Analysis Banking and finance Litigation Insolvency: Hedge strippers By The Lawyer 15 July 2008 10:58 17 December 2015 16:04 Sign in or register to continue reading. It's FREE Sign in Email Password Keep me logged in Forgot your password? Not registered? It's FREE! Register now Register with The Lawyer Chris Johnson 15 July 2008 at 15:22 Insolvency: Hedge Strippers It may well be that action may be taken in the Cayman Islands against directors for breaches of their fiduciary duties. However on a practical basis this is rarely pursued in the Cayman Islands owing to provision in company Articles of Association to provide directors with indemnities against their own mismanagement whether it amounts to negligence or even recklessness. Of course in the United Kingdom section 205 of the Companies Act 1948 renders any such provision void, as is the case in many jurisdictions both onshore and offshore.It is paradoxical that the Cayman Islands are in the forefront of modern legislation of funds and other offshore vehicles and yet rely upon a Companies Law that is antiquated, in part having been based on the 1862 UK Act. Recent transcripts of important cases in the Cayman Islands and the United States have highlighted the deficiencies of, and the lack of attention paid by directors in attending to their fiduciary duties. The well read Beacon Hill matter highlights the point in question and ought to be mandatory reading for all ‘wannabe directors’. A prospective sponsor should pay particular attention in seeking directors resident in the Cayman Islands, not only because of the provision of indemnities, but because there are no provisions in the Cayman laws to deal with the disqualification of wayward directors. Clearly the Cayman Islands need to remedy this if they are to continue to be the domicile of choice for hedge funds and other offshore vehicles. Finally it should be noted that where a fund has directors provided by a firm specializing in providing directors it has been held in the Grand Court of the Cayman Islands that , in the absence of fraud or bad faith, there is no duty of care owed between such a firm and the fund or its investors. Reply Link Name Email Cancel reply Threaded commenting powered by interconnect/it code.