A Year In Review – Top 5 Offshore Dispute Issues

1.All eyes on redemption right

Redemption rights have increasingly been under the spotlight in the past year, as more and more investors contemplate an exit from under-performing investments.

As the redemption of shares involves a return of capital, it is prohibited under Cayman Islands law except to the extent permitted by statute. Section 37 of the Cayman Islands' Companies Act (the Act) provides:

"(1) Subject to this section, a company limited by shares... may, if authorised to do so by its articles of association, issue shares which are to be redeemed or are liable to be redeemed at the option of the company or the shareholder...

... (3)(c) Redemption or purchase of shares may be effected in such manner and upon such terms as may be authorised by or pursuant to the company's articles of association."