The Court of Justice of the European Union (CJEU) has ruled on the possible scope of the decisions adopted for the intervention of Banco Popular, under Directive 2014/59 in the actions for nullity and/or liability for defective information on the leaflet concerning capital increases carried out by the bank prior to its sale to Banco Santander.
‘This ruling will lead many claims for Banco Popular shares to be dismissed,’ warns David Viladecans Jiménez, Legal Department Manager at Tecnotramit. The ruling concludes that it is not possible, subsequent to the redemption of the shares of a financial institution subject to resolution, to bring an action for the nullity of the purchase of the shares or for liability arising from the lack of truth on the leaflet of a public offer for subscription. In this regard, according to the CJEU, Directive 2014/59 prevents shareholders or creditors from claiming after the redemption of the shares any amount not due at the time of the resolution.
‘It should be noted that the general interest of the European Union in protecting investors does not override the general interest in ensuring the stability of the financial system. Resolution procedures occur in exceptional cases of great risk to the financial system, so regulations opt for shareholders and creditors to bear the losses before compromising public funds and depositors. Therefore, we are dealing with a situation that is an exception to the general insolvency rules of an entity,’ says Viladecans Jiménez.
It is therefore concluded that the action to enforce liability falls within the category of obligations and claims that are deemed to be discharged for all purposes, provided they have not matured prior to termination. Henceforth, they cannot object to the credit institution or investment firm under resolution or its successor.
Nevertheless, the CJEU recalls that Article 73 and subsequent ones of Directive 2014/59 provide for a safeguard mechanism for shareholders and creditors. ‘They have a right to reimbursement or compensation which shall not be less than the estimate of what they would have received if the whole entity had been liquidated under normal insolvency proceedings. In fact, if shareholders are deemed to have received less than they should have, they may claim the difference,’ he says.