The Protected Cell Company

  1. What is a Protected Cell Company?
    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 only have recourse against that particular cell. The Mauritius legislation in respect of PCCs is currently designed for the investment fund and insurance industries for the facilitation of so called “Umbrella Funds” and “Rent a Captive” operations.

    The Mauritius legislation in respect of PCCs has been recently amended to widen the applications of PCCs in Mauritius.

  2. Legal regime of the Mauritius PCC
    Mauritius enacted such legislation known as the Protected Cell Companies Act 1999 (”PCC Act”). In the year 2000, subsequent regulations were enacted under section 4(3) of the PCC Act to allow for an existing qualified global business to be converted into a PCC.

  3. Incorporation and Registration of the Mauritius PCC
    In order to be registered or incorporated as a PCC under the PCC Act, a company may carry out either of the following qualified global business activities:

    • Asset holding;

    • Collective investment schemes;

    • Insurance business

    • Specialised collective investment schemes

    • Structured finance businesses

    The registration process is similar to that of setting up a Category 1 Global Business Company and have the following features:-

  4. Features of the Mauritius PCC

    1. Legal Structure

      Under the PCC Act, a PCC is a single legal person. The creation of a cell by a PCC does not create, in respect of that cell, a legal person separate from the company. A PCC operates in two distinct parts; these parts are the Core and the Cells. There is one Core; but there may be numerous Cells.

    2. Name and Constitution

      A PCC may be easily identified from a non-PCC in that, by law, there must be included within the name of the company either the letters ‘PCC’ or the words ‘Protected Cell Company’.

      Each cell of a PCC must have its own distinct name or designation or denomination, which should be clearly set out in the agreement governing the subscription for cell shares.

    3. Creation of one or more cells

      A PCC may create one or more cells within the company, the assets of each of which must be segregated. There may be an unlimited number of cells within a PCC.

    4. Cellular and non-cellular assets

      The assets of a PCC can be either cellular or non-cellular or a combination of both. The cellular assets comprise assets attributable to the cells (Cell Assets) whereas other assets are non-cellular and attributed to the Core (Core Assets).

    5. Shares and Share Capital

      A PCC will generally have two classes of shares:

      • Ordinary shares, which control the Core, these being the voting shares of the PCC
      • Cellular shares, which are related to individual Cells and which will be distinct and separate from other Cells. The voting rights of Cellular shares are limited to the management of its respective cell.
    6. Management of the PCC

      The assets of a PCC can be either cellular or non-cellular or a combination of both. The cellular assets comprise assets attributable to the cells (Cell Assets) whereas other assets are non-cellular and attributed to the Core (Core Assets).

    7. Management of the PCC

      Like any other company, the PCC is managed by its Board of Directors. However, the management may be transferred or shared through a management contract to an Investment Manager in the case of collective investment schemes.

    8. Reporting requirements

      A PCC is required to submit annual audited accounts to the FSC only.
      Tax returns need also be filed accompanied by statement of accounts signed by directors.

    9. Taxation

      A protected cell company will have to pay tax on a cell basis. If the PCC is a qualified global business company, each cell would therefore be taxed at a rate of 15% but application of the “deemed foreign tax credit regulations” could reduce the tax liability to as low as 3%.

  5. Liability of the Mauritius PCC
    The PCC Act sets out the transaction terms of a PCC with regards to its liabilities and the provisions thereof for the recourse to cellular assets by creditors and the protection of creditors.

  6. Winding up and Liquidation Procedures for the Mauritius PCC
    Unlike other qualified global business companies, dissolution of the PCC is addressed by special provisions in the PCC Act, which provides for receivership and administration orders and new recourse to the creditor of the insolvent cell to the assets of the other solvent cells. Special winding up procedures are provided in the PCC Act, which protects contagion of solvent cells by insolvent ones.