Segregated cells within legal organisations : their introduction and implementation in Maltese law

Abstract

Segregated cells are a relatively new introduction to Maltese law and this thesis endeavours to offer complete evaluation and critique of the introduction, development and future potential for the concept in Malta. After a brief introduction to the segregated cell concept, the discussion moves on to the notion of patrimony and its fundamental relevance to segregated cells, providing an insight on how segregated cells challenge some of traditional and well established Civil law notions in Maltese law. This thesis then offers a critical analysis of the two well established applications through which segregated cells were first introduced into Maltese law, namely in the forms of the multi-fund SICAV and the Protected Cell Company in the specialised sectors of Investment Funds and Insurance respectively. The study will focus on the fundamental legal issues arising in respect of each model. The thesis then goes on to carry out a brief analysis of the Italian law concept of the "patrimonio destinato" which can be considered to be the Italian equivalent of the segregated cell concept. A comparative analysis is offered in a progressive manner as the discussion of each model is developed, of the common legal issues, particularly in regard to creditor protection, insolvency and foreign recognition which are the main areas for concern in relation to segregated cells. Careful consideration is also given throughout the analysis as to any possible need for reform. The discussion then moves on to an analysis of the recently introduced Article 20 of the Second Schedule to the Civil Code, which establishes general provisions for segregated cells, applicable to all legal organisations, as opposed to its previously restricted applications. This analysis draws on any similarities or differences with the previously discussed segregated cell models in order to bring out the key implications of the new section.

It should be noted that most other jurisdictions that provide for segregated cells basically provide for the same models now available in Maltese Law, so while certain specific comparisons are indeed useful and consequently made throughout the discussion, a more extensive comparison and analysis was not essential. Greater consideration, however, was given to the "patrimonio destinato", as it offers a novel approach to most other jurisdictions and is also somewhat similar in its scope to Malta's newly introduced section in the Civil Code. The thesis will then examine the new segregated cell concept developing abroad, known as the 'Incorporated Cell Company' considering the possible benefits (or otherwise) in comparison to the Protected Cell Company, and what effects the implementation of this new adaptation to the segregated cell concept would have in Malta; before moving on to outline various general conclusions as to the continuing development and future potential for segregated cells in Malta.