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Jonathan Addo
Jonathan Addo
  • Jonathan Addo

  • Partner
  • British Virgin Islands
Jeremy Child
Jeremy Child
  • Jeremy Child

  • Partner
  • London
Julie Engwirda
Julie Engwirda
  • Julie Engwirda

  • Partner
  • Hong Kong
Peter Ferrer
Peter Ferrer
  • Peter Ferrer

  • Partner
  • British Virgin Islands
Claire Goldstein
Claire Goldstein
  • Claire Goldstein

  • Partner
  • British Virgin Islands
Hazel-Ann Hannaway
Hazel-Ann Hannaway
  • Hazel-Ann Hannaway

  • Partner
  • British Virgin Islands
Nick Hoffman
Nick Hoffman
  • Nick Hoffman

  • Partner
  • Cayman Islands
Andrew Johnstone
Andrew Johnstone
  • Andrew Johnstone

  • Partner
  • Hong Kong
Paula Kay
Paula Kay
  • Paula Kay

  • Partner
  • Hong Kong
Phillip Kite
Phillip Kite
  • Phillip Kite

  • Partner
  • British Virgin Islands
Vicky Lord
Vicky Lord
  • Vicky Lord

  • Partner
  • Shanghai
Paul Madden
Paul Madden
  • Paul Madden

  • Partner
  • Cayman Islands
Henry Mander
Henry Mander
  • Henry Mander

  • Partner
  • Cayman Islands
Ian Mann
Ian Mann
  • Ian Mann

  • Partner
  • Hong Kong
William Peake
William Peake
  • William Peake

  • Partner
  • London
Lorinda Peasland
Lorinda Peasland
  • Lorinda Peasland

  • Consultant
  • Hong Kong
Chai Ridgers
Chai Ridgers
  • Chai Ridgers

  • Partner
  • Hong Kong
Nicola Roberts
Nicola Roberts
  • Nicola Roberts

  • Partner
  • Hong Kong
  • Singapore
Paul Smith
Paul Smith
  • Paul Smith

  • Partner
  • Cayman Islands
Andrew Thorp
Andrew Thorp
  • Andrew Thorp

  • Partner
  • British Virgin Islands
Jessica Williams
Jessica Williams
  • Jessica Williams

  • Partner
  • Cayman Islands
Jayson Wood
Jayson Wood
  • Jayson Wood

  • Partner
  • Cayman Islands

Cayman Islands Share Valuation Disputes & Professional Dissenting Shareholders

2016 in review: The rise of Cayman Islands share valuation disputes and professional dissenting shareholders.

Shareholders in Cayman Islands companies are increasingly asking the Cayman Islands Court to determine the fair value of their shares, a trend which is likely to continue into 2017. A substantial driver of this has been a perceived opportunity by value arbitrage investors looking to take advantage of the trend for US-listed, Cayman Islands incorporated, China companies going private. A take private transaction involves a valuation by a Cayman Islands company of the fair value of its shares. Shareholder-investors objecting to the company-determined value are keeping the Cayman Islands Court increasing busy.

Nine shareholder valuation proceedings commenced in the Cayman Islands to date  in 2016—compared to two in the two-year period of 2014-2015. Of the nine companies whose shares are subject to a fair value determination, eight conduct their operations through subsidiaries in the People’s Republic of China (the other conducts a large onshore drilling operation in Russia). Harneys has acted in the vast majority of the cases filed to date, amassing world class expertise and, consistent with its dominating Asia-Pacific footprint, acting for the China corporates. Previous decision Section 238 does not prescribe a valuation methodology for the Court to apply. In Integra Unreported, FSD 92 of 2014, Jones J , the Court combined an income approach (using a discounted cash flow methodology) with a market approach, with a 75 per cent and 25 per cent weighting respectively. The Court also confirmed that there should be no minority discount.

Looking to 2017 We predict that 2017 will be the high point for share valuation litigation in the Cayman Islands. Participation in share valuation litigation is a very unattractive prospect for a company. These proceedings are highly resource intensive on the company side: the company typically fields numerous information requests from its own and the dissenting shareholders’ independent expert; maintains an electronic data room; and the company’s management is usually required to participate in at least one conference with the experts – the dissenting shareholder does not bear the same burdens. Some dissenting shareholders may abuse the process. 

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