Duties of Directors – Cayman Islands Funds

Tania Dons • Posted 17/10/2011 • Under Articles

Weavering v. Peterson

A director of a Cayman Islands company owes certain fiduciary duties to the company. While these duties, as a matter of theory, are well understood, it is sometimes difficult to describe, in very practical terms, what exactly a director should and should not do in order to fulfil them. The Grand Court of the Cayman Islands (Financial Services Division) recently had cause, in Weavering v. Peterson, to consider how these general principles ought to play out in the context of an investment fund company and its directors.

The Weavering decision represents the application of already well-established principles to a particular set of facts. While the guidance provided by the Court in Weavering is instructive, it should be noted that the circumstances in that case were particularly egregious and the Court’s advice must be considered within that context. The directors in Weavering essentially did nothing except sign what the promoter put before them. There was a complete absence of meaningful consideration.