Cayman Court strikes out "cynical and abusive" winding-up petition

The Grand Court of the Cayman Islands has warned minority shareholders against using winding-up proceedings for their own commercial interests, rather than to vindicate the rights of shareholders generally.

The minority shareholder in the decision of Ctrip Investment Ltd v eHi Car Services Limited was prevented from using a winding-up petition to gain leverage for its own competing merger bid.

It's the first time that the Cayman Court has dealt with a minority shareholder challenging a take-private transaction by bringing proceedings directly against the Company which is to be subject to the merger.

Justice Kawaley struck out the winding-up petition as an abuse of process, stating that it arose from the cynical and abusive presentation of a winding-up petition on the just and equitable ground. The Grand Court held that the appropriate course for a dissenting minority shareholder is to vote against the privatisation at the EGM, or to exercise rights of statutory dissent under s.238 of the Companies Law.

The petitioner has sought leave to appeal – so watch this space for further updates as the matter progresses.