A dissatisfied Eircom shareholder has claimed at the High Court that he and members of his family were entitled to contest the Valentia takeover of Eircom.

Mr Edward Moran, Chapel Street, Belmullet, Co Mayo said he and 575,000 other shareholders had been encouraged to buy the Eircom shares at the top end of the market price and were now being forced to sell at the bottom of the market.

Mr Justice Smyth reserved judgment on the application by Mr Moran, his wife Imelda and son Thomas, against a decision of Valentia Telecommunications Ltd to acquire their shares under the 1963 Companies Act.

Mr Moran said he brought the proceedings to protect his right to ownership of his property and to protest against the compulsion being imposed on him. He held no grudge against Valentia but took issue with law which purported to give them the right to enforce acquisition.

Valentia had been a shell company which never traded and never had offices or assets of its own until recent weeks. Despite now being an exceptionally asset-rich consortium of multinational corporate entities, it had provided only about 22 per cent of the takeover price from its own resources. The remaining 80 per was borrowed by way of mortgage from financial institutions.

Mr Moran said the State as the original vendor of Eircom shares had failed not only to protect the constitutional rights of very many individuals who bought shares but also failed to protect their rights under company law.

He said the opinions of the vast majority of ordinary small shareholders had been ignored. There had been two years of hype and fanfare when Eircom was first floated. The people of the country entered into the spirit of the thing and 574,082 persons committed themselves to buying what had now turned out to be a pig-in-poke.

In an affidavit, Mr Biswajit Subramanian, a director of Valentia, with a London address, said the Morans had just more than 3,000 shares between them and their combined beneficial shareholding represented .00014 per cent of the total issued shares of Eircom. Those shares were registered in the name of Eircom Nominee Ltd.

The Morans were the only persons to have challenged in court Valentia's right to compulsorily acquire the shares beneficially owned by the family.

The Valentia offer for the Eircom shares had been reasonable because it was unanimously recommended by the independent directors of Eircom following a competitive bidding process; it had been accepted by the vast majority of shareholders and the Valentia price for the Eircom shares was considerably greater than the market price for the shares before the bidding process started.

Mr Subramanian said the takeover was sanctioned by the Minister for Enterprise, Trade, and Employment under the Mergers Acts and also by the Director of Telecommunications Regulation. The principle of compulsory acquisition of minority shareholdings enshrined in Section 204 of the 1963 Act was replicated substantially in the same form in a large number of common law countries. It was justified by the necessity for a mechanism that ensured, where the overwhelming majority of shareholders accepted an offer, they were not frustrated by a minority of shareholders.