Bermuda, the British Virgin Islands and the Cayman Islands all permit companies to do so, either inbound or outbound. However, before we look at the mechanics of continuances and discontinuances (or deregistrations in the
Squeeze-out mergers involve companies merging or amalgamating and continuing as one company with all assets, liabilities and obligations vesting in the resulting entity by operation of law. They also offer splendid opportunities to effect a squeeze-out of dissentient shareholders at a much lower level than 90% and, importantly, without court approval. A relocation might also afford an opportunity to restructure or adopt anti-takeover provisions. For example, Jardine Matheson Holdings, Jardine Strategic Holdings, Diary Farm International Holdings, Hongkong Land Holdings and Mandarin Oriental International all moved to
So, let us assume you wish to take over a Cayman company for a fair price but not one which will necessarily have all the shareholders behaving as if they were in a Pamplona-style bull run, that you do not wish to have minority shareholders whooping around your tent, that 90% acceptance is perceived to be a tad high to effect a squeeze-out and that you do not fancy seeking permission from m’lud. What do you do? Welcome to so called ‘move and merge’ deals.
These deals involve the preparation and distribution of a circular or proxy statement to shareholders of the Cayman company to obtain shareholder approval to the move and the incorporation of a new company in
The mechanics of the move itself may be segregated into two parts, deregistration in the Cayman Islands and continuance into BVI or
Deregistration in the
l The Cayman company must be authorised by its articles of association to deregister. Most articles of association permit this by resolution in general meeting (ordinary or special resolution). Occasionally, a discontinuance can be authorised by board resolution alone.
l The company must file certain documents with the Registrar of Companies in the
(i) notice of any proposed change in name and the proposed registered office or agent for service of process in
(ii) an undertaking that notice of the continuance will be given to the secured creditors within 21 days; and
(iii) a declaration that certain requirements have been met, for example, as to solvency, contractual consents and compliance with the laws of the new jurisdiction with respect to the deregistration. The declaration must include a statement of the assets and liabilities of the company made up to the latest practicable date.
l A fee equal to three times the annual government fee must be paid to the Registrar.
l The Registrar will issue a certificate certifying that the company has been deregistered. The Registrar will also give notice of the deregistration in the Cayman Gazette.
Continuance in BVI
l Articles of continuation containing the amendments to the memorandum and articles of association that are to be effective upon the registration of the company in the BVI must be approved by a majority of the directors of the company.
l The articles of continuation, accompanied by a copy of the memorandum and articles of association of the company, a certificate of good standing and a certified extract of the resolutions of the board and the shareholders, must be submitted to the Registrar of Corporate Affairs in the BVI for registration.
l Upon registration of the articles of continuation, the Registrar of Corporate Affairs will issue a certificate of continuation certifying that the company is incorporated in the BVI.
Continuance in
l An application must initially be made to the Bermuda Monetary Authority (BMA) seeking permission for the shareholders of the Cayman company to be shareholders of a
l Once the relevant consent has been received from the BMA an application for registration of the Cayman company in
l The Registrar of Companies will register the memorandum of continuance and will issue a certificate of continuance.
l Upon registration of the memorandum of continuance the continuance will become effective. The memorandum of continuance will be deemed to be the memorandum of association of the company. The certificate of continuance will be deemed to be the certificate of incorporation.
l The company is required to forward a copy of the certificate of continuance to the Registrar of Companies in the
l As soon as practicable from the date of continuance the company must adopt by-laws conforming to
David Lamb is a partner in the
