Cayman Islands Mergers And Consolidations

• Law Firm: Ogier
• Subject Matter: Corporate/Commercial Law, M&A/Private Equity, Corporate and Company Law, Shareholders
• Author: Mr Angus Davison, Bradley Kruger and Nathan Powell
• Published date: 16 January 2023

1. Introduction

The Cayman Islands Companies Act (Revised) (Companies Act) permits contractual mergers and consolidations, without the need for court approval, and a procedure whereby the assets and liabilities of a company can, by operation of law, vest in another company upon such a merger or consolidation.

2. Mergers and consolidations

2.1 A merger is the merging of two or more constituent companies, the vesting of their undertakings, property and liabilities in one of those companies as the surviving company and the dissolution, without formal winding up, of the constituent companies other than the surviving company.

2.2 A consolidation is the combination of two or more constituent companies into a new consolidated company, the vesting of the undertaking, property and liabilities of the constituent companies into the consolidated company and the dissolution, without formal winding up, of all the constituent companies.

2.3 The difference, therefore, is that a merger results in one constituent company continuing to exist as the surviving company, whereas consolidation results in a new consolidated company.

2.4 Any company limited by shares incorporated under the Companies Act (other than an exempted segregated portfolio company) may participate in a merger or consolidation as a constituent company with other Cayman companies or foreign companies (provided that the laws of the foreign jurisdiction permit such merger or consolidation). A key feature of the law is that the surviving or consolidated company may either be a Cayman company or a non-Cayman company.

3. Plan of merger or consolidation

3.1 A written plan of merger or consolidation (Plan) must be approved on behalf of each constituent company by its board of directors. The Plan must contain the following particulars:

• the name of each constituent company, the name of the surviving or consolidated company and the registered office of each such company;
• in relation to each constituent company, the designation and number of each class of shares;
• the date on which it is intended that the merger or consolidation is to take effect (if it is to take effect otherwise than on the date of registration of the Plan), but such date shall not be a date later than the ninetieth day after the date of such registration;
• the terms and conditions of the proposed merger or consolidation, including the manner and basis of converting shares in each constituent company into shares in the consolidated or surviving company, or into other property (which may be shares debt obligations or other securities in the consolidated or surviving company or any other corporate entity, or money or other property, or a combination of such property);
• the rights and restrictions attaching to the shares in the consolidated or surviving company;
• in the case of a merger, any proposed amendments to the memorandum and articles of association of the surviving company, or if none are proposed, a statement to that effect, or, in the case of a consolidation, the proposed new memorandum and articles of association of the consolidated company;
• any amount or benefit paid or payable to any director of a constituent company, consolidated company or surviving company upon the consolidation or merger;
• the name and address of any secured creditor of a constituent company and the nature of the secured interest; and
• the names and addresses of the directors of the...