CAYMAN ISLANDS Law and Practice Contributed by: Shari Seymour, Kerry Ann Phillips and Michael Lockwood, Maples Group
vote would be futile, or if the offer in question was below what the directors had been advised was the fair value of the Company. Where a target company is listed on the CSX, the Code provides that, after a bona fide offer has been communicated to the board of an offeree company or after the board has reason to believe that such an offer might be imminent, the board may not take any action without the approval of the shareholders in a general meeting that could effectively result in any bona fide offer being frustrated or in the shareholders being denied an opportunity to decide on its merits. Litigation in the Cayman Islands is not common in connection with M&A transactions, although a significant number of dissenters’ petitions under the statutory merger regime have been (or are in the process of being) heard in the Cayman Islands courts. M&A transactions implemented through schemes of arrangement inherently involve the Cayman Islands court. However, these are rarely opposed. Given that a large proportion of Cayman Islands M&A activity involves cross-border deals and/or companies listed on onshore stock exchanges, it is not uncommon for M&A transactions involving Cayman Islands entities to be subject to onshore litigation. 10.2 Stage of Deal In the case of transactions implemented through statutory mergers, litigation typically occurs 10. Litigation 10.1 Frequency of Litigation
post-closing, as opposed to in a manner which frustrates or delaying closing. This is because dissent rights, which guarantee dissenters the payment of fair value, are conditional on the merger completing. For transactions imple - mented through a scheme of arrangement, the scheme may be challenged before the court, although the grounds for such a challenge are Disputes did arise from broken M&A deals involving Cayman Islands companies in 2024, but these disputes are not being litigated in the Cayman Islands because (as is common) the relevant merger agreements were not Cayman Islands law governed and/or contained dispute resolution provisions in favour of other courts or arbitration. However, issues of Cayman Islands law often still feature in such disputes. limited, and this is rare in practice. 10.3 “Broken-Deal” Disputes Shareholder activism is not an important force in M&A transactions involving Cayman Islands enti - ties outside of merger dissent litigation, which is typically driven by activist arbitrage investors, who often acquire their shares for the purpose of pursuing such dissent actions. 11.2 Aims of Activists See 11.1 Shareholder Activism . 11.3 Interference With Completion See 11.1 Shareholder Activism . 11. Activism 11.1 Shareholder Activism
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