Protected Cell Companies (PCC) in Malta

Protected Cell Companies (PCC) in Malta

The Protected Cell Companies (PCC) Regulations as addressed by the Companies Act (Cell Companies Carrying on Business of Insurance) Regulations provide for the constitution, or conversion, of insurance companies, insurance brokers and insurance managers licensed by the Malta Financial Services Authority (MFSA) into Cell Companies.  Such Regulations also cater for Captives and Reinsurers.

Main Highlights of a Malta Protected Cell Company (PCC)

The PCC Regulations allow a cell company to be formed in carrying out business of insurance, reinsurance, captive, insurance brokerage and insurance management. After successfully applying the concept of a PCC back in 2004, Malta’s PCC model allows the promoter to write insurance business through a cell by effectively utilising the cell company’s core capital.  This would then imply that the promoter need not comply with the “own funds” requirements if the cell company’s core capital is utilised effectively.  Below are additional key considerations which are worth noting.

  • Insurance intermediaries and principals may be constituted / converted into a Protected Cell Company (PCC);
  • Re-Domiciliation of Cell Companies will benefit from a continued business operation in / from Malta as outlined by the Continuance of Companies Regulations;
  • Cell shares are subscribed to by the shareholders of that particular cell;
  • The PCC’s shareholders are distinct from the shareholders of the individual Cells (PC’s);
  • A Cell Company may own all of its Cells;
  • A PCC together with its Cells is deemed to have a single legal personality;
  • Each Protected Cell carries a separate judicial personality from the assets and liabilities of other cells – no contamination of assets and liabilities. Nonetheless, creditors of a Cell carry the right to claim upon the PCC’s core assets;
  • The PCC and its Cells are considered separate for Malta Tax purposes;
  • Insurance service providers are exempt from VAT;
  • Insurance Premium Tax does not apply;
  • Cell Companies may distribute profits and thus benefit from Malta’s full imputation system of Tax and thus subject for a refund on Malta Tax suffered;
  • A duty on insurance policies executed in Malta would apply as outlined under the Duty on Documents and Transfers Act;
  • The initial paid-up share capital of a Cell Company shall not be less than 50% of the Company’s value of own funds;
  • Minimum own funds requirement for a business of insurance and reinsurance varies between €2.3Mil and €7Mil;
  • Minimum own funds requirement for Captives will vary between €2.3Mil and €3.5Mil;
  • Insurance undertakings will benefit from EU passporting rights.

Why Malta for a Protected Cell Company (PCC)?

Being the sole EU member with a separate legislation for Protected Cell Companies (PCCs) and Incorporated Cell Companies (ICCs), passport benefits within the EU/EEA, robust regulatory regime and a favourable tax system favours Malta’s position for the carrying of business insurance, insurance management and brokerage.

CSB Group offers bespoke advisory and project-management solution for the setting up of a Malta PCC.  Kindly contact us om [email protected] for more information.

 

 

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CSB Group
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