Malta
CELL COMPANY LEGISLATION IN MALTA
Cell company legislation has been in effect in Malta for a number of years and is proving to be an opportunity for growth and expansion of Malta’s financial services industry, particularly the insurance and investment fund sectors, says Dr Angela Thorns of law firm Dingli and Dingli.
Insurance Regulations 2010 (ICC Regulations). These regulations are intended to complement existing laws and rules, including those covering Protected Cell Companies (PCC), which have been in operation since 2004.
A The use of cells in this way represents a solution for companies that do
not wish to operate as a stand-alone company. Under Maltese law, it is possible for an incorporated cell to eventually convert into a full company (not a PCC, an ICC or an incorporated cell). This can allow companies to achieve business continuity and reduce costs using a process that is faster and more cost-effective than dissolving the incorporated cell, forming a new company and transferring the business.
An incorporated cell is particularly useful when business is carried out or assets held in jurisdictions that have not adopted or do not recognise the concept of a protected cell. An incorporated cell enjoys is generally recognised in such jurisdictions.
PCCs and ICCs may also write insurance or reinsurance pursuant to
the applicable laws and regulations issued by the Malta Financial Services Authority (MFSA). Additionally, a PCC may carry on certain intermediary activities in the form of insurance management and insurance broking in accordance with the Insurance Intermediaries Act. In any case, prior written approval from the MFSA is required by law.
50 | INTELLIGENT INSURER | October 2011
s from February 1, 2011, it became possible to register an Incorporated Cell Company under the Companies Act’s Incorporated Cell Companies Carrying on Business of
DIFFERENCES BETWEEN
PCCS AND ICCS While both PCCs and ICCs are legally empowered to create cells, the
cells have a different status in law. A PCC creates within itself one or more cells for the purposes of
segregating and thus protecting the cellular assets of the company. Therefore, a protected cell does not have a separate legal status and each cell transacts through the PCC.
An ICC, on the other hand, establishes ‘incorporated cells’. As the name implies, each incorporated cell has its own separate legal status distinct from that of other incorporated cells and that of the ICC. The status of an incorporated cell is that of a limited liability company thus being able to enter into business transactions and contractual relationships with third parties in its own name.
SEGREGATION The segregation of assets and liabilities is the cornerstone of Malta’s cell company legislation, giving investor certainty to cell companies and cell owners. A cell owner carries on business through a cell in the knowledge that the cell’s assets and liabilities are separate and independent from those of the other cells and the company. In the case of an ICC, claims by third parties and creditors can only be directed against the assets of the
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