SICAV incorporated cell companies and future developments

Abstract

I identified 'SICAV Incorporated Cell Companies and future developments' as a title for my dissertation as the notion of segregated cell companies struck me as being the next phase in the evolution of the now traditional concept of limited liability companies. The concept of segregated cells, which this thesis analysis in detail, allows a limited liability company (and not only) to segregate a part of its assets and liabilities into 'cells' in order for such segregated assets and liabilities to be utilised to achieve a defined purpose or serve the interests of holders of particular shares. The concept of segregated cells has given rise to two major structures, the Protected Cell Company (PCC) where the cells remain part of the same entity and the Incorporated Cell Company (ICC), where the cells branch off and form a distinct company with separate juridical personality. The segregation afforded to the cells is ring-fenced, by statutory provisions, from claims that may be made by non-cellular creditors; also creditors of the cellular assets have no claim to non-cellular assets as we shall see. The question I wanted to address is how deeply would the idea of further limiting the liability of a limited liability company affect the whole panorama of corporate and financial services law as we know it. Chapter 1 and 2 explain the historical legal background of this structure and also explain the current legislative and regulatory landscape. Chapter 3 introduces the concepts and aims the legislation seeks to address and achieve as well as the origin of the structure in international business. Chapter 4 describes the fundamental underlying concepts of the PCC and the ICC structure whilst the framework adopted by Malta for segregated cell companies in general is explained in Chapter 5. Chapter 6 and 7 are a dedicated in-depth analysis of the regulations for ICCs: Companies Act (SICAV Incorporated Cell Companies) Regulations and Companies Act (Recognised Incorporated Cell Companies) Regulations. In chapter 8 I analyze how the segregated cell concept has been adopted and implemented in the international market. Chapter 9 serves as an appreciation and understanding of the ICC concept and my final remarks and latest updates and developments are presented in the concluding Chapter 10. Whilst reading this thesis, it is important to understand how the SICAV ICC and future developments can only be analysed and appreciated once a firm understanding of the segregated cell concept, its origins and the PCC are properly understood. This is mainly because the SICAV ICC is a derivative of the PCC concept and the overall segregated cell concept was only appreciated after the PCC became a functioning tool in the industry of insurance business. Thus many references are made to the development and implementation of the PCC. The raison d'etre for the ICC may only be appreciated in comparison to the PCC and any future developments must be seen in conjunction with the PCC and the segregated cell concept as a whole rather than for the ICC as stand-alone financial concept.