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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

Food for thought: Right of unregistered shareholders to petition to the Cayman Court

The “just and equitable” winding up petition is the remedy of choice for aggrieved shareholders in Cayman Islands companies. 

Not only is a petition the gateway to winding up the company, but once the court is satisfied that it is just and equitable that the company be wound up, it may grant alternative relief such as orders regulating the conduct of the company’s affairs (which may include reconstituting the Board of directors), or an order that a shareholder be bought out. However, the Companies Law expressly limits the right to petition to a shareholder who is either the original allottee of shares, or has been the registered shareholder for at least six months prior to presentation of the petition.  This provision reinforces and extends the common law principle that a company need not recognise trusts of its shares, which has also been recognised by the Cayman Islands Courts in Svanstrom v Jonasson [1997] CILR 192 and Schultz v Reynolds [1992-3] CILR 59, both of which held that the beneficial owner of shares was not able to pursue a derivative action in the name of the company.

The expressed legislative intent behind this provision was to prevent vulture funds from buying shares purely for the purpose of petitioning.  However, the effect is to exclude the large number of investors who hold their shares through custodians or clearing houses from the remedy of just and equitable winding up. This is significant.  The vast majority of such investors are unaware that this is the effect of using a custodian, and by the time they find out it may well be too late.  Many custodians are unwilling to petition.  Moreover, even if a custodian is willing to transfer the shares to the beneficial owner to allow it to petition in its own name, in most cases relief is required urgently and the requirement to wait six months before petitioning will be fatal. The law is ripe for review, as the effect of the current provisions, combined with the widespread use of nominees, is that many investors are left without an effective remedy for wrongdoing by the company. 

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