M&A deals in the Cayman Islands can be structured through various types of transactions. These include asset and share purchases, squeeze-outs (which can be effected with over 90% control), mergers, consolidations and schemes of arrangement with mergers and consolidations being the most common methods used.
This article seeks to provide a high-level summary of the merger and consolidation procedure under Cayman Islands law. Mergers and consolidations versus a scheme of arrangement The merger and consolidation provisions of the Companies Law (2011 Revision) (Companies Law) provide an efficient method of effecting a merger or consolidation (Merger Procedure) without the need for the approval of the Cayman Islands Court (Court).
Before amendments to the Companies Law in 2009, a Court approved scheme of arrangement was the only method by which two or more companies could combine under Cayman Islands law. Schemes of arrangement are still used in the Cayman Islands, although these tend to be the preserve of more complex business restructurings. The Merger Procedure allows for a simpler and more cost effective means by which companies can merge or consolidate.
The advantages of the Merger Procedure include that:
The approval of the Court is not required.
The timing for a merger or consolidation is generally shorter than for a scheme of arrangement.
While shareholders do have certain rights of dissent and appraisal under the Merger Procedure, these rights will not delay or impede the merger or consolidation arrangements.