Guernsey: Under One Roof

Last Updated: 24 July 2007
Article by Mark Helyar

Most Read Contributor in Guernsey, November 2017

Originally published in Captive & ART Review Guernsey supplement, May 2007

Guernsey introduced a new segregated cell company structure in May 2006 – the incorporated cell company (ICC). The introduction of the legislation followed soon after the creation of the structure in Jersey in February 2006. In January 2007 my team performed the first conversion of a mutual PCC fund to an ICC (creating the world's largest ICC mutual fund).

Segregation: A Potted History

As most readers will be aware, Guernsey pioneered the protected cell company (PCC) concept in 1997, modelled on similar but less formal and enforceable provisions in the Caribbean. Some 10 years on, the Guernsey PCC concept has been adopted by many major offshore jurisdictions. Far from its origins in the management and structuring of insurance risk, it is now used extensively in many areas of offshore financial structuring, including single purpose vehicle (SPV) cells for securitisation purposes and particularly for multi-strategy umbrella funds. Until 2006, practitioners in Jersey and a number of other jurisdictions had viewed the PCC concept with some scepticism. After some 10 years of essentially secure operation in Guernsey and elsewhere, the scepticism finally seems to be dwindling.

None of the original criticisms of the PCC as being unreliable in insolvency have been reflected in court proceedings, indeed many of the practical problems encountered since 1997 have been more subtle and related primarily to ordinary negligence and errors in administration. In other words the PCC has displayed the same characteristics in use as any "normal" company or trust structure. Without doubt one of the reasons for the smooth operation of the structure has been the restriction in Guernsey on the use of the PCC for non-regulated purposes until recent times. This means a much higher level of regulation, compliance and independent corporate governance has been applied to the Guernsey PCC until 2006.

As more and more legislatures adopt the PCC concept or an analogue by a different name, the less likely it becomes that a court in such a foreign jurisdiction would fail to recognise the reciprocal legal principles imposed by segregated cell company legislation.

However, despite all the flexibility and benefits, the PCC structure does currently pose some challenging (and therefore potentially expensive) legal issues for the purposes of achieving certain results, particularly where a credit rating might be a pre-requisite; and this has to date limited to some extent the use of the PCC for certain types of reinsurance and structured finance transaction, when its characteristics would otherwise perfectly suit such uses.

Jersey therefore introduced the ICC in February 2006 in response to lingering (albeit unsubstantiated) doubts about the PCC structure to create a hybrid of the PCC and a conventional company group. Many people are now asking what possible benefit such a structure could have over a simple group of separate companies?

The key points of the new ICC structure are:

  • Additional comfort regarding inter-cell security in the event of insolvency;
  • The ability to create binding contractual relations between cells without eroding cellular insolvency protection;
  • More formalised and less radical structure than the PCC, enabling an easier route to cell rating;
  • Very significant flexibility;
  • Opportunities for use of mixed "hybrids" and multiple-regulated cells.

Insolvency Protection & Rating

The key difference between the PCC and the ICC are that each ICC cell is a separate legal entity with a separate registration, as opposed to a single entity in the case of the PCC. This separation of corporate legal entity is generally respected in most jurisdictions and for that reason the ICC can provide more comfort in the event of insolvency of one cell; a foreign court would be less likely to use the assets of another cell to satisfy creditors' claims. It has always been the most important risk associated with a PCC that a foreign court might not recognise the inter-cell protections afforded by the Guernsey legislation.

For that reason it has generally been the case that counsel have advised a PCC to retain its assets in Guernsey to absolutely avoid any risk associated with foreign courts ignoring such inter-cell protections. Although, as indicated above, many other jurisdictions now have the same or similar legislation and are therefore less likely to ignore the similar provisions of another jurisdiction, the foreign asset risk is likely to be reduced for an ICC and its cells. This might, for example, allow increased access by ICC cells to investment markets where PCC boards have been reluctant to venture on a multiple cell basis.

The PCC cell has proved a difficult structure for which to obtain a credit rating, mainly because of the possibilities for the creation of recourse agreements and the fact that a large structure might require considerable and expensive due diligence to ensure a clean and high standard of limited recourse and insolvency protection. The ICC, because of the individual legal personality of each cell, is likely to be a considerably easier structure for which to obtain a credit rating.

Contractual Relationships

The additional benefit of having a separate legal entity at the cell level in an ICC is that cells are able to enter into binding contractual relationships with one another. This is not possible with a PCC and in particular has caused problems for rent-a-captive operations where there may have been a commercial case to provide financial guarantees or letters of credit, for example, between cells. Combined with the flexibility of having different memorandum and articles in each cell, complex but binding commercial arrangements can be created between cells which could not be created in a PCC without creating subsidiaries or involving third parties interposed between cells at additional expense. Cells in an ICC can buy and sell assets to one another, provide guarantees and borrow and lend from one another, adding a whole level of flexibility which has at times been a limiting factor with the PCC.

Erosion Of Insolvency Protection

Although the PCC has been re-engineered in 2005 and 2006 to enable "arrangements" in connection with the transfer of assets between cells, the inevitable result of excessive transfer of assets between the cells of a PCC must be to endanger the insolvency protection provided by law. There has been considerable debate and confusion in the past about what constitutes a transfer of assets in the ordinary course of business. This in turn has led to misapplication of the law and transfers of assets between cells having the potential effect of causing prejudice to creditors of the cell from where the transfer has been made. Since the ICC enables the usual principles of corporate benefit and contract law to be applied between separate ICC cells, the ICC is likely to be far less susceptible to erosion of insolvency in similar fashion.


The Guernsey ICC legislation was created on the model of that introduced in Jersey. Guernsey has the benefit of detailed familiarity with the concept of the segregated cell company and has been able to make certain improvements. Guernsey, for example, crucially included the ability to convert a conventional company into an incorporated cell and vice-versa. A PCC can also be converted to an ICC. Utilising other useful offshore legislation such as that enabling migration, it is now possible to migrate companies from all over the world to Guernsey and put them under one "roof" and vice versa. This has considerable benefits and attractions for private wealth management, where the structure is already being used for property holding and management.

Flexibility – Accounts

The ICC structure also allows accounts to be restricted to the individual cell shareholders in comparison to a PCC where all shareholders have a right to consolidated accounts. This is particularly useful for structures with mixed third party ownership (such as a rent-a-captive) or a private client structure where there may be a need for privacy in connection with the operations of different cells.

Multiple Use ICCs - The Future?

One opportunity is the potential for the use of the ICC for multiple/mixed regulatory purposes, for example, a licensed captive insurance cell and other cells providing employee benefits, holding structures for intellectual property assets, efficient royalty streaming, structured finance (including the issue of debt taking advantage of beneficial foreign company listing rules), hedging operations, private and tax transparent treasury fund management and so on. By establishing contractual relationships, the profits of one operation could also be used to fund or capitalise another. The Guernsey captive industry has an established relationship with the financial directors and CEOs of many of the world's largest corporations. Guernsey also has a sophisticated financial services infrastructure which is very well suited to provide a diverse mixture of beneficial financial products and structuring in a well regulated, low tax environment.

In the areas where, in particular, there is increasing convergence between the insurance and capital markets, there is likely to be a need for a new regulatory approach. This multiple use is one to which the ICC is well suited in terms of security and flexibility.

For more information about Guernsey's finance industry please visit

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions