Corporate Advisory

Cayman Islands Voluntary Liquidations

If you have a Cayman company which you no longer require and would like to dissolve before 31 December 2022 in order to avoid paying the annual fees next year, on the basis that the company is not a regulated entity and is solvent, the voluntary liquidation process should commence by 31 August 2022. We strongly recommend clients to start the liquidation process earlier, especially for clients holding entities with complex structures. This is to ensure full dissolution by the end of the calendar year. This helps companies avoid additional regulatory costs and reduce administrative burdens. Voluntary liquidation process The voluntary liquidation procedures of a company would follow the below procedure: Determine if the company is suitable using the solvency test Declarations of Solvency signed by all directors Shareholders pass a Special Resolution, which must: Resolve to wind up the company; Appoint voluntary liquidator(s); Approve the liquidators fee; and Provide for an indemnity to the liquidators Notice and Liquidators consent, filed with the Registrar of Companies (Registrar) and a notice that the shareholders have resolved to liquidate the company Publish the First Gazette Notice Publication of Notice in other jurisdictions Publish the Second Gazette Notice Pay any creditors claims Pay final dividend Final meeting held and notice to Registrar The following types of companies may find a 2022 dissolution date beneficial: Companies that are reporting as Financial Institutions under FATCA or CRS Relevant Entities undertaking Relevant Activities under the Economic Substance Act Benefits of voluntary liquidation Why should you consider to voluntarily liquidate a Cayman entity which you no longer require? Voluntary liquidation can efficiently close down a company while avoiding court processes and legal action. Additionally, it offers protection

Directors’ Duties: Payments made by Insolvent Shipping Company

Scrutiny faced by directors of companies for possible breaches of their fiduciary duties has been further clarified by the Privy Council in a case[1] involving actions of a director leading up to the insolvency of the company.  Key takeaways regarding duties are: Ultimate responsibility for the actions of a company rests with the directors. The Privy Council dealt with the following questions regarding the actions of the director in question, Ms. Ningning Chen (Ms Chen), co-incidentally one of the Peoples’ Republic’s richest women. When does a director’s duties to a company end where insolvency (voluntary or otherwise) is in the mix? In an insolvency scenario, in whose interest should a director be acting? Case facts to give some context to the issues … The matter involved a payment made on a shipping contract referred to as a “freight forwarding agreement” (FFA) entered into by Pioneer Freight Forward Limited (PFF) a BVI company, at a time when PFF was trading insolvent.  PFF had, under the FFA, and under the authority of Ms Chen, although not directly by her, paid the amount of USD13m to a creditor.  The Privy Council found this payment to have favoured one creditor over another. The Privy Council rationalised that until PFF was formally in liquidation, and thereafter by implication until the authority over the bank accounts had been transferred to the appointed liquidators, Ms Chen had a fiduciary duty to act honestly, in good faith, and in what she believed to be in the best interests of PFF.  Specifically, she had a duty to the creditors of PFF given that PFF was trading insolvent and then after being placed in liquidation, was insolvent.  A director cannot prefer one creditor over another

Redomiciliation into the Cayman Islands

Moving a business from one country to another could help alleviate overly onerous operational requirements under the current companies’ laws, reflect the changing nature of the business, offer administrative simplification for a business, or deal with unexpected regulatory or tax consequences arising from changes in law or the growth of the business.

Vietnam and Foreign Investment Structures

The British Virgin Islands, Hong Kong and Singapore provide attractive product offerings broadly characterised by cost effective incorporation and ongoing maintenance fees, a tax neutral investment platform, corporate flexibility, an English common law system that underpins the rule of law and contractual certainty, and enforcement provided by a modern and effective commercial court.