Shareholders in Irish Life and Permanent (IL&P) have rejected plans to inject State funds into the company, a meeting was told today.

IL&P chairman Alan Cook said at the start of the extraordinary general meeting that based on the proxies received by the company, shareholders in IL&P had voted down the company's resolutions to accept a Government bailout of €3.8 billion.

Three IL&P resoutions toagree the recapitalisation were voted down by shareholders.

Agreeing to the recapitalisation resolution would have wiped out shareholder interests and left the State with a 99 per cent share in the bank.

The board of Irish Life had previously called on shareholders to approve the capitalisation proposals, favouring an orderly acceptance of the resolution, “given the lack of alternative options available to raise the required capital”.

A spokesman for Minister for Finance Michael Noonan said he "remains committed" to recapitalising IL&P to the levels set by the Central Bank. Mr Noonan can use his separate legal powers to get a direction order to put the required capital into the company.

Earlier today, the European Union granted temporary approval for the plan. It will make a final decision on the aid after the lender submits a restructuring plan with measures address competition issues.

"The recapitalisation is necessary to increase the bank's solvency ratios, thereby enabling it to resist potential stress situations and preserving stability on the Irish financial markets," the commission said.

Opposition to the resolution was led in recent days by Malta-based investment fund Scotchstone Capital, which has publicly declared its opposition to the proposed recapitalisation and has been canvassing support to reject the motion.

Last week it offered to sell its shares to the Government at 90 cent each, a massive premium over the current price of 5 cent.

The group succeeded in tabling four additional resolutions for the egm, including the appointment of Piotr Skoczylas of Scotchstone Capital as a director of the company, and the appointment of an investment bank to assess other recapitalisation options. Another called for postponement of the recapitalisation deadline from July 31st to December 31st.

The four resolutions were passed by more than 60 per cent.

Shares in IL&P have plummeted as low as 3 cent in recent months. They were trading 7.8 per cent higher at 5.5 cent on the Dublin market this afternoon.