First Active shareholders have cleared the way for the bank to give them a €160 million windfall in June.

The former building society will now apply to the High Court to approve the scheme that will result in payments of around €554 for individuals who held onto the free shares issued when First Active floated in 1998.

Some shareholders would have been entitled to free shares on two accounts, such as a mortgage and deposit account, and will be entitled to receive a payment of €1,108.

The funds are being distributed to reduce its surplus capital and equates to a payment of €1.12 per share. All investors who held First Active shares yesterday will qualify for the payment.

The proposal was overwhelmingly approved by shareholders who attended the bank's annual general meeting in Dublin. First Active chairman, Mr John Callaghan, told shareholders that the date on which the payment would be made was dependent on the legal process, but it was hopeful it would coincide with the payment of its final dividend on June 13th.

Some shareholders asked the chairman whether the bank, which will lose its legislative protection against a takeover in September, has had any approaches from other institutions interested in acquiring First Active.

"At the moment First Active is the only publicly quoted company to which this type of protection applies. In September we will be exactly the same as every other plc. Someone may want to make an offer but it is down to you to decide to accept it. We will make sure you have a very good alternative not to sell," Mr Callaghan said. He refused to say whether any formal approaches had been made.

Other shareholders were concerned about potential bad debts in the light of Central Bank concerns on mortgage lending while one shareholder wondered whether First Active should be distributing even more of its surplus capital to shareholders.

Mr Callaghan insisted the business was well positioned and that the quality of its loan book remained very high and rejected the suggestion of a higher cash payout. He said the business still needed sufficient reserves to be viable.

The more than 300 shareholders who attended were a broadly contented lot, although some complained about the meagre refreshments provided after the meeting. One man told the chairman that other companies provided a full lunch and that the mutually owned EBS building society provided a free bar after its annual meeting.

Mr Callaghan said he would take this into consideration but did not feel any compulsion to turn the annual get-together into a "wedding party".