CF_Mag_2015_web-V2

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Why is the Cayman Islands one of the world’s leading international finance centres? AD Innovative legislation. Practical regulation. Robust legal system. Tax neutral. Strong Government involvement. Quality and experienced professionals in the area of fiduciary services, legal services, public accounting, investment funds & asset management, trusts, capital markets, banking and insurance. Innovation. Excellence. Balance. www.caymanfinance.ky
Cayman. Moving finance forward. 23 THE CAYMAN “OPPRESSION REMEDY” CONSIDERED IN RE-ACORN INTERNATIONAL, INC. By Fraser Hughes Back in April 2009, I wrote about the changes made to the Cayman Islands’ Companies Law that created a form of “oppression remedy”. Such a remedy is a feature of most common law jurisdictions. It allows company shareholders to apply to court to obtain relief in circumstances where their interests are being unfairly disregarded. That relief often involves orders that regulate the affairs of the company going forward to remedy the conduct or a manner by which minority shareholders’ shares may be purchased – a kind of corporate divorce. In the Cayman Islands, the “oppression remedy” can only be obtained as alternative relief in a petition to wind up a Cayman Islands company on the just and equitable ground. The 2007 amendments to the Companies Law contain those alternative powers, set out in subsection 95(3) of the Companies Law (2013 Revision). They include powers in the nature of injunctive relief and a general power to regulate the conduct of the company’s affairs in the future. An unusual feature of the Cayman Islands “oppression” provisions is that a party seeking relief from the court must first meet the test for winding up the company (i.e. ending it as a going concern) in order to have recourse to the alternative relief (Camulos v. Kathrein [2010] 1 CILR 303). Put another way, a party seeking the “oppression remedy” relief in Cayman does not have a free standing remedy. This creates a strange anomaly. In order to justify relief less invasive than ending the company as a going concern, a party must show that the facts justify ending the company as a going concern. This needs to be done on the basis of over 100 years of precedents that looked only to the question of whether winding up, and only winding up, was justified. My 2009 paper on this issue speculated as to whether using the winding up principles as a type of jurisdictional trigger for granting less invasive relief could lead to either, i) the granting of alternative relief becoming rare in the Cayman Islands; or, ii) the various tests established to (previously) justify winding up the company would relax
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