In Integra, the Grand Court of the Cayman Islands (the
"Court") made a costs order in favour of
dissenting shareholders who had proved that the company's value
was higher than that offered in the merger process (and
significantly higher than the even lower value the company had
placed on the shares in the court proceedings to assess fair
value). Maples and Calder acted for the dissenting
shareholders. For background on Integra, including
the substantive court decision on "fair value", please
update of 28 August 2015.
Where a merger is structured under Part XVI of the Cayman
Islands Companies Law (2013 Revision) (a "Statutory
Merger"), and where a dissenting shareholder triggers
the court process for determining "fair value", the Court
then, as is common in litigation in the Cayman Islands generally
(similar to most other common law jurisdictions), has a discretion
to make such award as is just and equitable with respect to the
parties' legal costs. This case represents the first
guidance from the Court as to how such a discretion might be
exercised in the context of "fair value" assessments in
The Court held that, where a shareholder dissents from a
Statutory Merger and chooses to participate in the court
proceedings to assess the "fair value" of the company
(the "Appraisal Hearing"):
(a) That shareholder's potential liability for the
company's costs will be limited solely to the additional costs,
if any, incurred by the company as a result of the dissenting
shareholder's participation in the Appraisal Hearing.
(b) Liability for such costs will ordinarily be determined
by the usual rule that "costs follow the event" (i.e.
whether or not the shareholder has been successful at the Appraisal
(c) What constitutes success or failure will depend on all
the circumstances of the case. In this case, in finding that
the dissenter had been successful, the Court found it relevant not
only that the dissenter had been awarded an amount higher than the
merger consideration, but also that the company had unsuccessfully
contended at the Appraisal Hearing that "fair value"
was lower than the merger consideration.
Notably, but on an obiter basis, the Court stated that,
where the dissenting shareholder does not participate in the
Appraisal Hearing, the non-participating dissenter will not be at
risk of an adverse costs order. The Court took the view that
to impose any liability for costs on non-participating dissenters
would discourage shareholders with a small interest in the company
from dissenting (on the basis that the costs of an appraisal action
could end up exceeding the value of that interest). Whether
it would be in the interests of a dissenting shareholder not to
participate in the Appraisal Hearing may be a difficult call, as
the company may argue (as they did in Integra) that
"fair value" is less than was offered as the merger
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