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

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

3. Corporate Governance

4. 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

5. 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)

6. 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

7. 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.

8. 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

9. 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

10. 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

11. 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

12. 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)

13. 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

14. Liquidation Regime

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

16. 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

17. 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

18. 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

19. 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

20. Ramesh Maharaj
Partner T E
Walkers
190 Elgin Avenue, George Town Grand Cayman KY1-9001
Cayman Islands T E