Merger Appraisal Actions In Bermuda – A Balanced Regime

Bermuda, like a number of other jurisdictions, has a statutory regime to facilitate corporate restructurings by enabling majority shareholders to "squeeze out" minority shareholders through an amalgamation or merger, with the quid pro quo being that the minority shareholders have the right to have the 'fair value' of their shares appraised by the Bermuda Court. The Cayman Islands has seen a very large number of 'merger appraisal' actions and in recent years Bermuda has followed suit with a series of appraisal actions having been filed in the Supreme Court.

Section 106(6) of Bermuda's Companies Act 1981 provides that any shareholder ("dissenting shareholder") who does not vote in favour of an amalgamation or merger and who is not satisfied that they have been offered fair value for their shares may apply to the Court to appraise the fair value of their shares ("appraisal action" or "section 106 proceedings").