The following briefing provides a round-up of the Cayman legal and regulatory developments during the third quarter of 2022 that may be of interest to funds clients. We are pleased to note that there is nothing critical or requiring immediate action at this time.

Summary of recent legal and regulatory developments

Over the past two or three years, we have seen an increasing number of cases where a client holds and wishes to sell or transfer shares in a Cayman Islands company which is in liquidation, or is seeking to purchase shares in such a company from another party.  In those circumstances, the transfer of the shares would be void absent the validation of the Grand Court of the Cayman Islands, as a result of section 99 of the Companies Law (2013 Revision) ("Section 99").  Section 99 is in the following terms:

In its decision published on March 13, 2013 (dated February 21, 2013 – IX ZR 32/12), the German Federal Court of Justice (BGH or Bundesgerichtshof) made it clear that it will uphold its prevailing case law regarding two questions at hand even though the relevant legal provisions relating to equitable subordination have been moved from the corporate law regime to the insolvency law regime with the 2008 Act to Modernize the Law on Private Limited Companies and Combat Abuses (MoMiG or Gesetz zur Modernisierung des GmbH-Rechts und zur Bekämpfung von Mißbräuchen).