Since 1 February 1997 it has been possible to incorporate a new company as, or to convert an existing company into, a protected cell company.
A protected cell company is a single legal entity whose assets can be allocated to different cells within the company. Where assets have been allocated to a cell, only creditors who have entered into transactions with that cell or who have otherwise become creditors of the cell concerned have recourse against those assets. Cellular assets must be both separately identifiable from non cellular assets and separately identifiable from the cellular assets attributable to the other cells.
Not all assets belonging to a protected cell company have to be allocated to a cell. Where they are not, the assets will be available to any creditor of the company.
Each cell must have its own distinct name or designation. The proceeds of the issue of shares by an individual cell become cellular assets. Dividends may be paid in respect of cells' shares purely by reference to the profits of the cell concerned.
When protected cell companies enter into transactions, notice must be given of the company's protected cellular nature. If this is not given then directors of protected cell companies can be held personally liable for the company's liabilities.
Where approval is obtained from the Royal Court the assets of an individual cell can be transferred to another company. It is not necessary for the company concerned to be incorporated in Guernsey and an order can be made allowing the transfer of assets in this way even if the protected cell company is being wound up, or is subject to an order for receivership or administration.
Approval to incorporate as, or to convert into, a protected cell company has to be obtained from the Financial Services Commission. This is available only to:
- collective investment schemes regulated in Guernsey;
- insurers who are registered or are specifically exempt from registration under Guernsey's insurance law; and
- companies of any other class or description that have been prescribed by the Financial Services Commission.
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.