Traditionally it was quite difficult for public companies to fold up their tents and march to a new destination. A ‘relocation’ would require a scheme of arrangement in their home jurisdiction, the incorporation of a new company in their dream jurisdiction and a share swap. Typically, though not necessarily, this would then be followed by a transfer of assets and a winding-up; alternatively our camper company would become a wholly-owned subsidiary of a foreign holding company. All this might be seen to be the corporate equivalent of moving the Seventh Army. Would it not be much easier if companies could simply ‘up sticks’ and relocate, simply change their jurisdiction of incorporation?
Bermuda, the British Virgin Islands and the Cayman Islands all permit companies to do so, either inbound or outbound. However, before we look at the mechanics of continuances and discontinuances (or deregistrations in the Cayman Islands), you might ask yourself why companies would wish to move. The answer can be found in inadequacies in their domestic laws. In the context of M&A for example, the Cayman Islands currently permits only two types of squeeze-out or compulsory acquisition; a scheme of arrangement and a so-called 90% squeeze-out following a general offer. Squeeze-out mergers are not permitted or at least not permitted without a scheme of arrangement, share swap and perhaps a transfer of assets and winding up – back to moving the Seventh Army.
