Your new Caribbean winter home
Snowbirds are the fortunate few with the time and money to spend their winter months away from the bustle and cold of a North American winter. Those looking for a safe English-speaking option should consider the advantages of the Cayman Islands, a small Caribbean territory with a stable government, affordable healthcare, no income, capital gains, inheritance or real estate taxes, and just a four hour flight from New York City. Those with a healthy annual income and capital to invest might want to consider their residency options as a Person of Independent Means (see below).
A Scheme of Arrangement under section 86 of the Cayman Islands (‘Cayman’) Companies Law (2016 Revision) (‘Scheme’) remains a truly useful tool for non-hostile takeovers, mergers and acquisitions. However, many shareholders of a takeover target company (‘the Target’) are daunted by the task of working their way through the weighty document package their company has sent them in the short time allowed before they have to vote for or against the Scheme. Here are ten points to bear in mind whilst reviewing the Scheme documents.
1. What is a Scheme of Arrangement?
In a Scheme where a bid company (‘the Bidder’) wishes to take over the Target, the Bidder and Target agree the terms of the Scheme, which will usually be that the shareholders take cash or shares in exchange for either the cancellation of their shares in the Target or the transfer of those shares to the Bidder.
A September 2016 judgment of the Cayman Islands (‘Cayman’) Grand Court, obtained by Solomon Harris on behalf of Receiver clients, has clarified for the first time that a Cayman segregated portfolio company (‘SPC’) can terminate an individual segregated portfolio (‘Cell’) if the Cell has either no assets, or no liabilities. The decision is a welcome clarification to Directors of how to operate section 228A(1) of the Companies Law (2016 Revision) (‘Companies Law’), and means that Directors of an SPC can pass a resolution to terminate a Cell if it becomes insolvent and has no assets.
Solomon Harris has achieved court approval of the Share Capital Reduction (‘SCR’) of a Cayman Islands (‘Cayman’) company without the need to produce a list of creditors and seek their approval for the SCR. This significantly reduced the time and costs involved. Here we discuss when and how court approval of an SCR can be obtained without creditor involvement.
A party to without prejudice negotiations may be allowed to give evidence in court of what another party said in those same negotiations, where excluding that evidence would act as a cloak for perjury, blackmail or other‘unambiguous impropriety’. An example of this can be found in recent a decision of the England and Wales Court of Appeal (‘EWCA’), which, whilst it is not binding on the Cayman Islands (‘Cayman’) Grand Court, would be considered persuasive authority.
The Confidential Information Disclosure Law, 2016 (‘CIDL’) came into force in the Cayman Islands (‘Cayman’) on 15 July 2016, replacing the Confidential Relationships (Preservation) Law, 2015 (‘CRPL’).
What has changed?
The introduction of the new law means that a breach of duty of confidentiality is no longer a criminal offence in Cayman. However, a person whose confidentiality is breached can sue the person who divulged the confidential information.
The provisions of The Limited Liability Companies Law, 2016 (the ‘Law’) came into force on the 8 July 2016. The Law was passed on 28 April 2016, and its provisions were brought into force by the Limited Liability Companies Law, 2016 (Commencement) Order, 2016. Limited Liability Companies (‘LLCs’) are now available to those wanting to establish a new corporate entity in the Cayman Islands (‘Cayman’), and the Law also includes a mechanism for converting existing companies into LLCs. Cayman LLCs will be particularly useful for those setting up master/feeder structures that include a Delaware LLC as it will enable investment managers to use the same type of corporate entity and documentation throughout the structure.
As part of its continuing drive to ensure Cayman Islands (‘Cayman’) corporate governance meets or exceeds the latest international standards, on 8 June 2016 the Cayman Islands Monetary Authority (‘CIMA’) introduced The Rule - Corporate Governance For Insurers (‘R-CGI’ or ‘Rule’). This imposes specific obligations on insurers regulated by the Authority under the Insurance Law, 2010 and is the first time insurers have been subject to a Rule on corporate governance rather than a Statement of Guidance (‘SOG’).
Globe Motors, Inc and others v TRW Lucas Varity Electric Steering Ltd and another 
In April 2016 the England and Wales Court of Appeal (‘EWCA’) considered whether parties had agreed to vary their contract between them by their conduct over time, despite their contract’s express provision that it could only be amended by a written document, signed by both parties, which specifically referred to the amendment provision. The conclusions reached by the EWCA judges would not be binding authority on the Cayman Islands Grand Court, but would be considered persuasive argument.
Basdeo v The Hon. Min of Finance as Ex Officio Commissioner for the Collection of Stamp Duty
In March 2016 the Cayman Islands (‘Cayman’) Grand Court ruled on the correct basis to value property for the purpose of calculating Stamp Duty. Although the sum involved was small in this instance, the Court commented that it was clear that the matter was ‘....an issue of principle that may well affect many other conveyances’.
Leisure and tourism is booming in Cayman.
We’ve seen a lot of exciting deal activity here in this sector in the last twelve months – we acted for a major international investor acquiring both the Westin and Sunshine Suites resorts; London & Regional purchased the Marriott Hotel; and Dart Realty completed its acquisition of the Beach Suites and former Hyatt resorts.
Dart is also on schedule to complete construction of the Kimpton Seafire Resort and Spa this year, recently featured by Forbes Magazine as one of the twenty most anticipated hotel openings of 2016.
And with the current owners of The Ritz-Carlton Grand Cayman now looking for a buyer, this is a great time to take a look at five key issues to consider when investing in hotels and resorts in the Cayman Islands.
Making a Will and keeping it up to date is something we all know we should do, and something that often gets postponed. Here we take a short look at why it’s important to keep your Will under review, the events which mean you should consider whether to change your Will and give some examples of the type of problems beneficiaries can face.
Why should I make a Will?
One of the best reasons for leaving a Will is that it gives you a say in important decisions taken after your death: -
The United Kingdom Court of Appeal has considered whether any or all of a meeting between a firm of solicitors and a litigant in person was covered by without prejudice protection. Here we look at how the Court approached the situation where there was no agreement or statement that the meeting would be conducted without prejudice, the ostensible purpose of the meeting was not to negotiate settlement of the litigation and parts of the meeting were open. We also look at how the Court addressed the issue of whether the protection had been waived or was being abused.
A decision of the Cayman Islands (‘Cayman’) Grand Court (‘Court’) has created uncertainty on whether the Directors of a Cayman company incorporated prior to November 2009 can petition for the company’s winding up (i.e. liquidation) without the sanction of the company’s shareholders. Here we look briefly at the uncertainty generated by the decision and what steps directors might take until the issue is clarified.
Property Alliance Group v The Royal Bank of Scotland
The UK High Court (‘Court’) has considered whether secret recordings made by one party prior to the start of litigation are covered by ‘litigation privilege’. The recordings were of meetings between the founder ('R') of Property Alliance Group Limited (‘PAG’) and former employees of a division of a UK bank (‘RBS’) who thought the meetings were for them to attract future work from PAG and who were not aware that their meetings were being recorded.
Having obtained a judgment for money to be paid to you against a party with assets in the Cayman Islands, the next step is to enforce that judgment against those assets. Unless your judgment is from certain states in Australia, then your judgment may only be enforced at Common Law.
The Cayman Islands (‘Cayman’) Department for International Tax Cooperation (‘DITC’) has issued an Industry Advisory for Cayman financial institutions (‘FI’s) on the latest developments towards the implementation of the Common Reporting Standard or CRS. Progress includes updated Self Certification Forms, a list of participating jurisdictions, and the designation of certain limited life debt investment entities as Non Reporting Financial Institutions.
The CRS is part of the Organisation for Economic Co-operation and Development’s (‘OECD’) Standard for Automatic Exchange of Financial Account Information in Tax Matters ('the Standard’). As an early adopter, the Cayman Islands is getting procedures ready for FIs to be able to record tax residence in all new accounts opened from 1 January 2016.
Kam Leung Sui Kwan v Kam Kwan Lai and Ors
The Hong Kong Court of Final Appeal (‘HKCFA’) recently considered when a Hong Kong Court has jurisdiction to wind up a foreign holding company which does no business in Hong Kongand whose only assets are shares in a company also incorporated outside Hong Kong. The decision concerned a British Virgin Islands (‘BVI’) incorporated company (‘YKH’) but it will interest those operating a family owned business structure using Cayman Islands (‘Cayman’) holding companies.
When making a Will it is important to make sure everything is explained clearly and precisely: it contains your instructions for a time when you are no longer available to correct any mistakes. Here we take four recent cases from the Courts of England and Wales to show how easy it is to get things wrong, the consequences, and look at how those cases would be treated in the Cayman Islands.
A July 2015 Cayman islands (‘CI’) judgment dismissed a winding up petition (‘Petition’), holding that it was an abuse of process for Petitioners to present a petition to wind up a CI Exempted Limited Partnership (‘ELP’) when they were contractually precluded from doing so by a term of the Limited Partnership Agreement (‘LPA’) which they had agreed to and signed. Here we look at the Judge’s reasons, published by the Grand Court (‘Court’) on 16 September 2015.
Cayman Trusts (Amendment) Law 2019 in force from 14th June 2019...
The new Cayman Islands ('Cayman') Trusts (Amendment) Law 2019 (‘Amendment’) will bring...