Cayman Islands Court ensures fair play and fair value in take private transactions

Investors await with interest the outcome of new cases involving fair value petitions filed by dissenting shareholders of Cayman Islands companies, which are being taken private using the Cayman Islands merger regime.

Shareholders of a company being taken private pursuant to part XVI of the Cayman Islands Companies Law (2013 Revision), who dispute the fairness of the offer received, may ultimately seek an order of the Grand Court of the Cayman Islands determining the “fair value” of the company’s shares and recover the duly appraised fair value of their shares. The court’s power to reach its own conclusion on fair value and require payment of a different amount to dissenting shareholders is critical for the protection of minority shareholders.

As yet, the only Cayman Islands decision on this appraisal process is Integra Group. Integra was a Cayman Islands incorporated company, which operated as an independent Russian oilfield services business. In 2007, it listed its global depository receipts (GDRs) on the London Stock Exchange. After mid-2012, the listed price of Integra’s GDRs significantly diminished. In December 2013, Integra’s management proposed a management buyout, structured as a merger under the Companies Law.

AISLING DWYER is an associate at the Hong Kong office of Maples and Calder.