CAYMAN ISLANDS Trends and Developments Contributed by: Christopher Brett Young, Andrew Barker, Hugh Anderson and Sam Francis, Walkers
Introduction The Cayman Islands continues to be a leading international offshore financial centre and a sig - nificant player in the global corporate landscape. Its well-developed legal system, supported by a business-friendly and adaptable environment, makes it a preferred jurisdiction for offshore transactions. The availability of various legal structures including companies, partnerships and limited liability companies has provided the flexibility for continued growth and adaptability to ever-changing challenges driven by global demands. Owing in part to recent buoyant economic mar - kets, there has been continued growth in cor - porate restructurings, mergers and acquisitions, joint ventures and financing deals involving both debt and equity. Mergers under Cayman Islands law The statutory merger regime under the Compa - nies Act has continued to be the most popular mechanism through which to acquire Cayman Islands entities. This regime allows two or more companies to merge, with the rights and obli - gations of each merging party vesting in one of them as the surviving company. The merger provisions of the Companies Act are substan - tially similar to those under Delaware law and are therefore familiar to those involved in M&A transactions in the United States. In addition to traditional industries, there has been notable growth in technology, fintech and cryptocurrency-related M&A transactions. This trend has run in tandem with the Cayman Islands becoming an increasingly popular and trusted hub for entities connected to the world of digital assets.
The Companies Act grants shareholders a statu - tory right to dissent in the merger of a Cayman Islands incorporated company and to be paid a judicially determined fair value for their shares in lieu of the merger consideration being offered by the merging company. The rights of a dissenting shareholder are not available in certain limited circumstances – notably for shareholders hold - ing shares for which an open market exists on a recognised stock exchange where certain forms of consideration are received. Consistent with previous years, the threat of dis - senting shareholders’ claims (particularly relating to opportunistic arbitrage plays) has remained ever constant and a broader body of case law has evolved in the jurisdiction as a by-product of such claims. Recent decisions heard in the courts of the Cayman Islands have focused on: • the determination of the fair value of a dis- senter’s shares; • confirmation that dissention rights apply to short-form mergers (where a parent company holding 90% or more of the voting rights of its subsidiary mergers with such subsidiary); • considerations as to the rate of interest pay - able on a judgment awarded in respect of fair value; and • whether a change (or no change) in the share price of a merger target should be taken into consideration in a judgment as to fair value for such dissention claims. Amendments to the Companies Act The Companies (Amendment) Act (as amended) ( “Amendment Act” ) was passed by the Cayman Islands Parliament in March 2024 but will not come into force until a subsequent Cabinet order is made. Consistent with the business-friendly nature of the Cayman Islands legal framework, these amendments to the Companies Act are
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