CAYMAN ISLANDS Law and Practice Contributed by: Daniel Lee, Sophia Scott, Kimberly Robinson and James Turner, Maples Group
Shareholder Liability Subject to any express provision in the articles of association of the company to the contrary, a share - holder does not owe any fiduciary duty to the compa - ny or to any other shareholder in exercising any rights or authorities, or performing any obligations under the articles of association. The liability of the shareholders of a company lim - ited by shares is limited to the amount unpaid on the shares held by them. Piercing the Corporate Veil The concept of “piercing the corporate veil” is recog - nised in the Cayman Islands only in exceptional cir - cumstances, including, as example and without limi - tation, where a company’s separate legal personality has been used: • for an illegal or improper purpose; and • for the purposes of fraud. The Labour Act (As Revised) establishes minimum employment standards but does not preclude an employer from setting terms and conditions above the minimum. It also establishes remedies for unfair dismissal and entitlement to severance pay, prohibits discrimination and regulates the employees’ health, safety and welfare. The Labour Act requires employers to: • register the workplace by written notice to the Director of Labour in the Cayman Islands; • furnish each employee with a written statement of working conditions containing specific information referenced in 4.2 Characteristics of Employment Contracts ; • provide reasonable training to employees during their probationary period; • maintain prescribed employee work accounts where there are ten or more employees; 4. Employment Law 4.1 Nature of Applicable Regulations
ary with respect to the company. Accordingly, direc - tors and officers owe the following fiduciary duties: • to act in good faith in what the director or officer believes to be the best interests of the company as a whole; • to exercise powers for the purposes for which those powers were conferred and not for a collat - eral purpose; • directors should not improperly fetter the exercise of future discretion; • to exercise powers fairly as between different sec - tions of shareholders; • to exercise independent judgement; and • not to put themselves in a position in which there is a conflict between their duty to the company and their personal interests. However, the company’s articles of association may permit a director to vote on a matter in which they have a personal interest provided they disclose the nature of interest to the board. Directors also owe a non-fiduciary duty of care, requir - ing them to act as a reasonably diligent person hav - ing both the general knowledge, skills and experience reasonably expected of a person in that role and the actual knowledge, skills and experience of the par - ticular director. A director (even where appointed by individual share - holders) is obliged to act in a manner that the director believes to be in the best interests of the company as a whole (even though it may not be in the best inter - ests of the appointing shareholder). Breach of Duty In the event of breach, directors may be person - ally liable to account to the company. Companies often indemnify directors and officers against liabil - ity incurred in carrying out their functions, except for liability resulting from actual fraud or wilful default. Articles of association may also exculpate directors from liability for negligence, default or breach of duty, except in cases of actual fraud or wilful default.
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