Court of Appeal confirms limitations on investors’ statutory right to “true and full information” in Abraaj Group Fraud

INTRODUCTION

The Abraaj Group at its peak was a world leading private equity firm based in Dubai, which operated a number of funds in the Cayman Islands, and held an estimated US$14 billion in assets under management. In 2018, the Group collapsed, amid allegations of serious financial mismanagement and fraud, resulting in the appointment by the Grand Court of provisional liquidators in June 2018, the imposition of a fine of c.US$300 million on the fund manager by the Dubai Financial Services Authority in July 2019, and the compulsory winding up in Cayman of certain key Abraaj entities in September 2019.

The proceedings in question arose from this collapse. In 2019, a successor investment manager, Neoma Manager (Mauritius) Ltd (Manager), took over the ELP then called Abraaj Private Equity Fund IV L.P. – since renamed Neoma Private Equity Fund IV L.P. (Fund) – together with a reconstituted general partner, the Abraaj General Partner VIII Ltd (GP).

The respondent, Abraaj ABOF IV SPV Ltd (LP), which had committed US$45 million to the Fund, disagreed with the accuracy of its opening capital account balance (CAB). The Manager determined the LP’s balance to be negative US$11.9 million whilst the LP alleged that its true CAB was US$42 million. Unable to reach agreement, the Manager initiated proceedings by writ (equivalent to a Part 7 Claim Form) in the Cayman Islands seeking a declaration as to the correct CAB. The LP counterclaimed and sought disclosure of 19 categories of documents under section 22 of the ELPA.

On 10 March 2023, the Grand Court granted summary judgment in favour of the applicant LPs, holding that they were entitled to “true and full information” and ordering broad document disclosure. The GP and Manager appealed. On 8 April 2025, the CICA unanimously allowed the appeal, discharged the lower court’s disclosure order, and awarded costs of the appeal and the writ proceedings to the Manager/GP.

DECISION

The CICA considered two key issues on appeal: first, the scope of section 22 of the ELPA; and second, whether it was appropriate for the Grand Court to order summary judgment under section 22 where the appellants had alleged that the requested information (i) had already been provided, (ii) did not exist, and/or (iii) was so broad as to raise issues of proportionality.[1]

Scope of Section 22

Section 22 of the ELPA provides that, subject to the terms of the partnership agreement, “each limited partner may demand and shall receive from a general partner true and full information regarding the state of the business and financial condition of the exempted limited partnership”.

At first instance, the Grand Court followed previous Cayman decisions which interpreted section 22 broadly. In quoting his own previous decision in Port Fund,[2] the judge noted that a claim under section 22 would fail “only… in cases where it is clear that the information sought did not relate to the business and financial affairs of the partnership, which is very wide target to aim at”.[3] On the facts, the judge held that section 22:

• entitled limited partners to the “same information” held by the general partner,[4] so that the limited partners can be put on “a level playing field”;[5]
• was broader than a party’s discovery obligations in litigation;[6] and
• required the general partner to obtain information from third parties.[7]

On appeal, while the CICA said that it was cautious not to express firm views about the scope of information available under section 22 in the abstract (given the limited factual grounds on appeal),[8] it found the judge’s observations that section 22 is a “very wide target to aim at” and entitles a limited partner to be put on a “level playing field” to be overly restrictive.[9] The CICA’s view was that there are limitations to the statutory entitlement which the judge failed to recognise,[10] and went on to outline the following general principles,[11] with significant regard to the English decision of Inversiones:[12]

1. Section 22 is a fundamental safeguard for limited partners, who are otherwise not entitled to interfere with the business of the ELP. The purpose of section 22 is to enable the limited partners to have “a comprehensive understanding” of the business decisions being made on their behalf and the financial consequences of those decisions. What is meant by “full information” under section 22 is to be determined in this light.

2. In ordinary circumstances, the court may be required to accept a limited partner’s request for information, however widely expressed – this is particularly so because of the conceptual difficulty of applying section 22 without knowing what documentation actually exists.

3. Where proper accounts of the partnership have been maintained with the material underlying documentation,[13] in most cases these will provide a substantial part of the information needed by the limited partners to understand “the state of the business and financial condition” of the ELP.

4. If the general partner provides information about what documents exist, the onus will shift to the limited partner to indicate (i) in what respects the available documentation is insufficient; and (ii) the existence of other documents which would be just as material as those which have been provided. It will not be sufficient for the limited partner to simply identify the existence of a particular document and demand all documents falling within that category.

5. Thereafter, the exercise will require a fact specific investigation of what is required to comply with section 22. Relevant factors will include: the nature of the partnership business, its mode of conduct and the terms of the governing documents.

6. The test is a functional one – the focus will be on the function of the documents that actually exist, and, more broadly, whether the information sought is properly required to allow the limited partner a “comprehensive understanding” of the state of the business and of its investment in it, and of the risks attaching to that investment.

8. Once satisfied in principle that relief should be granted, the court should also be satisfied that any disclosure order made is appropriate to address “real and substantial” issues. The court should not require an ELP to incur costs borne by all limited partners simply upon the request of one limited partner who cannot demonstrate that incurring that expense secures any practical advantage.
9. In an appropriate case, the court does have power to require the general partner to obtain information within its power from third parties, provided this can be done without incurring unreasonable expense – the latter being a fact sensitive question.

In light of the above principles, the CICA concluded that the judge had erred in deciding that the LP was entitled to “everything” that the GP and/or Manager “had or could obtain”.[14] Although the judge had recognised in principle that section 22 has practical and purposive boundaries, the CICA held that he did not attempt to apply any of these qualifications to the scope of the disclosure required by the GP and Manager in the present case.[15]

Summary judgment

On this issue, the CICA held that the summary judgment should not have been awarded.[16] The GP and Manager had presented detailed arguments in response to the LP’s section 22 claim, which the Grand Court had dismissed as irrelevant without any proper analysis. The CICA concluded that the judge could not properly have given summary judgment without assessing whether the specific defences raised fell within the exceptions to section 22, or otherwise satisfied the statutory obligation. The CICA also noted that the respondent had chosen to pursue an “inappropriate procedure” in this case.

TAKEAWAYS FOR STAKEHOLDERS

In light of the CICA’s judgment, stakeholders of private equity funds in the Cayman Islands might find the following key points useful:

• Framework for requests under section 22: The CICA has outlined a framework for limited partners to request information from general partners under section 22 (see points 1-8 above). To the extent that fund stakeholders might seek to vary the section 22 entitlement in the relevant limited partnership agreement, parties might consider adopting a comparable process in the agreement itself, so that the applicable framework is clear when requests for information/documents are made.

• Functional approach to section 22: The CICA recognised the importance of business reality in observing that the section 22 entitlement does not require a general partner to provide all documents and information in its possession to a limited partner under section 22. Rather, the focus should be on whether the document/information provides the limited partner with a “comprehensive understanding” of the state of the business, its investments and the associated risks. Disclosure should not unreasonably deplete the partnership’s resources, especially for the benefit of a single limited partner. The nature of the business, its mode of conduct and the terms of the governing documents read in light of current business practice will also be relevant factors.

• Inversiones is the leading authority on the meaning and scope of section 22: the CICA regarded the English decision of Inversiones as the most useful authority “by some distance” (even above previous Cayman decisions) because it applied in practice the information entitlement, rather than just set out statements of principle.[17] Practitioners and stakeholders should prioritise this decision for guidance on applying section 22 in practice.[18] A copy of the judgment in Inversiones is available here. 

• The importance of proper accounts, books and records: General partners and fund managers should ensure that proper accounts, books and records, with the relevant underlying supporting documentation,[19] are maintained and readily available for limited partners upon request. In many cases, the provision of such materials to limited partners will go a substantial way to discharging the general partner’s obligation under section 22, and may also help to allay any perceived concerns investors may have as to the running of the fund. 

• Court procedure: When enforcing a section 22 right in the Grand Court, parties should ordinarily do so by way of an originating summons (equivalent to a Part 8 Claim Form) rather than by writ proceedings.[20]

CONCLUSION

This decision provides an important clarification on the correct approach to general partner disclosure in the Cayman Islands. It reaffirms that section 22 of the ELPA is a fundamental right – but also a functional one which is not free of limitation. General partners and their advisers will welcome this decision, particularly those who had concerns that previous interpretations by the Grand Court risked giving limited partners an unbounded entitlement to information, even where such demands served only to impose an excessive burden on the partnership.

[1] Judgment at [31].
[2] Gulf Investment Corporation v The Port Fund LP [2020 (2) CILR Note 6].
[3] Grand Court judgment at [88].
[4] Grand Court judgment at [75(d)].
[5] Grand Court judgment at [51], noting that this arises from the General Partner’s position as agent and fiduciary of the ELP and, since the exempted limited partnership has no separate legal personality, as agent of each of the limited partners.
[6] Grand Court judgment at [34].
[7] Grand Court judgment at [34], [75(g)] & [75(h)].
[8] Judgment at [35] & [38].
[9] Judgment at [40].
[10] Judgment at [36].
[11] Judgment at [39].
[12] Inversiones Frieira SL v Colyzeo Investors II LP [2012] Bus LR 1136 (per Norris J).
[13] This is a statutory obligation of a general partner under section 21 of the ELPA, which provides that “a general partner shall keep or cause to be kept proper books of account including, where applicable, material underlying documentation…” and that “…proper books of account shall not be deemed to be kept if there are not kept such books as are necessary to give a true and fair view of the business and financial condition of the exempted limited partnership and to explain its transactions…”
[14] Judgment at [43].
[15] Judgment at [40].
[16] Judgment at [41] – [47].
[17] Judgment at [37].
[18] In particular, the general principles at [23]-[29], the key themes in that case at [10]-[17] and the application of those principles in Inversiones 2 at a subsequent hearing on 29 May 2012, following disagreement between the parties, at [18]-[48].
[19] Which they are obliged to do in any event under section 21 of the ELPA.
[20] Judgment at [45].