In specie distributions — legal update
On 18 February 2013, the Cayman Islands Court of Appeal released its judgment in Re FIA Leveraged Fund. Mourant Ozannes acts for the liquidators of the fund.
The decision analyses whether the fund’s directors were entitled to make an in specie redemption by the transfer of assets acquired by the fund after the redemption payment date and in circumstances where, on an objective basis, there were doubts as to the value of the assets. The case demonstrates that the courts will look very carefully at the actions taken by a fund’s directors and the powers available to them when considering these issues.
The judgment confirms, not surprisingly, that a fund’s power to make in specie distributions turns on a proper construction of its articles of association and offering documentation…
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