Opinion of Advocate General Richard de la Tour delivered on 2 December 2021.
| Jurisdiction | European Union |
| ECLI | ECLI:EU:C:2021:976 |
| Date | 02 December 2021 |
| Celex Number | 62020CC0410 |
| Court | Court of Justice (European Union) |
Provisional text
OPINION OF ADVOCATE GENERAL
RICHARD DE LA TOUR
delivered on 2 December 2021 (1)
Case C‑410/20
Banco Santander SA
v
J.A.C.,
M.C.P.R.
(Request for a preliminary ruling from the Audiencia Provincial de A Coruña (Provincial Court, A Coruña, Spain))
(Reference for a preliminary ruling – Directive 2014/59/EU – Recovery and resolution of credit institutions – Acquisition of shares – Resolution procedure – Directive 2003/71/EC – Incorrect information in the share issue prospectus – Action for a declaration of nullity of a share purchase contract – Error of consent – Application made against the universal successor of the credit institution)
I. Introduction
1. In response to the collapse of the Lehman Brothers bank in 2008 and to the financial crisis which followed, the European Union set itself the objective of achieving the orderly management of banking crises. It introduced two instruments in parallel: first, a common resolution framework for all its Member States (2) and, second, a specific and integrated single resolution mechanism for the euro area, in the context of the banking union. (3)
2. The objectives pursued by the banking resolution are common to the two instruments (4) and seek to:
– ensure the continuity of critical functions;
– avoid a significant adverse effect on the financial system, in particular by preventing contagion, including to market infrastructures, and by maintaining market discipline;
– protect public funds by minimising reliance on extraordinary public financial support;
– protect depositors covered by Directive 2014/49/EU of the European Parliament and of the Council of 16 April 2014 on deposit guarantee schemes (5) and investors covered by Directive 97/9/EC of the European Parliament and of the Council of 3 March 1997 on investor-compensation schemes (6); and
– protect client funds and client assets.
3. In order to achieve those objectives, a number of principles are laid down, foremost amongst which is the fact that the shareholders of the institution under resolution bear first losses, (7) but also the principle that no creditor is to incur greater losses than would have been incurred if the institution had been wound up under normal insolvency proceedings. (8)
4. In the case brought before the Court, a bank has been subject to resolution, over the course of which a number of write-downs and successive capital instrument conversions occurred, which were immediately followed by the sale of the business to another bank, which ultimately absorbed the first bank.
5. In that context, do the rules applicable to that resolution (losses borne by shareholders, bail-in and write-down and conversion of capital instruments) preclude the right to compensation of shareholders who subscribed to a capital increase offered to the public the year before the bank’s resolution if the related prospectus was defective, a right derived from Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 on the prospectus to be published when securities are offered to the public or admitted to trading and amending Directive 2001/34/EC? (9)
6. In addition, does the legislation applicable to the resolution preclude the consequences (restitution of the equivalent value of the subscribed shares, plus interest) of the judicial finding, made further to legal proceedings brought after that resolution, that the share purchase contract is null and void as a result of the deception or the error to which the shareholders fell victim on account of the defective prospectus?
7. Those are, in essence, the two questions put to the Court and which I will propose be answered in the affirmative.
8. I would point out that, given the connection between Regulation No 806/2014 and Directive 2014/59 and in view of the reference made by the former to the latter in Article 5 of that regulation, the interpretation of that directive will likewise apply in relation to the similar provisions of the regulation.
II. Legal context
A. EU law
9. Directive 2003/71 is applicable ratione temporis to the dispute in the main proceedings. (10)
10. Article 2(1) of that directive provides:
‘For the purposes of this Directive, the following definitions shall apply:
…
(d) “offer of securities to the public” means a communication to persons in any form and by any means, presenting sufficient information on the terms of the offer and the securities to be offered, so as to enable an investor to decide to purchase or subscribe to these securities. This definition shall also be applicable to the placing of securities through financial intermediaries;
…
(h) “issuer” means a legal entity which issues or proposes to issue securities;
…’
11. Article 6 of Directive 2003/71, which is entitled ‘Responsibility attaching to the prospectus’, provides:
‘1. Member States shall ensure that responsibility for the information given in a prospectus attaches at least to the issuer or its administrative, management or supervisory bodies, the offeror, the person asking for the admission to trading on a regulated market or the guarantor, as the case may be. The persons responsible shall be clearly identified in the prospectus by their names and functions or, in the case of legal persons, their names and registered offices, as well as declarations by them that, to the best of their knowledge, the information contained in the prospectus is in accordance with the facts and that the prospectus makes no omission likely to affect its import.
2. Member States shall ensure that their laws, regulation and administrative provisions on civil liability apply to those persons responsible for the information given in a prospectus.
…’
12. Recitals 13, 49 to 51 and 120 of Directive 2014/59 state:
‘(13) The use of resolution tools and powers provided for in this Directive may disrupt the rights of shareholders and creditors. In particular, the power of the authorities to transfer the shares or all or part of the assets of an institution to a private purchaser without the consent of shareholders affects the property rights of shareholders. In addition, the power to decide which liabilities to transfer out of a failing institution based upon the objectives of ensuring the continuity of services and avoiding adverse effects on financial stability may affect the equal treatment of creditors. Accordingly, resolution action should be taken only where necessary in the public interest and any interference with rights of shareholders and creditors which results from resolution action should be compatible with the Charter of Fundamental Rights of the European Union [(‘the Charter’)]. In particular, where creditors within the same class are treated differently in the context of resolution action, such distinctions should be justified in the public interest and proportionate to the risks being addressed and should be neither directly nor indirectly discriminatory on the grounds of nationality.
…
(49) The limitations on the rights of shareholders and creditors should be in accordance with Article 52 of the Charter. The resolution tools should therefore be applied only to those institutions that are failing or likely to fail, and only when it is necessary to pursue the objective of financial stability in the general interest. … In addition, when applying resolutions tools and exercising resolution powers, the principle of proportionality and the particularities of the legal form of an institution should be taken into account.
(50) Interference with property rights should not be disproportionate. Affected shareholders and creditors should not incur greater losses than those which they would have incurred if the institution had been wound up at the time that the resolution decision is taken. …
(51) For the purpose of protecting the right of shareholders and creditors, clear obligations should be laid down concerning the valuation of the assets and liabilities of the institution under resolution and, where required under this Directive, valuation of the treatment that shareholders and creditors would have received if the institution had been wound up under normal insolvency proceedings. … If it is determined that shareholders and creditors have received, in payment of, or compensation for, their claims, the equivalent of less than the amount that they would have received under normal insolvency proceedings, they should be entitled to the payment of the difference where required under this Directive. As opposed to the valuation prior to the resolution action, it should be possible to challenge that comparison separately from the resolution decision. Member States should be free to decide on the procedure as to how to pay any difference of treatment that has been determined to shareholders and creditors. That difference, if any, should be paid by the financial arrangements established in accordance with this Directive.
…
(120) Union company law directives contain mandatory rules for the protection of shareholders and creditors of institutions which fall within the scope of those directives. In a situation where resolution authorities need to act rapidly, those rules may hinder effective action and use of resolution tools and powers by resolution authorities and appropriate derogations should be included in this Directive. …’
13. Article 2(1) of Directive 2014/59 provides:
‘For the purposes of this Directive the following definitions apply:
…
(47) “normal insolvency proceedings” means collective insolvency proceedings which entail the partial or total divestment of a debtor and the appointment of a liquidator or an administrator normally applicable to institutions under national law and either specific to those institutions or generally applicable to any natural or legal person;
…
(57) “bail-in tool” means the mechanism for effecting the exercise by a resolution authority of the write-down...
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