Cell Companies

The Protected Cell Company (PCC) was pioneered by Guernsey legislators and is used as a cost effective and efficient tool to separate assets and liabilities into cells, each with statutory protection of its assets from those in other cells. The PCC is a single legal entity, with the company itself made up of a core and a number of ring-fenced protected cells. It is a way of creating different portfolios of assets within one company.

The PCC has a number of potential advantages over other structures:

• They are less expensive to administer than would be the case in a company with multiple subsidiaries, with only one board, company secretary and administrator required, and although assets and liabilities do need to be separated and separately identifiable, the cost savings should be quite significant;
• Because the cells of a PCC do not require registration they can be formed quickly by Board resolution;
• A PCC is treated as a single legal entity for taxation purposes which can have tax benefits;
• A PCC provides flexibility and protection if the core or a single cell of the PCC becomes insolvent. If a particular cell were to find itself in financial difficulty, a receiver could be appointed of that cell without affecting the other cells or the core;
• If a PCC enters into liquidation, the liquidator is required to recognize the rights of each individual cell and to protect the assets of each cell from the creditors of other cells;
• The PCC structure allows segregation of risk. So, investors with a higher risk profile can invest into a cell which invests in riskier assets without the danger of any losses arising from those riskier investments spreading to investors who have a lower risk profile;
• In the event that a single cell is successful and wishes to transact in its own right, this cell can be converted into a company without the remainder of the PCC being affected.

As an alternative, the Incorporated Cell Company (ICC) takes the cell concept one step further and makes each cell a separately incorporated, distinct legal entity. The ICC and its cells all have the same directors, but the legislation allows incorporated cells to exploit their status as independent legal entities, with the ability to contract amongst themselves and with third parties.

Hansard can assist with the set-up and administration of a cell company, either as a stand alone entity or as an integral part of a large client wealth management structure.