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The Companies (Amendment) Law, 2009 came into force on 11 May 2009. It introduces a new, simpler and more cost-effective mechanism for mergers and consolidations between Cayman Islands companies and between Cayman companies and foreign companies.
Previously, the only mechanism available under the Companies Law for a merger or consolidation between companies was the somewhat cumbersome provisions contained in sections 86 or 87 of the Companies Law (2007 Revision) (as amended) for schemes of arrangement to facilitate amalgamations and reconstructions which require court approval in order to be effective.
Under the new provisions, “merger” means the merging of two or more constituent companies and the vesting of their undertaking, property and liabilities in one of them as the surviving company. “Consolidation” is defined as the combination of two or more constituent companies into a consolidated company and the vesting of the undertaking, property and liabilities of such companies in the consolidated company. The essential difference is that a consolidation produces a new company different from either of its constituent companies, while in a merger one of the constituent companies will continue to exist as the other is merged into it.
These amendments will increase the flexibility and agility of Cayman Islands companies whilst reducing the costs of a simple restructuring.
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Cayman Islands Companies (Amendment) Law 2009 – Mergers and Consolidations