Section 238 of the Companies Law: Dissenting Shareholder Fair Value Petitions

The statutory merger provisions of the Companies Law have now been in force for some time, and the regime is used frequently to affect a wide range of corporate transactions. However, there has always been some uncertainty as to the resolution of the claims by dissenting shareholders under section 238 of the Cayman Companies Law. Cases dealing with section 238 have been rare and, until now, invariably abandoned well before any examination of the substantive issues could take place. The recent decision of the Grand Court in In the Matter of Integra Group (Jones J, 20th August) is of significant importance to all parties involved in mergers and buyouts of Cayman Islands companies, affording the Courts the opportunity for the first time to issue much-anticipated guidance on the determination of “fair value” under section 238.

As anticipated, the Court has relied heavily on the decisions of both the Delaware and Canadian courts in comparable circumstances. The circumstances surrounding the Integra merger were unusual as described in detail below which has led to the Courts emphasising that there is no one-size fits all approach and that each case must be specifically examined on its own facts.

Barnaby Gowrie and Nick Dunne of Walkers represented Integra Group (“Integra”) in the proceeding.

 

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CAYMAN ISLANDS
Nick DunnePartnerT +1 345 814 4548nick.dunne@walkersglobal.com
Melissa LimPartnerT +1 345 814 4512melissa.lim@walkersglobal.com
Rolf LindsayPartnerT +1 345 914 6307rolf.lindsay@walkersglobal.com

DUBAI
Barnaby GowriePartnerT +971 4 363 7942barnaby.gowrie@walkersglobal.com

HONG KONG
Denise WongPartnerT +852 2596 3303denise.wong@walkersglobal.com