Dentons Cayman Achieves Significant Court Win in High Profile Position Mobile Case

The Grand Court of the Cayman Islands recently delivered an important ruling in Re Position Mobile Ltd SEZC [2026] CIGC (FSD) 10, ordering that majority shareholders purchase the minority petitioner's shares following a finding that it was just and equitable to wind up the company. The case provides valuable guidance on two matters of considerable importance to shareholders and directors in this jurisdiction: the circumstances in which the Court will grant a buyout order as alternative relief under section 95(3)(d) of the Companies Act, and the duties owed by directors who hold positions across multiple related entities within a corporate group.

Michael Wingrave and Jack Stringer of Dentons successfully represented the Petitioner, Technology Investment Consortium LLC, in obtaining this outcome.

Background

The dispute arose from a joint venture to develop a mobile applications business. Position Mobile Ltd SEZC was established in late 2019 with a 51/49 ownership split between entities within the Genimous Group (a multinational conglomerate headquartered in China and listed on the Shenzhen Stock Exchange) and Technology Investment Consortium, LLC (TIC), whose members contributed entrepreneurial know-how and operational leadership. When the relationship broken down, TIC presented a winding up petition on the just and equitable ground, alleging exclusion from management, misappropriation of intellectual property and diversion of business to a wholly owned Genimous subsidiary, East End Technologies Ltd (EET).

The Rarity of Buyout Orders in the Cayman Islands

Unlike the position in England and Wales, the Cayman Islands does not have a standalone unfair prejudice remedy equivalent to section 994 of the UK Companies Act 2006. The sole gateway to obtaining relief akin to that available under the English unfair prejudice jurisdiction is through a winding up petition presented on the just and equitable ground under section 92(e) of the Companies Act. Only if the petitioner establishes that the threshold for winding up has been crossed does the court acquire jurisdiction to consider alternative relief under section 95(3), including the power to order one group of shareholders to purchase the shares of another.

The Court in this case referred to the principles governing appropriate relief - specifically, the choice between a winding up order and a buyout. Prior to this judgment, there was limited local authority, with Re Madera Technology Fund (CI), Ltd (unreported, 28 August 2023, FSD 54 of 2021) standing as one of the only instances of a buyout order being made, with the guiding principle being to address "the justice of this case."¹

Justice Doyle's decision provides an illustration of when the court will exercise its discretion to grant a buyout rather than proceed to wind up a company. The Court concluded that "a buyout order is the fairest and most appropriate remedy to meet the circumstances of this case" and that "[t]he buyout order enables the court to do justice to the injured shareholder."² Drawing on the House of Lords authority in Scottish Co-operative Wholesale Society Ltd v Meyer [1959] AC 324, the Court noted Lord Denning's observation that a winding up order in such circumstances "would unfairly prejudice" the minority shareholders "because they would only recover the break-up value of their shares," whereas a buyout order is "[o]ne of the most useful orders" which "will enable the court to do justice to the injured shareholders."³

This judgment therefore serves as an important illustration that the Cayman courts will deploy their full remedial armoury where the justice of the case demands it.

Directors' Duties in Corporate Groups: The Application of Meyer Principles

Perhaps of even greater significance is the Court's treatment of directors' duties in the context of corporate groups where individuals serve on the boards of multiple related entities.

This case involved a corporate structure in which the majority shareholders (part of the wider Genimous Group) had appointed directors to the board of Position Mobile who simultaneously held directorships in competing or related group entities, including Spigot, Inc. and Eightpoint Technologies Ltd SEZC. The Court found that one such director (Mr Chen) had acted "in an 'underhand' way" whilst being "in a position of conflict" and that he "did not appear to appreciate his seriously conflicted position."⁴

In reaching its conclusions, the Court applied the principles articulated by the House of Lords in Meyer. The Court referred to the statement of Lord President Cooper (adopted by Viscount Simonds and Lord Keith in the House of Lords), which the Court considered to be "highly persuasive":⁵

The truth is that, whenever a subsidiary is formed as in this case with an independent minority of shareholders, the parent company must, if it is engaged in the same class of business, accept as a result of having formed such a subsidiary an obligation so to conduct what are in a sense its own affairs as to deal fairly with its subsidiary.

This principle has important implications. In Meyer, the House of Lords held that nominee directors of a parent company who sit on the board of a subsidiary face an impossible conflict when the parent resolves to compete with the subsidiary. The Court in Re Position Mobile quoted Lord Denning's observation that such directors: ⁶

…could not do their duty by both companies, and they did not do so. They put their duty to the co-operative society above their duty to the textile company... By subordinating the interests of the textile company to those of the co-operative society, they conducted the affairs of the textile company in a manner oppressive to the other shareholders.

The Court in Re Position Mobile Ltd SEZC found that the circumstances placed the case "plainly in Meyer territory."⁷ The Court found that EET (a wholly owned subsidiary of Eightpoint, and the First Respondent in turn) and Position Mobile were competitors, and that:⁸

…[i]n a position of plain conflict the Respondents preferred, for obviously self-serving commercial interests, EET a wholly owned subsidiary over PM, their 51% subsidiary. The Respondents diverted the business progression from PM to EET, a competitor. That showed a lack of probity and was unfair to the minority shareholders of PM.

Lessons for Directors

The judgment provides a salutary reminder to directors serving on the boards of multiple group companies of the risks inherent in such positions. The core lesson from Meyer - now authoritatively applied in the Cayman Islands - is clear. When occupying conflicted positions across related entities, directors face a genuine risk of preferring the interests of one entity over another, whether consciously or inadvertently.

The lessons for directors on what not to do will be relatively obvious from the judgment. The Court found, for example, that Mr Chen (a director appointed by the Respondents) had executed an amended agreement "in an 'underhand' way" whilst "in a position of conflict being a director of PM, Spigot and Eightpoint" and "deliberately did not consult with the other directors of [Position Mobile] appointed by the Petitioner" because "[h]e wanted to keep them in the dark."⁹ The Court held that this was "an example of Mr Chen displaying a lack of probity" and that Mr Chen "did not appear to appreciate his seriously conflicted position."¹⁰ Various other instances of impropriety are outlined in the judgment.

Directors in conflicted positions must be scrupulously careful to:

• Recognise when conflicts arise and take appropriate steps to manage them, including consulting with fellow directors and, where necessary, recusing themselves from relevant decisions;
• Ensure that significant decisions affecting a company are taken through proper board processes, with consultation of all directors rather than unilaterally;
• Avoid taking steps that benefit one group entity at the expense of another without transparent disclosure and proper authorisation; and
• Refrain from subordinating the interests of a partly-owned company with independent minority shareholders to those of majority-owned group vehicles.

Where directors fail to observe these standards, they expose themselves and their appointing shareholders to the risk of findings of lack of probity and oppressive conduct. Not only can such findings result in an order requiring the purchase of a minority's shares at fair value but also sound in personal liability for those directors for breach of duty.

Please click here to read the full judgment.

1. Re Madera Technology Fund (CI), Ltd (unreported, 28 August 2023, FSD 54 of 2021) at [260].↩
2. At [456].↩
3. At [105], citing Scottish Co-operative Wholesale Society Ltd v Meyer [1959] AC 324 at 369.↩
4. At [434] and [303].↩
5. At [188], citing Viscount Simonds at page 362 of Meyer.↩
6. At [191], citing Lord Denning at page 367 of Meyer.↩
7. At [407].↩
8. At [407].↩
9. At [434].↩
10. At [303].↩

About Dentons

Redefining possibilities. Together, everywhere. For more information visit dentons.com