24 November 2021
This is part of a series of guides in which we examine areas of law that frequently arise in practice. Further guides will be released weekly; click here to subscribe to receive Collas Crill news and insights by email.
This guide looks at the key things you need to know about Protected Cell Companies ('PCCs') in Guernsey.
Legal personality and capacity
A PCC is a single legal entity with separate and distinct Protected Cell ('PC').
A PC is a pool of assets and liabilities that are attributed to a particular PC. The assets and liabilities of a PC are segregated from the assets and liabilities of both the PCC and any other PCs.
The general principle underpinning PCCs is that a liability attributable to a particular PC may only be satisfied from the assets attributable to that PC. Similarly, a liability attributable to the PCC may only be satisfied from the assets attributable to the PCC.
A PC does not have its own legal personality distinct from its PCC, so it must contract through its PCC.
Guernsey Financial Services Commission consent is required to incorporate a PCC.
PCCs have one set of memorandum and articles of incorporation.
Directors and shareholders
PCCs have one board of directors.
PCCs may issue 'core shares' and 'cell shares'. Shareholders are shareholders of the PCC itself. 'Cell shares' are issued in respect of particular PCs which can have defined rights in respect of the assets and profits of the underlying PC.
New PCs can be established by board resolution. There is no limit on the number of PCs that can be created.
Conversions and migrations
PCCs can convert to non-cellular companies (traditional companies that do not have any protected cells) or incorporated cell companies. Individual PCs can also be converted into non-cellular companies.
PCCs can also be migrated into and out of Guernsey from and to jurisdictions with similar provisions in their laws.
Assets of a PC are segregated from those of the PCC and other PCs and are not available to creditors of the PCC or other PCs on insolvency.
Recourse beyond a PC is permitted only in limited circumstances.
Liquidation / receivership / administration
Liquidators may apply a PC's assets only to those creditors entitled to have recourse to them.
The court may make a receivership order in respect of one or more PCs of a PCC. A receivership order is in effect a winding up order.
The court may make an administration order in respect of a PCC or one of its PCs.
Advantages of PCCs
PCCs generally offer lower administrative costs than a group of stand-alone non-cellular companies. For example, PCCs only need to file one annual validation per year.
PCCs also offer efficient ways for fund managers to launch multiple funds with minimal set up time whilst benefiting from economies of scale.
The four main uses of PCCs are:
- Investment funds
- Insurers (captives)
- Property / asset holding structures (including intellectual property)
- Family offices
About this guide
This guide gives a general overview of this topic. It is not legal advice and you may not rely on it. If you would like legal advice on this topic, please get in touch with one of the authors or your usual Collas Crill contacts.
About Collas Crill
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