CAYMAN ISLANDS Trends and Developments Contributed by: Jason Allison, Christopher Brett Young, James Murrie and Michael Beck, Walkers
The Companies (Amendment) Act The Companies (Amendment) Act (as amended) (“Amendment Act”) was passed by the Cayman Islands Parliament in March 2024 and came into force on 1 January 2026. While the timing of the enactment did not directly affect the Cayman corporate law land - scape during 2025, it contains a number of improve - ments aimed at removing historical friction points and helping to streamline certain corporate actions. Key amendments that are now in force include the following. • The conversion of foundation companies and LLCs to exempted companies (ie, the conversion of exempted companies to LLCs) was already per - missible. This change is expected to be particularly valuable for start-ups and similar operators in the fintech industry, which may have initially formed a Cayman Islands LLC or a Cayman Islands foun - dation company to enable early-stage flexibility but subsequently require an exempted company structure (with a traditional board and share capital) as their operations and valuations mature and are seeking an efficient pathway to enable liquid - ity events, including an initial public offering or an M&A transaction. • Continuation of an entity with no share capital – the amendment now allows foreign entities without a formal share capital structure (such as certain civil law entities or US LLCs) to continue into the Cayman Islands. Prior to the amendment, a for - eign entity could only apply to the Registrar to be registered by way of continuation as an exempted company where the entity had share capital. • Reduction of share capital – a company may now reduce its share capital without having to apply to court by passing a special resolution if the direc - tors of the company deliver a supporting solvency statement to the Registrar of Companies of the Cayman Islands. This follows a similar and more flexible approach available in Delaware and signifi - cantly reduces deal friction, timelines and ultimate - ly legal spend (the ability for parties to apply to the court for a reduction of capital remains in place).
The changes to the law are a positive step and will allow the Cayman Islands to meet the ever-changing and dynamic needs of clients. Court Developments – Section 238 Disputes The Cayman Islands is fortunate to have a well-estab - lished judiciary to address disputes, including dissen - tion rights actions, which are the primary corporate law battleground in the Cayman Islands. The Companies Act provides a statutory right for shareholders to dissent in the merger of a Cayman Islands incorporated company and to be paid a judi - cially determined fair value for their shares in place of the consideration being offered by the acquirer. An increased volume of shareholder dissention claims (with many stemming from arguably opportunistic plays) has led to an expanded body of related case law. A recent case confirmed that dissention rights apply to short-form mergers (where a parent company owning at least 90% of its subsidiary effects a merger with it), which may have implications for how control - ling shareholders look to structure squeeze-outs of minority investors. This trend also broadens the importance of determin - ing how fair value is best assessed and the rate of interest payable on a judgment awarded in respect of fair value, including whether a variation in the share price of a target should be taken into consideration in confirming fair value. While the nature of each dispute is fact-specific, issues around the determination of fair value appear to be the primary focus of such claims in the majority of cases. The debate has continued to centre on whether the actual transaction price (result - ing from an arm’s length, robust market check) should carry greater weight or whether expert-led financial modelling and analysis should be the primary indica - tor of value. The Cayman Islands courts have gener - ally adopted a blended approach, assessing the qual - ity of the deal valuation process before deciding how much weight to attribute to the transaction price. Whilst dissention claims have historically been largely successful in securing a higher fair value than the offer price, the matter of 51job, Inc . (the judgment for which was handed down in November 2025) was notable in
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