Cayman Islands Private Equity Funds: Closings and the Mercury Case
The English decision in R (on the application of Mercury Tax Group Ltd) v HM Revenue & Customs  EWHC 2721 (Admin)  All ER (D) 129 (Nov) (commonly referred to as the "Mercury Case") led to consideration of the effectiveness, under Cayman Islands law, of the use of pre-signed signature pages and signings and closings where signature pages are sent or transmitted by email or fax.
The Mercury Case caused many private equity fund managers to change the way in which closings were conducted for their Cayman Islands private equity funds.
We are pleased to announce that the potential problems associated with the Mercury Case were recently addressed by the passing of the Companies (Amendment) Law, 2011 and the Property (Miscellaneous Provisions) (Amendment) Law, 2011. It is now possible for the signature page to the subscription agreement and/or the limited partnership agreement (whether or not such agreement is at that time in final form) to be attached at the direction of, or on behalf of, or otherwise with the authority of the investor.
The effect of these changes is that, in relation to closings for exempted limited partnerships, general partners may elect to use (as a matter of Cayman Islands law) pre-signed or separate signature pages of the subscription agreement and/or the limited partnership agreement in order to facilitate efficient and administratively convenient closings.
The resolution of the potential problems associated with the Mercury Case was the product of the close partnership between the private and public sectors in the Cayman Islands, following the creation of the Financial Services Legislative Committee (the "FSLC"). The FSLC provides a fast-track process through which the financial services industry can develop and present the Cayman Islands Government with proposals for improvements to the current financial services legislative framework.