Legal changes made to attract insolvency work

(CNS): A number of amendments are being made to the Companies Act that officials from the financial services ministry say will retain and attract more restructuring and insolvency business for firms based in the Cayman Islands. The Companies (Amendment) Bill, 2021 is expected to be presented to Parliament at the next, as yet unfixed, meeting but the draft bill, which is now ready for public review, was drawn up based on proposals made by the Financial Services Legislative Committee. The ministry said stakeholders in the sector were consulted about the proposed changes and the input was considered during the drafting of the bill.

The bill creates a new standalone restructuring regime separate from company winding-up procedures to remove the appearance that it is part of the liquidating process. For companies considering using Cayman’s restructuring regime, that appearance was a potential deterrent, officials explained in a press release.

The draft law also improves more timely access to the restructuring regime. Relevant parties will be able to apply to the court to appoint restructuring officers. The amendments will also enable directors to apply to the court without a shareholder resolution, or without needing powers in their companies’ articles of association that allow them to do so.

For all companies incorporated before these amendments commence, the bill’s opt-in regime will enable a company to include an express provision in its articles of association to allow directors to present winding up petitions without requiring a shareholder resolution. For those incorporated after the bill passes, directors will be able to present winding up petitions without requiring shareholder resolutions, unless an express provision is included in their companies’ articles of association that prevent this.

See the bill on government’s gazette pages here.