CAYMAN ISLANDS Law and Practice Contributed by: Shari Seymour, Kerry Ann Phillips and Michael Lockwood, Maples Group
6.11 Irrevocable Commitments It is common for bidders to obtain irrevocable com - mitments to tender or vote from principal sharehold - ers of a Cayman Islands target company prior to the launch of bids or the announcement of the relevant transaction. Regarding statutory mergers and tender offers in respect of a Cayman Islands company, the shares subject to an irrevocable commitment will gener - ally count towards the requisite voting thresholds to complete the transaction. Irrevocable commitments to vote may also be utilised in the context of a scheme of arrangement, provided they are clearly disclosed and (subject to certain exceptions) do not confer addition - al rights on those giving the commitment. However, in a scheme context, careful consideration should be given to whether insiders and/or bidder affiliates can or should vote in any event (including in light of any relevant listing rules), as that may create issues when it comes to having the scheme approved by the court. There is generally no legal requirement to make a bid public. For companies listed on a foreign stock exchange, the applicable listing rules may prescribe requirements for public disclosure and/or the obser - vance of secrecy in respect of bids. In the case of a target listed on the CSX, an announcement of a firm intention to make an offer must be made in the follow - ing circumstances: • when the board of the target has been notified in writing of a firm intention to make an offer from a serious source, irrespective of the attitude of the board to the offer; or • immediately upon an acquisition of shares that gives rise to an obligation to make a mandatory offer under the Code; see 6.2 Mandatory Offer Threshold . 7.2 Type of Disclosure Required 7. Disclosure 7.1 Making a Bid Public No specific disclosure is required for the issuance of shares in a business combination, except for a deal structured as a scheme of arrangement, in which case
a circular is required (see 2.1 Acquiring a Company ), or for a tender offer involving a CSX-listed target, in which case an announcement would apply (see 7.1 Making a Bid Public ). 7.3 Producing Financial Statements Bidders are not legally required to produce financial statements (pro forma or otherwise) in their disclosure documents. Formal financial statements are not legally required to be prepared in any required form, although they are usually prepared in accordance with GAAP, IFRS or any other applicable accounting standards. A constituent company in a statutory merger must confirm to the Registrar of Companies that it is able to pay its debts as they fall due in the ordinary course of business (ie, it is solvent). This is demonstrated by preparing a statement of assets and liabilities up to the latest practicable date (typically no more than 30 days) prior to the merger. 7.4 Transaction Documents There is no legal requirement to disclose any transac - tion documents in full. However, Cayman Islands enti - ties may be subject to onshore disclosure and report - ing obligations (if, for example, their shares are listed on a foreign stock exchange). Disclosure may also be required in a scheme of arrangement or a tender offer involving a CSX-listed target; see 7.2 Type of Disclosure Required . 8. Duties of Directors 8.1 Principal Directors’ Duties Under Cayman Islands law, directors owe the follow - ing fiduciary duties to the company as a whole: • a duty to act in good faith in what the director or officer believes to be in the best interests of the company as a whole; • a duty to exercise powers for the purposes for which those powers were conferred and not for a collateral purpose; • a duty not to improperly fetter the exercise of future discretion; • a duty to exercise powers fairly between different sections of shareholders;
296 CHAMBERS.COM
Powered by FlippingBook