Malta Cell Companies: Recognised Incorporated Cell Company (RICC)

Malta Recognised Incorporated Cell Company (RICC)

The Recognised Incorporated Cell Company is a company which is duly recognised in terms of Companies Act (Recognised Incorporated Cell Companies) Regulations (the “Regulations”) which may establish and provide services to separate Incorporated Cells (ICs) in turn duly licenced as Collective Investment Schemes.

The Recognised Incorporated Cell Companies Regulations brought about a platform type of model consisting of an incorporated cell company providing standardised administrative services to any number of ICs.  Such Incorporated Cells carry a separate legal personality from each other and are subject to a Collective Investment Scheme licence from the MFSA (with the exception of the Notified AIF).

The administrative services provided by the RICC consist mainly of routine contractual matters and start-up support. Specifically, the Schedule to the Regulations lists the following services which may be carried out by the RICC.

The Schedule to Regulations

  1. Affirms the concept of separate legal personality of each IC (each IC is rind fenced), and
  2. Accommodates popular international demand by introducing a ‘platform’ type of model by providing standardised administrative services to its ICs, which administrative services largely consist of routine contractual matters and start-up support.

Services carried out by RICC

A RICC may provide any one or more of the following services to the ICs:

  • Provision of administrative services related to the establishment of ICs;
  • Procurement of external service providers and approval of any changes thereto;
  • Negotiation of service provision agreements and changes thereto;
  • Submission of any model agreements to be used by the ICs;
  • Submission to the MFSA of any changes or amendments to model agreements and submission of any new model agreements negotiated with service providers for the approval of the MFSA;
  • Signature of tripartite agreements between service providers, the RICC and an IC based on the model agreements;
  • Standardisation of any other documentation to be used by ICs;
  • Approval and joint signature of any applications for licences (including variations, extensions thereof) to be submitted by or on behalf of incorporated cells which are in the course of being formed;
  • Provision of written declarations identifying any changes to model agreements already submitted to the MFSA, including a NIL declaration confirming that no changes have been made;
  • Provision of ancillary services as may be approved by the MFSA.

It is important here to note that a RICC may not carry out any other activity that may require a licence under the Investment Services Act. Thus it may not provide any IC with, for example, investment management services.

Other advantages for establishing a RICC include the following:

  • Possibility of ICs to establish segregated sub-funds (not themselves ICs);
  • Possibility of Cross-IC investment and intra-IC contracting;
  • Possibility for the RICC to generate revenue streams from a platform fee;
  • Relocation/ migration provisions. ICs may to migrate in and out of the RICC they share with other ICs and either relocate to another RICC (by means of a relocation agreement setting out the terms upon which the said relocation is to take place) or establish themselves as separate independent schemes.

Application for Recognition

The MFSA will not recognise an applicant for recognition unless it is satisfied that the said Applicant and its directors are fit and proper. In any case, the provision of administrative services by the RICC shall be effectively directed or managed by at least two individuals in satisfaction of the “dual control” principle. Such persons shall be of sufficiently good repute and sufficiently experienced so as to ensure the sound and prudent management of the RICC.

Furthermore it is to be noted that the MFSA would expect at least one director of the RICC to be based in Malta.

The Application Process

There are 3 phases:

  1. Phase One – Preparatory
  2. Phase Two – Pre-Recognition
  3. Phase Three – Post-Recognition /Pre-Commencement of Business

The application for recognition must be accompanied by an application for licencing of the first IC which is to be included in the platform structure of the RICC. Both applications shall be dealt with separately by the MFSA, however no IC may be granted a licence before a Recognition Certificate has been issued to its RICC.

The conditions for the application of the IC would depend on type of collective investment scheme licence the IC intends applying for.

The introduction of the RICC regime in 2012 has added depth to Malta’s modern and coherent legal framework and should serve to bolster Malta’s position as a European financial services hub.

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