Trends In Cayman Islands Companies Listing On The NYSE And Nasdaq – Corporate and Company Law – Corporate/Commercial Law

Key takeaways

• The Cayman Islands is the most common non-US jurisdiction for
  listed entities out of 47 different jurisdictions currently listed
  on the NYSE and Nasdaq.

• Special Purpose Acquisition Companies (SPACs) have been the
  most significant factor in the increase of Cayman Islands listed
  entities since 2020.

• The Foreign Private Issue (FPI) status is a key benefit
  associated with Cayman Islands listed entities as it offers a more
  flexible regime.

The Cayman Islands is the most common non-US jurisdiction for
listed entities

Entities established in 47 different jurisdictions are currently
listed on the NYSE and Nasdaq. Of these different jurisdictions,
outside of the United States, the Cayman Islands accounts for more
listed entities than any other jurisdiction. As at November 2024
there were 430 Cayman Islands entities listed on NYSE and Nasdaq
accounting for approximately 35% of listed entities formed outside
of the United States.

95% of all SPACs launched in 2024 are established in the Cayman
Islands

The most significant factor in the increase in the number Cayman
Islands listed entities has been the volume of Special Purpose
Acquisition Companies (“SPACs”) launched from 2020
onwards.

While the number of SPAC launches since 2021 has reduced
significantly, the proportion of SPACs listed in the Cayman Islands
has increased substantially from 33% in 2020 to 95% of the 32 SPACs
launched in 2024.

Why Cayman Islands entities are used for listing on NYSE and
Nasdaq

Foreign (non-US) entities listed on both the NYSE and NASDAQ in
many cases qualify for “Foreign Private Issuer” (FPI)
status. FPIs benefit from a more flexible regime in terms of
securities registration, accounting and ongoing reporting. They are
permitted to comply with “home country” governance
standards. The home country governance standards applicable to
Cayman Islands entities provide a well established and attractive
governance framework for issuers.

A material influence on the dominance of the Cayman Islands as
the jurisdiction of choice for new SPACs has been the increase in
SPAC litigation in the Delaware courts. Cayman Islands SPACs and
their directors have not been exposed to this litigation to the
same extent. Although the non-SPAC IPO market has been subdued in
recent years, we are seeing an increased recognition of the
advantages that incorporation in the Cayman Islands has to offer in
terms of mitigating litigation risk.

Looking towards 2025, in the expectation that the number of IPOs
will increase, the Cayman Islands is well placed to build upon its
established reputation as the jurisdiction of choice for
prospective issuers.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.