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Having seen a surge in dissenting shareholder litigation over the past 18 months, the Grand Court of the Cayman Islands (the “Court”) continues to release considered judgments concerning the operation of the appraisal process set out in Section 238 of the Companies Law (2016 Revision) (the “Law”) that give clear directions as to how such actions should be presented and pursued in this jurisdiction. Following the judgment in Shanda Games and building on the judicial guidance found in the other very recent decisions of the Court summarised in our article here, the judgment of the Honourable Justice Raj Parker in In the matter of Qunar Cayman Islands Limited (unreported, 21 July 2017) (“Qunar“) addresses in clear and concise terms the appropriate approach to the directions required in such proceedings which have their own unique features differing from ordinary civil litigation.
Qunar Cayman Islands Ltd (the “Company”) is a Cayman Islands exempted limited company that had been listed on the Nasdaq in 2013. In June 2016, it was the subject of a “take private” transaction pursuant to which it was to enter into a merger agreement with Ocean Management Holdings Ltd and Ocean Management Merger Sub Ltd (the “Merger”). The Merger was approved in February 2017. Eight shareholders forming four groups, (collectively, “the Dissenters”) dissented to the Merger and commenced the appraisal process provided for in Section 238 to formally assess the “fair value” of their shares (the “Proceedings”).
The Proceedings came before the Court for directions on 23 June 2017. Although the broad structure of the directions had been agreed, there remained a number of areas of disagreement, including as to the proper approach to discovery by the Company, the appointment of joint experts, and the question of whether the Dissenters should also be compelled to give discovery.
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Fine Tuning Fair Value Appraisals: Further Guidance from the Cayman Court