Take-Private Transactions - Cayman Islands Law Considerations

Published date15 October 2020
Subject MatterCorporate/Commercial Law, M&A/Private Equity, Corporate and Company Law, Shareholders
Law FirmOgier
AuthorMr Nathan Powell, Florence Chan, Bradley Kruger, Michael Robinson and Ross Wilding

Introduction

Take-private transactions have long been a feature of the legal landscape in the Cayman Islands, whether as a tool for acquiring a company or in order to re-list the company on a more favourable or convenient stock exchange.

The Companies Law (Revised) of the Cayman Islands (the Companies Law) provides certain avenues to take-private a Cayman Islands company - from the traditional court approved schemes, to simpler and more cost-effective mechanism for mergers and consolidations.

This document sets out an overview of the different options for stakeholders and the key considerations in respect of each option to assist in determining which mechanism might best suit the needs of particular companies.

Ogier has been involved in a number of recent high value take-private transactions in the Cayman Islands. Our corporate specialists also work closely with our cross-jurisdictional dispute resolution teams who have significant expertise in the area of shareholder and valuation disputes.

With Cayman Islands specialists based in the Caribbean, Asian and European time-zones, Ogier is able to provide its clients with seamless round the clock advice on take-private matters.

Our lawyers and professional staff based in Hong Kong speak English, Cantonese and Mandarin to better service our Asia-based clients in their native languages.

Take-private methods

Shareholder considerations
Take-private option Companies Law reference Required Approvals Indicative timing Court process?
Statutory merger Sections 232-239

Special resolution of the shareholders of each company (being 66%, unless higher in the articles of association).

Provided no litigation for fair value appraisal, process can be completed in a short time-frame (as little as 1 to 2 months). Generally no Court approval necessary. However, dissenting shareholders could invoke fair value appraisal rights under section 238 of the Companies Law which could result in uplift for dissenting shareholders' shares.
Tender offer & squeeze-out Section 88 Need to have approval of 90% of independent shareholders (i.e those not already owned by the bidder or its affiliates). At least 4 to 6 months following the tender offer being made. The Court will generally not intervene unless an
application is made by the dissenting shareholders (and even then it will only intervene in limited circumstances).
Tender offer & streamlined merger Section 233(7) Provided the bidder has acquired (directly or indirectly) 90% of the
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