Cayman Islands exempted companies have long been the vehicle of choice for listings on the Hong Kong Stock Exchange (HKSE). In 2016, more than 80% of the companies listing on the Main Board and the Growth Enterprise Market were Cayman companies. There are now nearly 800 Cayman companies listed on the Main Board – representing well over 40% of the total and far outnumbering every other domicile. So the key reason why you should use a Cayman company is not a legal one – you should do so because your investors will be expecting you to.
How has this situation come about? There are a number of factors.
The key technical advantage of using a Cayman listing vehicle on the HKSE is that Cayman corporate law is flexible and requirements of the HKSE listing rules and ongoing requirements can easily be met within the Cayman framework, and the memorandum and articles of the listing vehicle can be tempered accordingly. For example, there is no relevant Cayman law relating to the holding of an annual general meeting or the auditing of accounts. Accordingly, the Cayman company may simply conform its M&A to the required HKSE standards.
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Derrick Kan is a partner in the corporate team at Maples and Calder (Hong Kong)
Maples and Calder (Hong Kong)
53/F, The Center, 99 Queen’s Road Central
Tel: +852 2971 3096