Recently, the Minister responsible for the registration of commercial partnerships has made certain specific regulations (herein mentioned) which apply to any company conducting a shipping or aviation business.
Primarily, it is to be highlighted that a cell company is a company formed or established as such or converted into a cell company and creating within itself one or more cells for the purposes of separating and protecting the cellular assets of the company.
Nonetheless, a cell company shall be founded as per law and it is still to be considered to be as a single legal person. Hence, a cell within said type of company shall not create a distinct legal personality.
In relation to the cell company's name, it shall include the expression 'Mobile Assets Protected Cell Company' or 'MAPCC'. Also, the abovementioned company shall highlight its cell company status in the Memorandum and Articles of Association. Hence, the latter has to be amended upon a conversion of the company to a cell company. Moreover, each cell within, shall include a distinct name or designation.
Upon such conversion, as per a resolution of the company's directors, the company shall (within 40 days from said conversion) attribute company assets to a particular cell. This action is to be noted (within 14 days from the resolution) to the registrar, stating all details. Such assets will be considered to be cellular assets of a particular cell.
In addition, upon such attribution, the interest of an owner in a registered aircraft or ship, shall be duly noted alongside the consent provided by the mortgagee or the registered security holder.
Within this legal notice, it is made clear that assets are to be either cellular or non-cellular and a clear distinction is to be made. Furthermore, records, accounts, statements and any other documents of a particular cell are to be kept separate from those of other cells.
The abovementioned cellular assets also include the proceeds of the issuing of any cell shares. This is to be referred to as cell share capital. In relation to cell shares, cellular dividends may also be paid by the cell company. This is to be done by reference only to the cellular assets and liabilities, or the profits attributable to the cell in respect of which the cell shares were issued and of no other cell.
A cell company shall inform any person with whom it is conducting any relevant activities that it is a cell company and shall also indicate which cell is involved in said transaction.
Within each and every transaction carried out by a cell company, the latter shall highlight the fact that no one is to make or attempt to use any cellular assets attributed to a particular cell to satisfy debts of other cells. If this is done, the person involved shall be liable to a fine as much as the amount benefitted and the prejudiced cell shall be compensated. Hence, the debts of one particular cell are to be satisfied by the assets of its own and of no other cell.
On the same note, assets attributed to a particular cell are to be made available to the creditors of the assets of that same cell. Hence, creditors of the assets attributed to cell 'A' shall have no access whatsoever to the assets attributed to cell 'B'.
These herein mentioned regulations are to be adhered to by all cell companies and their cells. Any incompatible or inconsistent to these regulations agreements are to be considered null and void.
Originally published July 3, 2020
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.