CAYMAN ISLANDS Law and Practice Contributed by: Shari Seymour, Kerry Ann Phillips and Michael Lockwood, Maples Group
6.8 Additional Governance Rights If a bidder does not seek 100% ownership of a target, examples of additional governance rights that the bidder can seek outside of its sharehold - ings include negotiating with the target for the right to nominate a person for appointment as a director of the target, and/or for special consent rights that accrue to the bidder or its nominee director(s). Unless the memorandum and articles of association provide otherwise, the business and affairs of a company are managed by its board of directors. In the context of an LLC that is managed by a board of managers, the bidder could similarly seek rights to appoint the managers if this is not already provided for in the operating agreement of the LLC. To the extent that a bidder acquires such num - ber of a Cayman Islands company’s shares to pass a special resolution under Cayman Islands law (typically, a two-thirds majority of those shareholders attending and voting at the rel - evant meeting), it would be able to amend the company’s memorandum and articles of asso - ciation (subject to certain limited exceptions), pass a shareholder resolution authorising a plan of merger (provided that the board had also approved that) and place the company into vol - untary liquidation, among other matters. If a bidder acquires a sufficient interest in an LLC, it may be able to cause equivalent actions in respect of such LLC, subject to the terms of the LLC agreement constituting the LLC. 6.9 Voting by Proxy Subject to the memorandum and articles of association of a Cayman Islands company, shareholders may vote by proxy at general meet - ings of the company.
6.10 Squeeze-Out Mechanisms When a takeover offer is made and accepted by holders of 90% of the shares to which the offer relates within four months, the offeror may, within a two-month period, require the holders of the remaining shares to transfer such shares on the terms of the offer. Shareholders who wish to object to the offer may apply to the court for relief under Section 88 of the Companies Act, which provides that the transfer will happen unless the court “thinks fit to order otherwise” . However, there is a heavy burden of proof on sharehold - ers dissenting under Section 88 to show that the offer is unfair and not merely open to criticism, and a presumption that an offer accepted by 90% of shareholders is fair. Squeeze-outs using this mechanism are very rare in practice, includ - ing in light of the availability of parent-subsidiary mergers. In some circumstances, transactions similar to a merger, reconstruction and/or an amalgama - tion may be achieved through means other than these statutory provisions, such as a share capi - It is common for bidders to obtain irrevocable commitments to tender or vote from principal shareholders of a Cayman Islands target com - pany prior to the launch of bids or the announce - ment 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 generally count towards the requisite voting thresholds to complete the transaction. Irrevoca - ble commitments to vote may also be utilised in the context of a scheme of arrangement, provid - tal exchange or asset acquisitions. See also 2.1 Acquiring a Company . 6.11 Irrevocable Commitments
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