The Companies Law (Amendment) Law, 2011 (the "Amendment
Law") was brought into force in the Cayman Islands on April
27th, 2011. The Amendment Law effects important changes to the
Companies Law (the "Law") updating it to provide
increased flexibility and clarity and also to codify some existing
practices under common law. The changes to the Law are designed to
enhance the attractiveness of the Cayman Islands to the
international financial community and at the same time strengthen
the existing environment of legal certainty and commercial focus
that the Islands currently offer.
The principal areas of change under the amendment are set out
A new concept to the Cayman Islands, the introduction of the
ability of companies to hold treasury shares increases flexibility
with share capital, particularly for fund vehicles with regular
subscriptions and redemptions.
SEGREGATED PORTFOLIO COMPANIES - ATTRIBUTION OF ASSETS /
The Amendment Law has introduced a mechanism allowing for the
board of an SPC to address the issue of erroneously attributing
assets and liabilities to the wrong portfolio(s). The segregation
process for attributing assets and liabilities of the portfolios of
an SPC is the single most important part of operating these
vehicles correctly and the remedial mechanism will give comfort to
the directors, particularly in the more complex structures that
they have a means by which they can efficiently rectify
administrative errors. The former provisions of the Law attributing
personal liability for such errors to the directors have been
EXECUTION OF DEEDS ETC.
Ever an area of uncertainty, the Amendment Law addresses
concerns which had arisen as a result of the common practice of
exchanging signature pages only when closing complex transactions
covering many different time zones. A decision of the English
courts had thrown doubt over the legitimacy of this practice. The
Amendment Law now specifically permits it for Cayman companies,
streamlining the process of document execution and deal-closing in
the Cayman Islands.
COMPANY MERGERS AND CONSOLIDATIONS
The shareholder approval requirements to a merger or
consolidation of a Cayman company have been clarified and
simplified and a special resolution (usually 2/3 of shareholders
present and voting at a quorate meeting) will now be sufficient
subject to any special provisions in the relevant articles of
association (which may for example specify additional class
consents to merger). A further material change is that the
surviving company can now be an overseas company.
SHARE REDEMPTIONS, PURCHASES AND SURRENDERS
The Amendment law, for the first time, explicitly provides for
fully paid shares to be capable of being surrendered to the issuing
company for no consideration. This is anticipated to be of great
help in group restructurings and clarifies an uncertain area of
law. In addition, the Amendment Law sets out the effect of a
redemption or purchase of shares on a company's balance sheet
and confirms the authority of the board to determine the manner and
terms of any redemption or purchase of shares when appropriately
A welcome change introduced by the Amendment Law allows for a
company to maintain one or more "branch" registers of
shares. The branch registers can relate to one or more of the
existing classes of shares in issue and will allow great
flexibility to the company's service providers particularly in
some jurisdictions where shareholders have expressed the need to
have a duplicate register available locally.
TRANSFER OF SHARES
In a codification of existing practice the Amendment Law now
expressly permits paperless share transfers, an essential part of
the trading of Cayman company shares in jurisdictions which require
electronic settlement. Further, shares of Cayman companies which
are listed may now be recorded in a separate register and the
process of transferring and recording title to such listed shares
can be as provided in the rules of the relevant exchange.
Dual names are now permitted and the second name can be in a
script other than the Roman alphabet. This will allow non-literal
translations to be used for company names in different scripts,
allowing more flexibility in naming conventions. It is likely to
mean that company numbers become more important when identifying
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Failure to comply with company law in Hong Kong can be very expensive for businesses. In a highly dynamic business and regulatory environment such as Hong Kong, it is challenging for business owners to remain fully aware of the latest legal requirements.
In our article " Characteristics of the Commercial Agency Law of the United Arab Emirates" published with Mondaq on 27.09.2016, we outlined the general applicability of the UAE Commercial Agency Law (Federal Law No. 18 of 1981 including its amendments).
Confidentiality of corporate documents and information is one of
the key attractions of incorporating a company in the BVI. A
company search of the BVI Registrar of Corporate Affairs will only
disclose certain information and documents.
Luxembourg's Companies Act ‘reform bill' includes new rules for conversions of company types and introduces the S.à r.l.-S.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).