Dissenter Disclosure In Cayman Appraisals Revisited

• Published date: 06 July 2022
• Subject Matter: Corporate/Commercial Law, Corporate and Company Law, Shareholders
• Law Firm: Ogier
• Author: Mr Shaun Maloney, Marie Skelly and Dunzelle Daker

Given the central importance of the discovery process to shareholder appraisal litigation, it is unsurprising that the scope of such disclosure is often a matter of significant debate between the parties. In a recent decision in the ongoing 58.com litigation,¹ the Grand Court of the Cayman Islands revisited the disclosure that must be produced by dissenting shareholders in fair value proceedings under section 238 of the Companies Act.

Background

Discovery was first ordered against dissenting shareholders in the Qunar appraisal.² Since then, the Grand Court has consistently ordered that dissenters only need to disclose the same (or very similar) categories of documents as were ordered in Qunar and has repeatedly rejected attempts by companies to expand the scope of dissenter disclosure.³

Despite this trend, the scope of discovery for dissenting shareholders was again hotly contested in 58.com, where the company sought to:

1. broaden the scope of the disclosure beyond the standard Qunar categories
2. remove the requirement for disclosable documents to actually be relevant to the determination of fair value, and
3. apply an extended five year temporal "look back" period from the valuation date

Decision

In addressing the expanded categories of disclosure sought by the company, Justice Ramsay-Hale noted that the dissenting shareholders are not themselves the subject of the valuation exercise and reaffirmed that their particular motives and commercial positions are not relevant, nor are their subjective views or any decisions that they may have made as to valuation. Similarly, the Court found that discovery for the purpose of undermining the credibility of a party or its witnesses is generally not appropriate in fair value proceedings. The Court consequently refused to order any of the broadened categories of disclosure sought by the company and restricted the scope of the dissenter disclosure exercise to that which had previously been ordered in Qunar and applied in subsequent cases.

In addition, the Court found that that a relevance filter was a sensible stipulation which had been...