Protected Cell Companies

Malta is the only EU member state with Protected Cell Company (PCC) legislation, which provides numerous advantages compared to stand-alone insurance companies or captives. A unique element of a PCC is that an insurer can write business through the ownership of a protected cell, using the core’s capital.

The Protected Cell Company (PCC) has garnered much popularity making it one of Malta’s flagship structures, and establishing the country as an attractive jurisdiction for those looking to set up a cell company, or simply a cell. A PCC can have within itself one or more cells for the purpose of segregating and protecting the cellular assets of the company from those of other cells or the assets of the core itself. A cell is in turn formed by a class of shares within the cell company. The core and its cells are to be treated as one legal entity, as cells do not have separate legal personality. Once established, a PCC can also form cells for third parties.

Operating model of a Protected Cell Company

A cell company operates in two parts – the company core and the cells. The core part comprises all non-cellular assets including the company’s core share capital, investments, liabilities and so forth. The core share capital may be the minimum required at law or it may be much larger depending on its activities. The core does not need to take any of the insurance risk itself, but must be solvent at all times based on the business written by the whole company, including the cells.

A cell company can create one or more cells within its company structure. The cells are independent of each other and from a legislative point of view are protected from each other. This is done by the issue of cell shares in respect of each individual cell. Each shareholder of a cell receives its own dividend stream. For tax purposes each cell is treated as a separate entity. A protected cell transacts insurance business through the licence held by the PCC.

The PCC has a single board of directors which takes responsibility for the transactions within the core and each of the cells and for the statutory and regulatory compliance and corporate governance requirements of the company as a whole. The assets of any one particular cell are only available to the shareholders and creditors of that cell – creditors of another cell have no recourse against them. However, in the event that the cellular assets of one cell have been exhausted, the company’s core assets may be secondarily liable to satisfy any cellular liability of one of its cells. This can be avoided by a non-recourse agreement in the case of captives and reinsurance cells.

Benefit of a Protected Cell Company

The PCC set-up allows the start-up and ongoing regulatory burden of an insurance company to be spread throughout the owners of the various cells and the core of the PCC without putting any individual cell owners’ assets at risk from liabilities of the others. Cells are particularly attractive to medium-sized corporate groups wishing to establish their own insurance vehicle.


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