BERMUDA

BRITISH VIRGIN ISLANDS

CAYMAN ISLANDS

APRIL 2015 DECEMBER 2015

ISSUE NO. 1 1

BERMUDA BRITISH VIRGIN ISLANDS CAYMAN ISLANDS DUBAI HONG KONG LONDON MAURITIUS SINGAPORE / conyersdill.com

OFFSHORE CASE DIGEST

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Editor

Bermuda Christian R. Luthi

Assistant Editor

Bermuda Stephanie Hanson

Contributors

Bermuda Ben Adamson Scott Pearman

British Virgin Islands Tameka Davis

Cayman Islands Paul Smith Erik Bodden

Hong Kong Nigel K. Meeson, QC Norman Hau

This update is not intended to be a substitute for legal advice or a legal opinion.

It deals in broad terms only and is intended to merely provide a brief overview

and give general information.

BERMUDA | BRITISH VIRGIN ISLANDS | CAYMAN ISLANDS

About Conyers Dill & PearmanFounded in 1928, Conyers Dill & Pearman is an international law firm advising on the laws of Bermuda, the British Virgin Islands, the Cayman Islands and Mauritius. With a global network that includes 130 lawyers spanning eight offices worldwide, Conyers provides responsive, sophisticated, solution-driven legal advice to clients seeking our expertise on corporate and commercial, litigation, restructuring and insolvency, and private client and trust matters. Conyers is affiliated with the Codan group of companies, which provides a range of trust, corporate secretarial, accounting and management services.

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This update is not intended to be a substitute for legal advice or a legal opinion.

It deals in broad terms only and is intended to merely provide a brief overview

and give general information.

3 / conyersdill.com

The Offshore Case Digest offers readers a high level summary of the major commercial cases decided in Bermuda, the British Virgin Islands and the Cayman Islands between April 2015 and December 2015. Our goal is to provide a useful reference tool for clients and practitioners who are interested in the development of case law in each jurisdiction.

ABOUT THE DIGEST

We would welcome any feedback and suggestions from readers on the content. If you would like to obtain further information on any of the cases, feel free to contact any of the Conyers Dill & Pearman litigation team.

JURISDICTION PAGE

Bermuda 2

British Virgin Islands 6

Cayman Islands 12

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SUPREME COURT

SHARE TRANSFER - INJUNCTION TO RESTRAIN COMPANY FROM HOLDING SPECIAL GENERAL MEETING TO ADOPT AMENDED BYE-LAWS - PRE-EMPTION RIGHTS

M Pulido -v- UST Holdings Ltd et al [2015] SC (Bda) 67 Com (25 September 2015)

A transferee of shares who has not yet been registered on the share

register of the company does not have standing to obtain interim relief

prohibiting an impugned meeting. Hellman J found that a transfer of

shares who contended that they were the legal owner of 50,000

shares in UST Holdings Ltd (the Company), but who had not yet been

entered on the company register, did not have standing to seek

injunctive relief to prevent a resolution being put to the members of

the Company to adopt restated bye-laws in full substitution for the

Companys existing bye-laws.

Under the new proposed bye-laws, the Company could refuse to

register the Plaintiff as a shareholder without giving any reason. The

Transferee strongly suspected one of the purposes of restating the

bye-laws was to allow the Company to prevent him from becoming a

member.

It was held that a company is not bound to recognise trusts of shares;

the company can only look to the man whose name is upon the

register. A company is not obliged to recognise a person claiming title

to shares as transferee until an instrument of transfer in the prescribed

form has been submitted for registration and has been registered. The

Company could consider the restatement of the bye-laws without

regard to the Transferees beneficial interest. The material distinction

was held to be not between legal and beneficial ownership, but

between members and non-members. Only members have standing to

challenge a proposed restatement of a companys bye-laws in the

courts.

CONFIDENTIALITY IN TRUST PROCEEDINGS - SECTION 47 OF THE TRUSTEE ACT - PRIVACY OF BENEFICIARIES

BCD Trust [2015] SC (Bda) 83 Civ

Confidentiality in trust proceedings, especially non-contentious

proceedings, can be a pressing issue for trustees. Trustees sometimes

need to obtain the guidance of the Bermuda Court, or the exercise of

the Courts broad powers under Section 47 of Bermudas Trustee Act,

on entirely non-contentious issues. The trustees may not, however,

want undue press attention placed on the beneficiaries. Trustees may

avoid seeking the assistance of the Court if, by doing so, they might

undermine their beneficiaries privacy. For this reason, trustees often

seek confidentiality orders, which typically provide that the names of

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the parties involved can be anonymised in the cause book, for the

hearing to be heard in private and for subsequent access to court files

by the public to be restricted.

Confidentiality, however, is increasingly hard to find in modern courts.

The courts continually trend towards ever greater transparency. While

non-contentious trust actions were, in the past, heard in chambers

(which meant members of the public and the press were in practice,

left outside), chambers hearings are now held in court rooms to which

the public have ready access. Further, due to recent procedural

reforms in Bermuda, court papers held in the Registry are increasingly

open to public and media scrutiny.

Thus, confidentiality orders are in increasing demand. They can,

however, be hard to obtain. In England for example, such orders, even

in non-contentious matters, are treated as exceptional and only

granted on the basis of cogent evidence of need (V -v- T [2014]

EWHC 3432 (Ch) Civ). This effectively means that trustees must show

evidence of a security risk or dangers such as false friends latching on

to minor beneficiaries.

In BCD Trust [2015] SC (Bda) 83 Civ, Kawaley CJ in an ex tempore

ruling adopted a liberal and pragmatic approach. The Chief Justice

emphasised that the Bermuda Constitution specifically permits the

Courts to hold hearings in private if it considers it necessary or

expedient for the protection of the private lives of the persons

concerned in the proceedings. He also commented that, in the

absence of any obvious public interest in knowing about internal trust

administration, it was in the public interest to deal with non-

contentious trust applications as private hearings.

Trustees who wish to obtain the Courts guidance, while protecting the

privacy of the beneficiaries, can be confident that their privacy will be

protected.

COMPANY LAW - SHAREHOLDERS - TEST FOR UNFAIR PREJUDICE - APPLICATION TO PUBLIC COMPANIES

Annuity & Life -v- Kingboard [2015] (Bda) LR 97

Shareholders who believe that they are being treated unfairly have

several remedies. One of the most effective can be an unfair prejudice

petition. Such petitions were historically rare in Bermuda, not least

because the hurdle is a high one. A petitioner must not only show that

its interests (as shareholder) have been unfairly prejudiced. It must

also show that the prejudice is so bad that it would justify the winding

up of the company on just and equitable grounds.

In Annuity & Life -v- Kingboard [2015] (Bda) LR 97, Kawaley CJ found

that this test had been met. What makes the case particularly notable

is that Kingboard is a company publically listed on the Singapore

Stock Exchange.

The shareholders allegations in Kingboard were two-fold. The first

allegation was that Kingboard had intentionally depressed its own

profitability. The Claim was that Kingboard, which produced copper

foil and sold it to affiliated companies, had been selling its copper foil

at an under-value. Shareholders in Kingboard, it was claimed, suffered

at the expense of shareholders in the affiliated companies. The

second allegation was that, when minority shareholders raised these

allegations and blocked Kingboards ability to sell its copper foil to

affiliates, as they had the power to do, Kingboards reaction had been

unreasonable. (Kingboards reaction had been to cease producing

copper foil altogether, instead licensing its production facilities to a

third party. The third party then proceeded to supply copper foil to

the same affiliates).

Much of the trial was taken up with the allegations of transfer pricing

and allegations as to whether or not the licensing arrangement was a

sham. Ultimately, Kawaley CJ rejected the transfer pricing allegations

in their entirety and also rejected the Claim that the license

arrangement was a form of sham. He did, however, find that

Kingboards reaction (ceasing all production of copper foil) to the

minority shareholders concerns about transfer pricing had been

unreasonable and a visible departure from the standards of fair

dealing. He concluded that the test for unfair prejudice had been met

and that the remedy was for the majority shareholders to purchase