1. Deal structure

1.1 How are private and public M&A transactions typically structured in your jurisdiction?

Public M&A transactions in the Cayman Islands are typically structured as either:

  • a statutory merger/consolidation;
  • a tender offer (accompanied by a squeeze-out); or
  • a scheme of arrangement.

Each of these is discussed in more detail in question 1.2.

Private M&A transactions in the Cayman Islands are often accomplished by statutory merger/consolidation or asset acquisition. A tender offer (and squeeze-out) or scheme of arrangement remains an available option for private M&A transactions in the Cayman Islands.

1.2 What are the key differences and potential advantages and disadvantages of the various structures?

Statutory merger/amalgamation: A merger or consolidation is permitted under the Cayman Islands Companies Act (as revised), and is the process whereby one or more constituent companies are subsumed into another constituent company (or a new company in the case of a consolidation), the latter of which becomes the surviving entity. The advantages of this structure include the following:

  • The shareholder approval threshold for a statutory merger/consolidation (subject to any additional requirements in a merging company’s articles of association) requires only a special resolution passed in accordance with the company’s articles of association (typically, a two-thirds majority of those shareholders attending and voting at the relevant meeting);
  • Court approval is not required (unlike for a scheme of arrangement); and
  • Once the relevant approvals and thresholds have been satisfied, the merger or consolidation is binding on all shareholders. Minority dissenters will have the right to dissent and be paid the fair value of their shares, and may compel the company to institute court proceedings to determine fair value if the parties are unable to agree themselves; but importantly, they will be unable to block the merger or consolidation. These merger dissent rights are discussed further in question 8.1.

Tender offer (accompanied by a squeeze-out): A tender offer can be used in negotiated or unsolicited transactions. There is no prescribed form that a tender offer must take under Cayman law, except where the target is listed on the Cayman Islands Stock Exchange. One advantage of a tender offer is that the Companies Act provides for a squeeze-out of shareholders holding 10% or less of the shares following a takeover offer, allowing the purchaser to acquire the entire share capital of the target. In order for a purchaser to invoke the squeeze-out provisions:

  • there must be a scheme or contract for the transfer of shares or any class of shares in a Cayman company to another company (the bidder);
  • the offer must be approved by not less than 90% in value of the shares subject to the offer (and so excludes shares held or contracted to be acquired prior to the date of the offer) within four months of the offer being made; and
  • notice must be given to dissenting shareholders that the bidder wishes to acquire their shares.

The court has the power to exercise its discretion to order against a proposed squeeze-out and acquisition of the dissenters’ shares upon application by dissenting shareholders. A disadvantage of the tender offer approach is that the bidder must acquire acceptances from 90% or more of the shares which are subject to the tender offer before it can exercise the squeeze-out mechanism, which is typically a higher shareholder approval threshold than for a statutory merger/consolidation. Dissenters have limited rights to object to the acquisition and, in the case of a tender offer which is not on an all cash-basis, have no right to compel a cash alternative.

Schemes of arrangement:

A scheme of arrangement is a court-supervised procedure that can be used to effect a takeover of a public or private company. This involves an application being made to the Cayman court by a shareholder of the target or the target itself proposing an arrangement. A majority in number representing 75% in value of the shareholders or class of shareholders, as the case may be, present and voting at the meeting must agree to the scheme. The advantages of a scheme of arrangement are as follows:

  • Once sanctioned by the court, the scheme will be binding on all shareholders or class of shareholders and the target;
  • It provides flexibility in terms of structure; and
  • Dissenting shareholders do not have the right to claim payment of fair value for their shares (unlike in a statutory merger/consolidation).

A main disadvantage is that a scheme of arrangement, being a court-driven process, can sometimes take longer to close than other routes such as a merger/consolidation. A scheme of arrangement requires the support of the target’s board of directors and is therefore unavailable in a hostile takeover situation.

1.3 What factors commonly influence the choice of sale process/transaction structure?

Key factors which commonly influence the choice of acquisition structure include:

  • speed;
  • consent thresholds and the target’s share capital structure – for example, the shareholder approval threshold for a statutory merger/consolidation is typically a two-thirds majority of those shareholders attending and voting at the relevant meeting (unless the articles of association specify a higher threshold), which is lower than is required for a scheme of arrangement (75% majority) or to invoke a squeeze-out (90% approval); and
  • whether the target is listed.

2. Initial steps

2.1 What documents are typically entered into during the initial preparatory stage of an M&A transaction?

The preliminary documents entered into during the initial preparatory stage of an M&A transaction include:

  • non-disclosure agreements;
  • adviser appointment agreements; and
  • lock-up letters.

2.2 Are break fees permitted in your jurisdiction (by a buyer and/or the target)? If so, under what conditions will they generally be payable? What restrictions and other considerations should be addressed in formulating break fees?

There is no express restriction on break fees in the Cayman Islands Stock Exchange’s Code on Takeovers and Mergers and Rules Governing Substantial Acquisitions of Shares. Break fees are a common feature of cross-border private M&A transactions. The directors of the Cayman company will need to be satisfied that:

  • entering into the break fee arrangement is in the best interests of the company; and
  • they are discharging their fiduciary duties to the company.

The Cayman company’s memorandum and articles of association should also be checked to ensure that they do not contain any objects or other provisions which restrict or prohibit break fees. The terms of any break fees will be deal specific and will depend on the relative strength of the parties’ negotiating positions; they are typically negotiated by onshore deal counsel.

2.3 What are the most commonly used methods of financing transactions in your jurisdiction (debt/equity)?

We see a mixture of cash reserves, debt and equity used to finance transactions in the Cayman Islands.

2.4 Which advisers and stakeholders should be involved in the initial preparatory stage of a transaction?

The common advisers and stakeholders involved at the initial preparatory stage of transactions include financial advisers, PR advisers, accountants and lawyers. We also see in going-private transactions that target board members sometimes engage their own independent advisers at an early stage.

2.5 Can the target in a private M&A transaction pay adviser costs or is this limited by rules against financial assistance or similar?

There are no financial assistance rules in the Cayman Islands and it is possible for the target in a private M&A transaction to pay adviser costs.

3. Due diligence

3.1 Are there any jurisdiction-specific points relating to the following aspects of the target that a buyer should consider when conducting due diligence on the target?           (a) Commercial/corporate, (b) Financial, (c) Litigation, (d) Tax, (e) Employment, (f) Intellectual property and IT, (g) Data protection, (h) Cybersecurity and (i) Real estate.

(a) Commercial/corporate

Buyers should conduct the usual diligence of the target’s:

  • constitutional documents – including its memorandum and articles of association and statutory registers, and any shareholders’ agreements; and
  • commercial contracts entered into by the target to check for any change of control provisions indemnities and termination rights, among other things.

Buyers should be aware that:

  • the register of members of Cayman Islands companies is prima facie evidence of the matters set out therein (ie, the register of members will raise a presumption of fact on the matters set out therein, unless rebutted); and
  • a shareholder registered in the register of members will be deemed as a matter of Cayman Islands law to have legal title to the shares as set against its name in the register of members.

The register of members and other constitutional documents are not publicly available for Cayman Islands companies and must be provided by the target as part of the due diligence process, which will be highly unlikely on a hostile bid.

(b) Financial

There are no Cayman-specific points relating to financial due diligence and buyers should conduct the usual checks in this regard.

(c) Litigation

Searches of the Cayman Islands courts are routinely carried out as part of the due diligence exercise to determine whether the Cayman target has been involved in any local litigation (past or ongoing cases).

(d) Tax

The Cayman Islands currently has no income, corporate or capital gains tax, and no estate duty, inheritance tax or gift tax. Other than stamp duty, no registration, documentary or any similar taxes or duties of any kind are payable in the Cayman Islands in connection with the signature, performance or enforcement by legal proceedings of any Cayman Islands law-governed documents.

A Cayman Islands exempted company may apply to the Financial Secretary at the Ministry of Finance and Economic Development of the Cayman Islands for a written undertaking that should a law ever be enacted in the Cayman Islands imposing any tax to be levied on profits, income, gains or appreciations, that law shall not apply to the exempted company or its operations. This undertaking may be granted for up to 30 years from the date of the undertaking. The target should be asked whether such undertaking has been obtained as part of the due diligence process.

(e) Employment

The Labour Act (2011 Revision) is the key law governing the terms and conditions of employment in the Cayman Islands and employment contracts must comply with minimum levels of protections provided under this law.

(f) Intellectual property and IT

The Trade Marks Act 2016 establishes a Cayman Islands Register of Trade Marks and the Patents Act (2018 Revision) provides for a Cayman Islands Registry of Patents.

(g) Data protection

The Cayman Islands Data Protection Act 2017 (CIDPA) is the primary legislation in the area of data protection in the Cayman Islands. CIDPA is based substantially on the UK Data Protection Act, 1998 and is intended to meet the ‘adequate protection’ requirements relating to the international transfer of personal data. CIDPA does not replicate the EU General Data Protection Regulation (2016/679), but there is considerable overlap.

(h) Cybersecurity

The Cayman Islands Monetary Authority (CIMA) recently updated its Rule and Statement of Guidance relating to Cybersecurity for Regulated Entities, which came into effect on 27 November 2020. The rule applies to entities that are regulated by CIMA, including banks and insurance companies, and requires such entities to establish and maintain a cybersecurity framework. The Statement of Guidance supplements the rule by providing detailed guidance on implementing rule requirements, including in relation to:

  • risk identification and assessment;
  • risk monitoring and reporting;
  • incident response, containment and recovery;
  • use of the Internet;
  • employee training and awareness;
  • outsourcing arrangements; and
  • data protection.

(i) Real estate

Title to real estate is evidenced by registration at the Cayman Islands Land Registry, which is open to public inspection and is the primary source of information on any real estate due diligence in the Cayman Islands.

3.2 What public searches are commonly conducted as part of due diligence in your jurisdiction?

Limited information about Cayman Islands entities – such as entity number, formation date, registered office and status – is available through a search portal which can be accessed through the Cayman Islands General Registry website by account holders (usually Cayman Islands law firms or local registered office service providers). The names of the directors of Cayman Islands entities can also be accessed for an additional fee. However, no other information is publicly available on the particulars of such directors, and it is not possible to run a search of a person’s name to determine all the directorships they hold in the Cayman Islands.

Local court searches and a search of the Land Registry can also be carried out, as mentioned in question 3.1.

The Cayman Islands Intellectual Property Office maintains a register of trademarks and patents. This is not a publicly searchable register and access is available only to licensed agents appointed by the proprietor of the rights.

3.3 Is pre-sale vendor legal due diligence common in your jurisdiction? If so, do the relevant forms typically give reliance and with what liability cap?

We sometimes see pre-sale vendor due diligence on Cayman Islands M&A transactions. Reliance and liability caps are determined on a case-by-case basis.

4. Regulatory framework

4.1 What kinds of (sector-specific and non-sector specific) regulatory approvals must be obtained before a transaction can close in your jurisdiction?

Examples include approval of:

  • the Cayman Islands Monetary Authority (CIMA), which must be obtained before closing on banking/insurance transactions involving entities that are regulated by CIMA; and
  • the Utility Regulation and Competition Office (OfReg), which must be obtained before closing on transactions involving OfReg regulated entities in the information, communications, technology, energy, fuel and water sectors.

4.2 Which bodies are responsible for supervising M&A activity in your jurisdiction? What powers do they have?

The Cayman Islands Stock Exchange (CSX) regulates public M&A transactions involving entities that are listed on the CSX. The CSX’s powers are broad and include the ability to suspend or cancel a listing and impose sanctions (in addition to or instead of a suspension in trading or cancellation of a listing) if any of the listing rules is breached.

4.3 What transfer taxes apply and who typically bears them?

No registration, documentary or any similar taxes or duties of any kind are payable in the Cayman Islands. The decision as to who bears stamp duty when payable is typically determined on a deal-by-deal basis.

No stamp duty is payable on the issue or transfer of shares of a Cayman Islands exempted company (other than those of a company that holds an interest in real estate in the Cayman Islands).

5. Treatment of seller liability

5.1 What are customary representations and warranties? What are the consequences of breaching them?

Customary representations and warranties include confirmation that:

  • the parties have corporate authority to enter into the transaction;
  • all required consents, approvals, licences and so on have been obtained;
  • entry into the transaction does not violate any laws or regulations; and
  • the seller is the owner of the target property.

Damages is the usual remedy for a breach of warranty. They are calculated on a contractual basis, with the aim of putting the claimant in the position it would have been in if the warranty had been true. A claim for misrepresentation may also be brought in the event of a breach of a representation; the remedies for such claim include rescission of the contract and damages. It is common for the purchase agreement to impose caps and/or hurdles on a seller’s liability for warranty claims.

5.2 Limitations to liabilities under transaction documents (including for representations, warranties and specific indemnities) which typically apply to M&A transactions in your jurisdiction?

It is common for the purchase agreement to impose caps and/or hurdles on a seller’s liability for breach of warranty and indemnity claims.

5.3 What are the trends observed in respect of buyers seeking to obtain warranty and indemnity insurance in your jurisdiction?

We are increasingly seeing buyers seeking to obtain warranty and indemnity insurance in the Cayman Islands on M&A transactions (following the onshore trend in this area).

5.4 What is the usual approach taken in your jurisdiction to ensure that a seller has sufficient substance to meet any claims by a buyer?

Financial guarantees, holdbacks and escrow arrangements are common mechanisms to support a seller’s obligation to meet warranty and indemnity claims made by a buyer.

5.5 Do sellers in your jurisdiction often give restrictive covenants in sale and purchase agreements? What timeframes are generally thought to be enforceable?

Restrictive covenants in sale and purchase agreements are common in the Cayman Islands. These typically cover matters such as restrictions on the seller competing with the target business or soliciting employees, customers or suppliers of the target business, with each such restriction limited for a certain period of time and agreed on a deal-by-deal basis.

The enforceability of such restrictive covenants in the Cayman Islands depends on a number of factors, including:

  • whether a legitimate business interest is being protected;
  • the time period attaching to the particular restrictive covenant; and
  • its geographical scope.

These factors will be considered on a case-by-case basis. Restrictive covenant timeframes which are limited to those reasonably necessary to protect a legitimate business interest are generally considered to be enforceable in the Cayman Islands.

5.6 Where there is a gap between signing and closing, is it common to have conditions to closing, such as no material adverse change (MAC) and bring-down of warranties?

Conditions to closing are common on transactions where there is a gap between signing and closing. However, we are increasingly seeing these conditions limited to fundamental matters such as regulatory and shareholder approval. In line with the increasing onshore trend, we often see MAC clauses being heavily negotiated.

6. Deal process in a public M&A transaction

6.1 What is the typical timetable for an offer? What are the key milestones in this timetable?

The Cayman Islands Stock Exchange’s (CSX) Code on Takeovers and Mergers and Rules Governing Substantial Acquisitions of Shares (Code) will apply where the target is listed on the CSX. As at the time of writing, only five equity companies are listed on the CSX. The typical timetable for an offer and key milestones for a transaction where the Code applies is as follows:

  • First closing date: An offer must initially be open for at least 28 days following the date on which the offer document is posted.
  • Further closing dates: In any announcement of an extension of an offer, either the next closing date must be stated or, if the offer is unconditional as to acceptances, a statement may be made that the offer will remain open until further notice. In the latter case, at least 21 days’ notice in writing must be given to those holders of relevant shares which have not accepted before the offer is closed.
  • Offer to remain open for at least 21 days after unconditional as to acceptances: Once an offer has become or is declared unconditional as to acceptances, the offer must remain open for not less than 21 days after the date on which it would otherwise have expired.
  • Final day rule: An offer (whether revised or not) may not become or be declared unconditional as to acceptances after midnight on the 60th day after the day on which the initial offer document was posted (save with the consent of the CSX Council Executive).
  • Time for fulfilment of all other conditions: All other conditions must be fulfilled or the offer will lapse within 28 days of the first closing date or the date on which the offer becomes unconditional as to acceptances, whichever is the later (save with the consent of the CSX Council Executive).
  • Settlement of consideration: The consideration must be posted within seven days of the date of the offer becoming or being declared unconditional and acceptance thereof, whichever is the later (save with the consent of the CSX Council Executive).

6.2 Can a buyer build up a stake in the target before and/or during the transaction process? What disclosure obligations apply in this regard?

Acquisitions of target shares before the offer period: In accordance with the CSX Code on Takeovers and Mergers and Rules Governing Substantial Acquisitions of Shares (Code), when a bidder or any person acting in concert with it acquired relevant shares in the target within the three months prior to the commencement of the offer period or, otherwise than with the consent of the Council Executive, prior to that three-month period, the offer to the holders of relevant shares of the same class must be on terms similar to the most favourable of such acquisitions, if the Council Executive takes the view that there are circumstances which render this necessary.

Acquisitions of target shares during the offer period: In accordance with the Code, if after the commencement of the offer period and before the offer closes for acceptance, a bidder or any person acting in concert with it purchases relevant shares in the target at above the offer price (being the then-current offer price), it must increase its offer to not less than the highest price paid for the shares so acquired. Immediately after the acquisition, an announcement is required that a revised offer will be made. The announcement must also state the number of shares acquired and the price paid.

6.3 Are there provisions for the squeeze-out of any remaining minority shareholders (and the ability for minority shareholders to ‘sell out’)? What kind of minority shareholders rights are typical in your jurisdiction?

In a tender offer, contractual acquisition or public takeover, where the removal of a minority is required, the statutory squeeze-out remains available where the relevant statutory thresholds are met. Please see question 1.2.

6.4 How does a bidder demonstrate that it has committed financing for the transaction

In accordance with the CSX Code on Takeovers and Mergers and Rules Governing Substantial Acquisitions of Shares, the announcement of a firm intention to make an offer containing a wholly or partial cash consideration must include confirmation by the financial adviser or by another appropriate third party that resources are available to the offeror sufficient to satisfy full acceptance of the offer. Except with the consent of the CSX Council Executive, the confirming party will be expected to produce the cash itself if, in giving the confirmation, it acted irresponsibly or failed to take all reasonable steps to assure itself that the cash was available.

6.5 What threshold/level of acceptances is required to delist a company?

Under the CSX’s listing rules, to delist a company’s securities from the CSX, the issuer must obtain the approval of the holders of the affected class, and the holders of any securities convertible into the affected class, of its listed securities by way of a three-quarters majority vote at duly convened meetings of such holders.

6.6 Is ‘bumpitrage’ a common feature in public takeovers in your jurisdiction?

We sometimes see instances of bumpitrage, where activist investors of target entities purchase shares after the announcement of a bid with a view to forcing the bidder to improve the terms of its offer for the target.

6.7 Is there any minimum level of consideration that a buyer must pay on a takeover bid (eg, by reference to shares acquired in the market or to a volume-weighted average over a period of time)?

Subject to the price implications pursuant to the CSX Code on Takeovers and Mergers and Rules Governing Substantial Acquisitions of Shares of shares being acquired before or during the offer period (as described in question 6.2), there is no minimum level of consideration that a buyer must pay on a takeover bid.

6.8 In public takeovers, to what extent are bidders permitted to invoke MAC conditions (whether target or market-related)?

We are not aware of MAC conditions being tested in the Cayman Islands, but it is likely that the approach adopted by the UK Takeover Panel would be followed in the Cayman Islands. The Takeover Panel’s recent refusal to allow Brigadier Acquisition Company Limited to rely on a MAC condition when the impact of the COVID-19 pandemic became apparent after Brigadier’s announcement of a firm intention to make an offer for Moss Bros Group PLC confirms that MAC conditions continue to be very difficult for bidders to invoke in the United Kingdom, with such approach likely to be followed in the Cayman Islands.

6.9 Are shareholder irrevocable undertakings (to accept the takeover offer) customary in your jurisdiction?

Yes, shareholder irrevocable undertakings on public M&A transactions in the Cayman Islands are common.

7. Hostile bids

7.1 Are hostile bids permitted in your jurisdiction in public M&A transactions? If so, how are they typically implemented?

Hostile bids are permitted in the Cayman Islands and are typically implemented by way of a merger. Neither a merger nor a scheme of arrangement can ever be truly hostile, insofar as it requires the consent of the target board. In situations where the target board is uncooperative or unwilling to engage, the acquirer may launch a proxy fight (on the terms and subject to the conditions set out in the constitutional documents of the target) to have the board or certain members thereof replaced. The proxy fight may be launched in connection with a tender offer or contractual acquisition of equity. The squeeze-out procedure as described in question 1.2 is also available in the context of a hostile transaction (assuming that the relevant thresholds are met).

In order to comply with their fiduciary duties, the directors of a target will need to give due consideration to any bona fide offer, even if it is unsolicited, to determine whether acceptance of such an offer is in the best interests of the company. Depending on the scope of the fiduciary duties imposed on the manager(s)/managing member(s) of a limited liability company (LLC), they may also be obliged to consider any bona fide offer.

The constitutional documents of a target may contain certain poison pill or other structural defence provisions (eg, staggered boards, fixed number of board members, limited rights to call meetings), which may make a hostile takeover more difficult to consummate or give the target superior bargaining power.

7.2 Must hostile bids be publicised?

This is determined by the rules of the relevant exchange on which the relevant bidder and target is listed.

7.3 What defences are available to a target board against a hostile bid?

Other than for companies listed on the Cayman Islands Stock Exchange (CSX), there are no stake-building rules applicable under Cayman Islands law. However, transfers of equity securities in an unlisted company are typically subject to the consent of the board.

To the extent that the target’s constitutional documents do not include anti-takeover provisions, the directors of the target will be limited in their ability to resist a change of control by their fiduciary duties to the company – the directors will be obliged to consider the terms of the acquisition in good faith and act bona fide in the best interests of the company as a whole in relation to any acquisition proposal. Depending on the scope of the fiduciary duties imposed on the manager(s)/managing member(s) of an LLC, they may also be obligated to consider any bona fide offer.

If the target is listed on the CSX, the Code on Takeovers and Mergers and Rules Governing Substantial Acquisitions of Shares provides that at no time after a bona fide offer has been communicated to the target board, or after the target board has reason to believe that such an offer might be imminent, may any action be taken by the target board without the approval of the shareholders in general meeting which could effectively result in any bona fide offer being frustrated or in the shareholders being denied an opportunity to decide on its merits.

8. Trends and predictions

8.1 How would you describe the current M&A landscape and prevailing trends in your jurisdiction? What significant deals took place in the last 12 months?
The current landscape seems to be one of anticipation. There has been deal flow in Bermuda, with some high-value transactions, just not high volume. The insurance sector has generated many of these deals, but has been by no means alone.

M&A activity slowed as a result of the effects of COVID-19 during mid to late 2020. Considering the factors of investors with pent-up demand for investment opportunities, prevailing low interest rates, significant dry powder held by private equity funds and deal-making opportunities arising in the post-COVID-19 environment, we expect to see a rebound in M&A activity in 2021 and into 2022.

Jurisprudence in respect of shareholder valuation/merger dissents under Section 238 of the Companies Act continues to evolve, with some important judgments handed down in 2020. Section 238 provides that any shareholder of a Cayman company dissenting from a merger or consolidation is entitled to payment of the fair value of its shares in exchange for those shares, provided that the dissenting shareholder gives the company written notice of its objection, before the company’s shareholders vote on the merger or consolidation.

The recent Trina Solar decision was the first to consider the ruling of the Privy Council in the Maso Capital v Shanda Games appeals, with the Privy Council unanimously holding that a minority discount is to be applied to the fair value determination of the dissenters’ shares. In Trina Solar, the Grand Court of the Cayman Islands held that it is not bound to determine value based only on a hypothetical arm’s-length sale, but that it must assess all relevant facts and matters and can adopt any methods of valuation that are relevant. In this case, a blended approach to the valuation methodologies was considered appropriate. Previously, in Nord Anglia Education, Inc, the Grand Court took a blended approach to the valuation of the dissenting shareholders’ shares, showing what weight (if any) is to be attributed to the market price, the transaction price and the discounted cash value of the dissenters’ shares.

We have seen a surge in the number of special purpose acquisition companies (SPACs) over the last 12 months. SPACs are companies that are formed to raise capital through an initial public offering to fund a strategic acquisition in the future, usually within 18 to 24 months. Cayman Islands exempted companies are one of the most popular vehicle choices for SPACs, owing to their flexibility and their familiarity to international investors and stock exchanges. We expect increased levels of M&A activity over the next 18 to 24 involving Cayman SPACs as they seek to consummate business combination transactions with both Cayman and overseas targets.

8.2 Are any new developments anticipated in the next 12 months, including any proposed legislative reforms? In particular, are you anticipating greater levels of foreign direct investment scrutiny?

Cayman’s Ministry for Financial Services circulated a consultation paper in February 2021 (with a 12 March 2021 deadline for comments) in connection with the proposed implementation of mandatory disclosure rules (MDRs) for Common Reporting Standard (CRS) avoidance arrangements and opaque offshore structures in the Cayman Islands. The stated purpose of the MDRs is to provide information on arrangements that (purport to) circumvent the CRS and on structures that disguise the beneficial owners of assets held offshore. This initiative follows the publication by the Organisation for Economic Co-operation and Development in 2018 of MDR Model Rules designed to require persons involved in the promotion, design, marketing, implementation or management of a relevant arrangement or structure to be legally obliged to report the existence of that arrangement or structure. This information can then be exchanged with relevant jurisdictions where international information exchange agreements are in place. The Cayman Islands has committed to the chair of the EU Code of Conduct Group (Business Taxation) to consult on the implementation of similar rules, with the necessary legislation expected to follow.

No other relevant legislative reforms in the Cayman Islands are anticipated for the next 12 months.

9. Tips and traps

9.1 What are your top tips for smooth closing of M&A transactions and what potential sticking points would you highlight?

A number of factors will help to ensure smooth closing of M&A transactions, including the following:

  • Closing timetable: A realistic closing timetable should be determined in advance after consultation with the parties, their respective advisers and any applicable regulatory authorities.
  • Closing checklist: A comprehensive closing checklist should be maintained and managed by either the buyer’s or seller’s legal advisers.
  • Catch-up calls: Regular deal team catch-up calls are helpful to ensure that all workstreams are progressing in accordance with the transaction timeline.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Type

Insight

Locations

Cayman Islands

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