IMAC Captive Basics Course - Corporate Governance and Liquidation

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Presentation transcript:

IMAC Captive Basics Course - Corporate Governance and Liquidation 22 September 2016 – Ramesh Maharaj 8257566

Introduction Walkers is leading Cayman Islands law firm. Walkers is recognised as a leader in the offshore legal arena.

Corporate Governance

What is Corporate Governance? The systems and processes to direct, manage, control and protect a company – taking into account: objectives and strategies need for transparency and accountability relationship among directors, shareholders, managers, employees relationship with auditors, accountants, regulator and third parties The board of directors is responsible for corporate governance policies and application

Corporate Governance Polices A Captive's Corporate Governance Policies should take into account obligations prescribed by: the Companies Law the Insurance Law Principles of Common Law Memorandum and Articles of Association Shareholders Agreement (if any) CIMA Statement of Guidance on Corporate Governance (Feb 2016) CIMA Rule on Corporate Governance for Insurers (April 2016)

Corporate Governance Policies Memorandum and Articles of Association + Share Capital and Shares Directors and Shareholders Minutes and Resolutions Dividends Record Keeping Reporting Obligations Administrative Obligations

Memorandum and Articles of Association + Share Capital and Shares Memorandum of Association sets out objects/powers – ultra vires: “beyond the powers” authorised capital (eg. US$50,000 divided into 50,000 Shares of US$1 each) Annual fee to Registrar based on authorised capital Issued Share(s) – (1 share issued for US$100 = $99 Share Premium) Articles of Association sets out mechanics to achieve objects the play book - share rights, meetings, dividends, etc.

Directors and Shareholders The shareholders are the owners – and appoint Directors (initially) The board of directors handle the day to day management of the Captive The board makes decisions collectively – subject to any specific delegation of power Each Director can act for and on behalf of the Captive Each Director owes fiduciary duties to the Captive act in best interests, loyalty, good faith and avoid any conflict of duty and self interest Objective vs Subjective - standard of care Alternate Directors - update register of directors if appropriate Personal liability where act in breach of fiduciary duties, ultra vires or fraudulently Indemnification in Articles – D&O Insurance

Minutes and Resolutions Director Minutes/Resolutions – written resolutions vs minutes Shareholder Minutes/Resolutions Written Resolutions - unanimous for Special Resolution Ordinary Resolutions - at least a majorityof votes at relevant meeting Special Resolutions – at least 66.6% majority of votes at relevant meeting Frequency – as necessary to meet fiduciary obligations Technology – permitted unless expressly prohibited

Dividends The Articles of Association generally contain provisions on the payment of dividends Payable out of profits or share premium in cash or in specie Subject to CIMA approval Cash flow solvency test vs balance sheet Declaring and paying dividends Board resolutions Financial statements

Record Keeping Knock Knock To be kept at the company’s registered office Register of Members (unless resolve otherwise) Register of Directors and Officers Register of Mortgages and Charges Minute Book all minutes provided promptly so filings can be made

Reporting Obligations Annual Return Filed with the Cayman Islands Monetary Authority Filed with the Register of Companies in January of each year with annual government fee Change in Directors or Officers or Registered Office (30 days) Special Resolutions (15 days)

Administrative Obligations Books of Accounts Necessary to give a true and fair view of the company’s affairs Registered Office Maintain in the Cayman Islands Properly display name Meetings/Annual General Meeting

Liquidation Regime

Cayman Liquidation Regime Voluntary Liquidation – Out of Court (solvent) Official Liquidation – In Court (solvent/insolvent) Provisional Liquidation – In Court (solvent/insolvent)

Voluntary Liquidation Solvent/out of Court procedure - Wind down and payment of creditors Liquidator – any person or legal entity Procedure Board Resolutions to confirm solvent – Directors sign Declaration of Solvency Shareholder Special Resolutions to appoint Liquidator and commence voluntary liquidation Filings Notice to CIMA File with ROC: Special Resolution File with ROC: Consent to Act signed by Liquidator – effective upon filing File with ROC: Directors Declaration of Solvency

Voluntary Liquidation (continued) Publication First Gazette Notice - appointment of Liquidator and details Second Gazette Notice – invite creditor claims – notice of final shareholder meeting – at least 21 days notice Foreign newspapers? Final Shareholder Meeting Liquidator Report approved and Final Return made to Registrar within 7 days 3 months from date Final Return filed with Registrar – deemed dissolved

Official Liquidation (Court ) Terminal event for the Company/Petition process Insolvency / Just and Equitable Assets liquidated Liabilities and Creditors paid Court appointed liquidators Powers of the directors cease and replaced by a liquidator

Provisional Liquidation (Court) Restructuring regime in the Cayman Islands (Chapter XI Bankruptcy Code) / Process Court appointed liquidators to promote a restructuring Asset dissipation provisional liquidators “Soft Touch” provisional liquidation Directors remain in control, subject to PL supervision

Ramesh Maharaj Partner T +1 345 914 4222 E Ramesh.Maharaj@walkersglobal.com Walkers 190 Elgin Avenue, George Town Grand Cayman KY1-9001 Cayman Islands T +1 345 949 0100 E info@walkersglobal.com