The Companies Law provides a helpful mechanism whereby the Grand Court may make an order to recognise the right of a foreign representative, which is appointed in respect of a debtor for the purposes of a foreign bankruptcy proceeding, to act in the Cayman Islands on behalf of or in the name of the debtor. Three recent rulings demonstrate how the procedure operates.
The Freedom of Information Law gives members of the public a general right of access to records held by public authorities (other than exempt records). But what is a 'public authority' for these purposes? The answer to this question raises some surprising legal possibilities, which can have practical consequences for a variety of local companies.
Last year the Cayman Islands government announced a proposal to require registration of new and existing master funds in a traditional master-feeder structure. The Legislative Assembly passed the relevant legislation at the end of 2011. Closed-ended funds and master funds that do not have Cayman Islands regulated feeder funds investing in them are not subject to the new registration requirements.
The Cayman Islands Stock Exchange recently revised its Listing Rules. The main amendments have rebranded the rules relating to equity securities in Chapter 6 to facilitate listings by mineral companies, mineral exploration companies, start-ups and companies offering securities to "specialist investors". A new provision in Chapter 5 allows suitably qualified corporate advisers to act as listing agents to equity issuers.
No sooner than Gillies-Smith appeared to rewrite the Cayman courts' approach to free-standing freezing orders, considerable doubt has been thrown on that decision. A recent judgment emphasised the traditional principled objections to the grant of such free-standing freezing orders. The court's refusal to allow service on a non-resident defendant directly contradicts the decision in Gillies-Smith and signals a return to earlier jurisprudence.
A tax information exchange agreement signed by Canada and the Cayman Islands has entered into force. This development represents another example of the Cayman Islands' commitment to international standards of tax transparency. Furthermore, it makes the Cayman Islands a more attractive destination for Canadian corporations, given its favourable tax regime and sophisticated financial services infrastructure.
In November 2009 the Cayman Islands introduced a specialised court division to handle financial disputes – the Financial Services Division. The new division has been a welcome addition to the Grand Court from a litigant's perspective and has brought marked changes in the efficient delivery of justice in complex commercial disputes.
Free-standing freezing orders (or Mareva injunctions) have once again been considered by the Cayman Islands Grand Court. For the first time, a freezing order has been granted despite the absence of substantive proceedings in the jurisdiction. The judgment has grabbed the legal headlines and has been heralded as a ground-breaking development in Cayman Islands law.
The Court Fees Rules 2009 were amended by the Court Fees (Amendment) Rules 2009. As recent court practice illustrates, the amendment to the rules has provided a welcome and attractive addition to the procedure of the court in its supervision of compulsory winding up, enabling the court to weigh the interests of creditors and the interests of justice against the broad public interest taken as a whole.
In the Cayman Islands, the position with regard to free-standing freezing orders is unclear. Recent judicial comment suggests that the Cayman courts may ultimately come to determine that free-standing injunctions are permissible in the Cayman Islands. However, while it appears likely that the Cayman Islands will eventually follow in the footsteps of other offshore jurisdictions, this cannot yet be guaranteed.
Securitisation is an essential part of the post-financial crisis environment and is a vital component for the re-establishment of lending in the global economy. Due to capital constraints, banks will be unable to sustain lending at anything like pre-credit crunch levels unless there is a live and active primary securitisation market.
The increasing demand by investors for improved operational standards, higher levels of communication, greater transparency and more appropriate and independent valuation methods will lead hedge funds out of the current crisis and into a more stable and sustainable investment era. This demand, more than any proposed government regulation, will be the driving force behind improvements in the hedge funds industry.
Where, in the course of international litigation, a party seeks to depose a future witness of fact using powers available to it under the laws of another jurisdiction or under powers of the domestic court, the question arises as to what approach the courts should take to such steps. Four recent Cayman Islands cases have considered these issues from the perspective of Cayman law.
A recent Grand Court decision provides useful guidance regarding 'loss of substratum', one of the bases which justifies a winding-up on just and equitable grounds. The case demonstrates that the Cayman courts are willing to take a commercial view in relation to substratum arguments in appropriate cases in order to assist investors in Cayman companies.
In recent months a great deal of misinformation regarding the Cayman Islands has been circulating. In order to ensure that funds and their advisers are making choices predicated on facts, this update clarifies a few points which may have become blurred in recent times.
Kidnapping is a booming industry. It is estimated that over 8,000 kidnappings occur annually worldwide with no signs of slowing. With so much wealth tied up in private trusts, it seems inevitable that some trustees will be called upon by frantic family members to assist with the release of loved ones. This update examines many of the issues of risk that trustees must consider.
Until recently a Cayman fund company could combine with another fund company only by way of 'arrangement' or via a somewhat cumbersome asset transfer process. However, the Companies Law (2009 Revision) allows a 'merger' whereby one company remains as the surviving company, having in effect absorbed the other merging or terminating company, which is then struck off and ceases to exist.
The Cayman Islands has signed a Tax Information Exchange Agreement with New Zealand, bringing to 12 the number of such agreements that it has concluded. Consequently, the Cayman Islands has been upgraded to the White List compiled by the Organization for Economic Cooperation and Development and is now in position to take advantage of its newly elevated status as a fully compliant offshore financial centre.
More than 500 strata operate in the Cayman Islands, the administration of which is often fraught with conflict and confusion. In the event of an error that results in loss to the strata or a unit owner, both the strata and its committee members may personally be exposed to liability. However, a combination of foresight, legal advice, well-drafted bylaws and insurance can greatly reduce the risk of liability and litigation.
The Exempted Limited Partnership Law (2007 Revision) has been amended by the Exempted Limited Partnership (Amendment) Law 2009. Many of the changes clarify the existing law and place greater reliance on the expressed provisions set forth in the partnership agreement. The amendments took effect on May 11 2009.