Why is Paragon Entertainment registered in the Cayman Islands?
30 May 2017
Q: “Would it be possible for you to explain the reason behind Paragon being registered in the Cayman Islands rather than in the UK?”
A: The Cayman registration of Paragon Entertainment Limited is a legacy issue over which we had no control. Paragon Entertainment Limited was previously called “Marwyn Capital II Limited” and was set up in 2009 as a qualifying company for VCT/EIS investment through which the original founders and investors intended to make an acquisition. “Marwyn Capital II Limited” was the vehicle which was used to acquire Paragon Creative, our operating company, in 2011 and was subsequently re-named “Paragon Entertainment Limited.”
Whilst we would prefer the company to be UK incorporated, despite Cayman incorporation we are nevertheless:
- registered for tax in the UK
- subject to AIM regulation
- Not commercially disadvantaged by it, in the view of the Board - our clients do not raise the Cayman registration as a concern.
Changing the domicile of the holding company would be both expensive and time consuming to achieve and would likely involve incorporating a new UK company which would be used to acquire the Cayman incorporated vehicle on a “share for share” basis. No premium would accrue to shareholders as a result of this process. Shareholders’ existing holdings in PEL would simply be replaced with new shares in the UK incorporated vehicle.
On balance we feel that the distraction to management of undertaking a process like this would more than outweigh any benefits of making the change.