In Re China Shanshui Cement Group Limited (23 November
2015) Mangatal J, sitting in the Financial Services Division of the
Grand Court of the Cayman Islands, has held that the decision of
Jones J in Re China Milk Products Group Ltd.1
was wrong, thereby confirming a long-held belief universally shared
among Cayman Islands' practitioners.
The question at issue was whether or not directors of a Cayman
Islands company had the authority to present a winding up petition
on behalf of the company in the absence of either (a) a
shareholders resolution or (b) an express provision in the articles
of association authorising such action to be taken by the
Mangatal J held that as a matter of Cayman Islands law they did
not have such authority. She held that the law was correctly stated
by Smellie J (as he then was) in Banco Economico SA v Allied
Leasing and Finance Corporation2, applying the
well-known English decision in Re Emmadart
Ltd.3 which was reversed by statute in
England4, but had not been reversed by statute in the
Cayman Islands. There had been debate as to this very point in the
discussions leading to the 2007 amendments to the Companies Law,
but Mangatal J concluded that a deliberate decision had been taken
not to reverse Re Emmadart by statute in the Cayman
In short, she held that section 94(2) of the Companies Law which
provides that "where expressly provided for in the
articles of association of a company the directors of the company
incorporated after the commencement of this Law have authority to
present a winding up petition on its behalf without the sanction of
a resolution passed at a general meeting" applied to both
solvent and insolvent companies (and not just to solvent companies
as Jones J had decided). It merely provided statutory confirmation
of the position which had been previously held to be the case in
Re Emmadart. There was nothing in section 94(1)(a)
allowing "the company" to present a petition
which could be construed as allowing "the
directors" to do so.
Her decision is self-evidently correct as a matter of statutory
construction. Jones J's decision may have been convenient for
restructuring lawyers, but it is not for the Judges to usurp the
legislative function and to decide cases according to their own
personal interpretation of the Companies Law because they believe
the Law should have been drafted differently. That way can only
lead to chaos and confusion and make it impossible to give proper
advice on Cayman Islands corporate law.
There should therefore be no crying over spilt milk, and one can
only hope that there will soon be a similar decision taking
Little Sheep to the slaughterhouse.5
1  2 CILR 61
2  CILR 102
3  1 Ch.540
4 Section 124(1) Insolvency Act 1986
5 In Re Little Sheep Group  1 CILR 34 another
decision of Jones J universally considered to be wrong.
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