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Offshore Litigation Blog

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Can a director owe fiduciary duties to shareholders?
In a recent decision, Kelly and Anor v Baker and Anor [2022] EWHC 1879 (Comm), the English High Court has considered the circumstances in which a director may owe fiduciary duties directly to a shareholder. This issue is of direct relevance to the Bermuda, British Virgin Islands and Cayman Islands Courts given the heavy amount of case law on directors’ duties in those jurisdictions.
Remedies for improper share dilution: The Cayman Islands Court of Appeal decision in China Shanshui
China Shanshui is a part of a long running multijurisdictional legal saga for the control of one of the largest cement companies in China. In these proceedings, a significant shareholder brought a claim against the company challenging the validity of the company’s issuance of convertible bonds and subsequent issuance of shares. The company’s articles of association empowered the company’s board of directors to make such an issuance, and the conversion and issuance of shares have been approved by ordinary resolutions of the shareholders of the company. However the claimant shareholder alleged that the issuance was made for the improper purpose of diluting its shareholding to enable other shareholders to gain control of the company.
Cayman Court’s approach to a shareholder’s winding up petition which is in substance a dispute between shareholders
In the recent decision In the Matter of Madera Technology Fund (CI), Ltd, the Cayman Islands Grand Court considered the Court’s power to order the joinder of shareholders to a shareholder’s winding up petition and characterise the proceedings as an inter partes proceeding between shareholders of the company.
Unfair family fights? Legitimate expectation and proper purpose in family businesses
In the recent judgment of Ma v Wong [2002] UKPC 14 the Privy Council unanimously dismisses the appeal against the dismissal of the unfair prejudice claim under s184I of the BVI Business Companies Act 2004, alleging breach of equitable constraints on the majority shareholders in relation to the conversion of preference shares into ordinary voting shares, changing the balance of power in the Third Respondent BVI-company (STIC), and breach of directors’ fiduciary duty in the exercise of power for an improper purpose.
Cayman Court extends protection to those who invest through nominees
In the recent decision of Re Asia Momentum Fund (SPC) Ltd. (In Voluntary Liquidation), the Grand Court of the Cayman Islands considered whether a former beneficial shareholder of a Cayman Islands company had standing to petition for the company’s winding up where its shares had been redeemed but the company had failed to pay out the proceeds of redemption.
It’s a done deed: directors, dishonesty and deeds
On 7 April 2022, the BVI Commercial Court handed down judgment in the ancillary claim of West Ridge Investment Company Limited (West Ridge), the Ancillary Claimant in the high-profile IsZo Capital LP v Nam Tai Property Inc. et al litigation in which, West Ridge sought to be indemnified pursuant to a Deed of Indemnity (Deed) agreed between Nam Tai Property Inc. (Nam Tai) (a company listed on the New York Stock Exchange) and West Ridge. The Court held that the Deed was a proper commercial resolution of the issues between the parties which stood to be enforced and that Nam Tai should be bound to its bargain with West Ridge.
English High Court follows BVI case, Lau v Chu, to confirm the test for just and equitable winding up
In the recent decision in Re Klimvest Plc [2022] EWHC 596 (Ch), HHJ Cawson QC, sitting as a Judge of the English High Court, ordered that the respondent company, Klimvest, be wound up on just and equitable grounds pursuant to section 122(1)(g) of the Insolvency Act 1986. In his judgment, he drew heavily on the Privy Council case of Lau v Chu [2020] UKPC 24, which reinstated the BVI Commercial Court’s first instance decision and endorsed the initial findings of Justice Kaye.
Missed understanding: BVI Court holds directors in breach of their duty to act for a proper purpose
On 17 January 2022, the BVI Commercial Court handed down judgment in Green Elite (In liquidation) v Fang Ankong et al, in which a claim for breach of directors’ duties was brought by the liquidators of Green Elite against the former directors of that company. The Court held that the directors breached the requirement under section 121 of the BVI BCA to carry out their duties for a proper purpose with the result that they were liable in restitution for certain sale proceeds received by them.
Cayman court provides welcome guidance on valuation date for fair value of shares
In a recent development to section 238 litigation in the Cayman Islands, the Grand Court has confirmed that the relevant date for the purposes of valuation of dissenting shareholders’ shares should be the date of the EGM.
BVI Court has the power
In the recent decision of the BVI Commercial Court in Hydro Energy v Zhaoheng, the Court continued the appointment of provisional liquidators and refused to stay the underlying application to wind up a BVI company on just and equitable grounds, notwithstanding that the applicant had already commenced arbitration proceedings in Hong Kong pursuant to which interim relief had already been granted.
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