Given current financial conditions in the equity markets, opportunities for privatisations abound and schemes or arrangement are all the rage again. They can be used for Bermuda, Cayman and BVI companies.
A scheme of arrangement is essentially an agreement, approved by the requisite majority of shareholders and imposed on the minority shareholders, between a company and its shareholders, as a result of which scheme shares are compulsorily transferred to a bidder or are cancelled, such that the target company becomes wholly owned by the bidder. Schemes of arrangement are therefore an important tool to privatise companies. Indeed, for various reasons, a scheme of arrangement is the most common method to privatise a company listed on HKSE.
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This article was originally published in the Offshore Update column in the Asian-Mena Counsel magazine Volume 17 Issue 7.