The board of property company Dunloe Ewart has disenfranchised its major shareholder, the media- shy property developer Mr Liam Carroll.

Mr Carroll will have to go to the High Court to get back the voting and other rights associated with his 27.5 per cent shareholding. At yesterday's closing price his shares are worth approximately €38.5 million.

The move, believed to be the first use of Section 79 of the Companies Act 1990, was agreed unanimously by the Dunloe board on Monday after Mr Carroll had failed to respond to a request for clarification from Dunloe within an allotted time period.

It is understood the company was notified in late July that Mr Carroll was the owner of a small block of shares which were purchased in late 1999 in the name of an Isle of Man company.

Dunloe was told by Mr Carroll's solicitors that the 750,000 shares had been transferred in June into the names of Mr Carroll and his wife for legal reasons but that Mr Carroll had been the legal owner since late 1999.

The firm was concerned with this as it had five previous notifications from Mr Carroll or his representatives, outlining his shareholdings but failing to mention the Isle of Man stake. All these notifications were subsequent to the late-1999 purchase.

In a statement yesterday, Dunloe said it had informed Mr Carroll that "no right or interest of any kind whatsoever in respect of any shares in the company held by him are enforceable by him, whether directly or indirectly, by action or legal proceeding".

The company also said the board had appointed a committee of independent, non-executive directors specifically to create a channel of communication between the company and Mr Carroll, "for the purpose of maximising value for all the shareholders in the company and also to seek clarification and disclosure from Mr Carroll in respect of his shareholding in the company". The company has 3,500 shareholders.

It is understood the sub-committee was set up to counter the impression that the dispute between Dunloe and Mr Carroll was a "personality squabble" between him and Mr Noel Smyth, chairman of Dunloe and a significant shareholder in the company. Mr Carroll has never communicated his views on Dunloe to the company.

It is understood the block of 750,000 shares was moved into the Carroll names just six days before the Dunloe annual general meeting in June at which various measures proposed by Mr Smyth were blocked because they did not get the necessary 75 per cent backing from shareholders. The small shareholding would not have affected the outcome.

Mr Dermot Desmond's company, IIU Ltd, purchased about 1.25 per cent of Dunloe earlier this month. Another of his companies. Bottin International, is understood to own a further 0.5 per cent.

Dunloe is to hold an extraordinary general meeting on October 3rd, at which shareholders will vote on a deal concerning the company's involvement in the Cherrywood mixed-use development in south Dublin. The firm is proposing to buy out the British Land interest in the site. The vote will be decided by simple majority.