In the recent Cayman Islands case of In the Matter of Qunar Cayman Islands Limited, the Honourable Justice Raj Parker was asked to rule on threshold case management issues peculiar to dissenter shareholder litigation which challenges the value placed on dissenters’ shares following a take-private.
It was held that:
1. Only one expert was to be instructed by all dissenters since this would be of the most assistance to the Court. Three of the four dissenter groups agreed to jointly instruct one expert to represent all of the dissenters. However, one of the dissenter groups argued it should be entitled to appoint its own expert and to represent its interests alone. Citing the independence of experts under Cayman Islands law, the Court found there was no good reason to allow the disagreeing dissenter group to instruct their own expert. The Court was not convinced any prejudice would be suffered by the dissenters in directing they can appoint one joint expert, especially given that their interests in the action are aligned.
2. Only in exceptional cases should the Cayman Islands Court order dissenting shareholders to provide discovery. The Court was not convinced it should follow decisions of the Delaware Court (section 238 having largely being derived from Delaware law) whereby dissenters were ordered to disclose certain materials. In making its decision, the Court was not persuaded that dissenter disclosure is relevant to the question of fair value. However, the Court did find that the possibility of discovery from dissenters should not be ruled out in appropriate cases.
3. The Court should not limit the Company’s obligation to discover all relevant information on the determination of fair value. What amounts to relevant seems to be determined by the experts. In circumstances where the Company has concerns over the scope of the disclosure requested by the experts, and indeed its relevance, further direction from the Court may be sought.
Despite the increase in dissenting shareholder actions in the jurisdiction, the judgment in Qunar is only the second written judgment on directions in such actions.