The PRODUCT

A Protected Cell Company (“PCC”) is a single legal entity that can divide its assets between different cells within the company.  When sub-divided, the assets of each cell are deemed to be entirely separate from each other and the creditors of a cell can only have recourse against that particular cell.

PCC will normally issue two classes of shares:-

• Core shares which carry voting rights; and
• Cellular shares issued for each Cell which do not carry voting rights.

Each cell may have its own name or designation.

Assets and liabilities within a cell cannot be use.

In the core of a PCC the problem encountered with an umbrella fund company structure is avoided, since the excess liabilities of a cell cannot be set-off against the assets of the entire company.  This legal segregation is often described as “ring fencing”.  Further, a PCC may effect distributions in respect of cell shares by reference only to the cellular assets and liabilities attributable to the cell in respect of which the cell shares were issued.

Given this ring fencing, a PCC structure is very useful for any investment entity with various investment portfolios, where each has its own investment strategy and risk profile and is even more attractive where investors are not common in each portfolio.  PCCs can be used for asset holding structured finance, captive insurance and investment funds.