CAYMAN ISLANDS Law and Practice Contributed by: Shari Seymour, Kerry Ann Phillips and Michael Lockwood, Maples Group
company, the shareholders of each constituent company must also approve the plan of merg - er by special resolution (typically, a two-thirds majority of those shareholders attending and
rights under a scheme of arrangement, although objecting shareholders are entitled to notice of the proceedings and to be heard by the court. However, the necessary majority vote for a scheme is higher than for a statutory merger, at 75% of those shareholders who attend and vote at the relevant meeting(s), and, unlike with a statutory merger, insiders are typically effectively A statutory squeeze-out under Section 88 of the Companies Act is available where the applica - ble statutory thresholds are met. Where a bidder has acquired or obtained the approval of 90% of the shares in a Cayman Islands company, it may compel the acquisition of the remaining shares in the company and thereby become the sole unable to vote. Squeeze-Out The primary sources of Cayman Islands law relevant to M&A transactions are the Compa - nies Act, the LLC Act and common law; see 2.1 Acquiring a Company . There are no specific statutes or government regulations concerning M&A transactions in the Cayman Islands. However, if the target company’s securities are listed on the Cayman Islands Stock Exchange (CSX), the CSX Code on Takeovers and Mergers and Rules Governing Substantial Acquisitions of Shares (the “Code” ) may apply. Such rules exist principally to ensure the fair and equal treatment of all shareholders. In addition, there are change-of-control rules applicable to entities that are regulated by: • the Cayman Islands Monetary Authority (the “Authority” ) under: shareholder of the company. 2.2 Primary Regulators
voting at the relevant meeting). Merger of Parent and Subsidiary
No special resolution is required for a merger between a parent company and its subsidiary. In order for this to apply, the parent must hold issued shares that together represent at least 90% of the votes at a general meeting of the subsidiary. Dissenters’ Rights A dissenting shareholder in a merger is entitled to payment of the fair value of all their shares upon dissenting, if they follow the statutory pro - cedures. The Companies Act also provides that dissenters’ rights are not available in certain cir - cumstances, including in respect of the shares of any class of a constituent company for which an open market exists on a recognised stock exchange or recognised inter-dealer quotation system at the expiry of the period allowed for notice of an election to dissent. These dissent rights do not apply to M&A transactions pursu - ant to a scheme of arrangement. Scheme of Arrangement A scheme of arrangement is a flexible form of corporate restructuring, similar to (and based on) statutes in England and elsewhere in the British Commonwealth. A scheme must be approved by the requisite majority shareholders, and by a court order (although the court does not typically evaluate the commercial merits of the scheme). A scheme of arrangement also involves the production of a circular, which must be suffi - ciently detailed to allow shareholders to make an informed decision in relation to the merits of the proposed scheme. There are no dissenters’
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