On 11 March 2024, the Companies (Amendment) Act, 2024 was gazetted (the “Amendment Act”). The purpose of the Amendment Act is to make the following innovative commercial enhancements to the Companies Act (as revised) (the “Act”) as the Cayman Islands continues to thrive as a globally respected financial centre of excellence in the face of evolving market dynamics.
The Amendment Act is not yet in force and we will issue a further update as and when the Amendment Act (or parts of the Amendment Act) are brought into force.
Reduction of Share Capital
At present, a reduction of share capital for a solvent company (save in respect of a redemption or repurchase of shares) requires court sanction. The Amendment Act will now permit a reduction of share capital without court approval provided that this is permitted by a company's articles of association. All that will be necessary is a special resolution of shareholders approving the capital reduction together with a solvency statement.
It will be necessary to provide the special resolution and solvency statement to the Registrar of Companies (the “Registrar”) within 15 days after the special resolution approving the capital reduction is passed, following which notice of the registration will be published by the Registrar in the Cayman Islands Gazette.
Conversion
The Amendment Act allows for the conversion of a limited liability company (LLC) or a foundation company to an exempted company. The process will simply require consent of the members (or equivalent), a certificate of good standing and filing with the Registrar.
Re-Registration
The Amendment Act also allows for the re-registration of an exempted company as an ordinary resident company for companies who propose to carry on business within the Cayman Islands.
Continuation by Bodies Corporate
Previously, the Act provided that only a body corporate with a share capital could continue into the Cayman Islands as an exempted company. The Amendment Act will permit bodies corporate with or without a share capital under the laws of any jurisdiction outside of the Cayman Islands to apply to be registered by way of continuation as an exempted company limited by shares under the Act.
Fractions of Shares
The Amendment Act confirms that, if permitted by a company's articles of association, fractions of shares may be redeemed or repurchased under the Act.
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.
