Welcome changes

Author: | Published: 11 Jul 2011

Recent amendments to the Cayman Islands Companies Law have fine tuned the mechanics for implementing mergers involving Cayman Islands companies. These improved provisions have been welcomed especially by lawyers advising on takeovers of Cayman Islands companies listed on various exchanges around the world, where, previously, the more involved scheme of arrangement procedure was the procedure of choice for implementing these types of acquisitions.

Recent examples of listed Cayman Islands companies that have announced they are proposing to go private by statutory merger include Chemspec International, Funtalk China Holdings and CNinsure (all Nasdaq-listed).

What is a merger? A merger is a procedure whereby one or more constituent companies are subsumed into another constituent company, the latter of which becomes the surviving entity upon the merger taking effect. The legal effect of a merger is that the surviving entity assumes all the rights, obligations and liabilities of every non-surviving constituent company, whilst at...