The Cayman Islands has recently seen a flurry of merger activity, in many instances as a result of listed entities seeking to engage in ‘go private’ deals involving companies incorporated in the jurisdiction. The statutory merger and consolidation process set out in Part XVI of the Companies Law (2016 Revision) (the “Law”) is an attractive and increasingly well-used option for effecting such deals. However, as a result of a spike in the number of shareholders willing to exercise their rights under the shareholder appraisal rights regime set out in Section 238 of the Law, such deals are also resulting in an increase in litigation before the Grand Court of the Cayman Islands (the “Court”).
In two recently published judgments, the Court has painted a clearer picture of the rights and obligations of the parties seeking a “fair value” determination pursuant to Section 238 of the Law, and clarified the avenues of relief available to dissenting shareholders in the pre-trial stage of such litigation. The judicial guidance in these judgments gives some insight into how applications for interim payments and discovery will be dealt with by the Court, and may assist those considering a statutory merger or consolidation in the Cayman Islands to become better informed about the likely issues they may face in pursuing such deals.
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Mergers and Fair Value Petitions: Cayman Case Law Update