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  • Part 4: Part 4: Protected Cell Companies

    • Article 93 - Protected Cell Companies

      (1) A form of legal entity known as a protected cell company may be incorporated in the QFC.
      (2) Subject to the provisions of this Part, a Company may be:
      (A) incorporated as a PCC; or
      (B) converted, if so authorised by its articles of association and approved by the CRO, into a PCC.
      (3) For the avoidance of doubt, and notwithstanding that a PCC may have created one or more Cells under this Part:
      (A) a PCC is a single legal person; and
      (B) the creation by a PCC of a Cell does not create, in respect of that Cell, a legal person separate from the PCC.
      (4) The provisions of Part 3 of these Regulations, save as amended or varied by this Part and unless the context requires otherwise, shall apply in relation to a PCC as if references therein to "LLC" were references to "PCC".

    • Article 94 - Creation of Cells

      A PCC may create one or more Cells for the purpose of segregating and protecting Cellular Assets in the manner provided by this Part.

    • Article 95 - Cellular and Non-Cellular Assets

      (1) The assets of a PCC shall be either Cellular Assets or Non-Cellular Assets.
      (2) It shall be the duty of the directors of a PCC:
      (A) to keep Cellular Assets separate and separately identifiable from Non-Cellular Assets; and
      (B) to keep Cellular Assets attributable to each Cell separate and separately identifiable from Cellular Assets attributable to other Cells.
      (3) The Cellular Assets of a PCC comprise the assets of the PCC attributable to the Cells of the PCC.
      (4) The assets attributable to a Cell of a PCC comprise:
      (A) assets represented by the proceeds of Cell Share Capital and reserves attributable to the Cell; and
      (B) all other assets attributable to the Cell.
      (5) For the purposes of Article 95(4), the expression "reserves" includes retained earnings, capital reserves and share premiums.
      (6) The Non-Cellular Assets of a PCC comprise the assets of the PCC which are not Cellular Assets.
      (7) Notwithstanding the provisions of Article 95(2), the directors of a PCC may cause or permit Cellular Assets and Non-Cellular Assets to be held:
      (A) by or through a nominee; or
      (B) by a PCC the Shares and capital interests of which may be Cellular Assets or Non-Cellular Assets, or a combination of both.
      (8) The duty imposed by Article 95(2) is not breached by reason only that the directors of a PCC cause or permit Cellular Assets or Non-Cellular Assets, or a combination of both, to be collectively invested, or collectively managed by an investment manager, provided that the assets in question remain separately identifiable in accordance with Article 95(2).

    • Article 96 - Position of creditors

      (1) The rights of creditors of a PCC shall correspond with the liabilities provided for in Article 103.
      (2) No such creditor shall have any rights other than the rights referred to in this Article 96 and in Articles 97 and 103.
      (3) There shall be implied (except insofar as the same is expressly excluded in writing) in every transaction entered into by a PCC the following terms:
      (A) that no party shall seek, whether in any proceedings or by any other means whatsoever or wheresoever, to make or attempt to use any Cellular Assets attributable to any Cell of the PCC to satisfy a liability not attributable to that Cell;
      (B) that if any party succeeds by any means whatsoever or wheresoever in using any Cellular Assets attributable to any Cell of the PCC to satisfy a liability not attributable to that Cell, that party shall be liable to the PCC to pay a sum equal to the value of the benefit thereby obtained by him; and
      (C) that if any party succeeds in seizing or attaching by any means or otherwise levying execution against any Cellular Assets attributable to any Cell of the PCC to satisfy a liability not attributable to that Cell, that party shall hold those assets or their proceeds on trust for the PCC and shall keep those assets or proceeds separate and identifiable as such trust property.
      (4) All sums recovered by a PCC as a result of any such trust as is described in Article 96(3)(C) shall be credited against any concurrent liability imposed under the implied term set out in Article 96(3)(B).
      (5) Any asset or sum recovered by a PCC under the implied term set out in Article 96(3)(B) or 96(3)(C) or by any other means whatsoever or wheresoever in the events referred to in those Articles shall, after the deduction or payment of any costs of recovery, be applied by the PCC so as to compensate the Cell affected.
      (6) In the event of any Cellular Assets attributable to a Cell of a PCC being taken in execution in respect of a liability not attributable to that Cell, and insofar as such assets or compensation in respect thereof cannot otherwise be restored to the Cell affected, the PCC shall:
      (A) cause or procure its auditor, acting as expert and not as arbitrator, to certify the value of the assets lost by the Cell affected; and
      (B) transfer or pay to the Cell affected, from the Cellular or Non-Cellular Assets to which the liability was attributable, assets or sums sufficient to restore to the Cell affected the value of the assets lost.
      (7) Where under Article 96(6)(B) a PCC is obliged to make a transfer or payment from Cellular Assets attributable to a Cell of the PCC, and those assets are insufficient, the PCC shall so far as possible make up the deficiency from its Non-Cellular Assets.
      (8) This Article shall apply to Cellular and Non-Cellular Assets of a PCC wherever situated and notwithstanding any statutory provision or rule of law to the contrary.
      Amended (as from 5th April 2015).

    • Article 97 - Recourse to Cellular Assets by creditors

      Without prejudice to the provisions of Articles 96 and 103, Cellular Assets attributable to a Cell of a PCC:

      (1) shall only be available to the creditors of the PCC who are creditors in respect of that Cell and who are thereby entitled, in conformity with the provisions of this Part, to have recourse to the Cellular Assets attributable to that Cell; and
      (2) shall be absolutely protected from the creditors of the PCC who are not creditors in respect of that Cell and who accordingly are not entitled to have recourse to the Cellular Assets attributable to that Cell.

    • Article 98 - Cell Shares and Share capital

      (1) A PCC may, in respect of any of its Cells, create and issue Shares the proceeds of the issue of which shall be comprised in the Cellular Assets attributable to the Cell in respect of which the Cell Shares were issued.
      (2) The proceeds of the issue of Shares other than Cell Shares created and issued by a PCC shall be comprised in the PCC's Non-Cellular Assets.
      (3) A PCC may pay a dividend in respect of its Cell Shares.
      (4) Dividends may be paid in respect of Cell Shares by reference only to the Cellular Assets and liabilities, or the profits, attributable to the Cell in respect of which the Cell Shares were issued; and accordingly, in determining whether or not such a dividend may lawfully be paid, no account need be taken of:
      (A) the profits and losses, or the assets and liabilities, attributable to any other Cell of the PCC; or
      (B) non-cellular profits and losses, or assets and liabilities.

    • Article 99 - Reduction of Cell Share Capital

      (1) The provisions of Article 30 shall apply both in relation to a PCC and to one or more Cells of a PCC.
      (2) In the application of Article 30 to a PCC, references in Article 30 to "LLC" shall be interpreted as references to a PCC or to a Cell of a PCC, as the case may be.

    • Article 100 - Name and articles of association of PCC

      (1) The name of a PCC shall end in the expression "Protected Cell Company", "PCC" or any cognate expression approved in writing by the CRO.
      (2) The articles of association of a PCC shall state that it is a PCC.
      (3) A PCC may, in order to comply with Article 100(2), alter its articles of association by Special Resolution.
      (4) Unless and until a PCC has complied with the provisions of this Article 100, it shall be deemed not to be a PCC.
      (5) Each Cell of a PCC shall have its own distinct name or designation.

    • Article 101 - Requirements for a PCC

      A Company may not be incorporated as a PCC, and an existing Company may not be converted into a PCC, unless:

      (1) the Regulatory Authority has consented in writing to the incorporation or conversion; and
      (2) the PCC is, or is to be:
      (A) an Insurer; or
      (B) a Collective Investment Fund.

    • Article 102 - Incorporation of Company as PCC

      A person wishing to incorporate a Company as a PCC shall make an application to the CRO for the incorporation of the PCC in accordance with Part 3 of these Regulations.

    • Article 103 - Liability of Cellular Assets

      (1) Subject to the provisions of Article 103(2), and save to the extent that the PCC may have agreed that a liability shall be the liability solely of the PCC's Non-Cellular Assets, or of the Cellular Assets attributable to a particular Cell of the PCC, where any liability arises which is attributable to a particular Cell of a PCC:
      (A) the Cellular Assets attributable to that Cell shall be primarily used to satisfy the liability;
      (B) the PCC's Non-Cellular Assets shall be secondarily used to satisfy the liability, provided that the Cellular Assets attributable to the relevant Cell have been exhausted; and
      (C) any Cellular Assets not attributable to the relevant Cell shall not be used to satisfy the liability.
      (2) In the case of loss or damage which is attributable to a particular Cell of a PCC and which is caused by fraud, the loss or damage shall be the liability solely of the PCC's Non-Cellular Assets, without prejudice to any liability of any person other than the PCC.
      (3) Any liability not attributable to a particular Cell of a PCC shall be the liability solely of the PCC's Non-Cellular Assets.
      (4) Notwithstanding the above provisions of this section:
      (A) the liabilities under Article 103(1)(A) of the Cellular Assets attributable to a particular Cell of a PCC shall abate rateably until the value of the aggregate liabilities equals the value of those assets except that the provisions of this paragraph shall be disregarded in assessing the existence and extent of any secondary liability under Article 103(1)(B); and
      (B) the liabilities of the PCC's Non-Cellular Assets shall abate rateably until the value of the aggregate liabilities equals the value of those assets.
      (5) For the avoidance of doubt, a PCC may enter into arm's length transactions in respect of two or more of its Cells giving rise to reciprocal liabilities attributable to such Cells.
      (6) This Article 103 shall apply to the assets of the PCC wherever situated.

    • Article 104 - Disputes as to liability attributable to Cells

      (1) In the event of any dispute as to:
      (A) whether any right is or is not in respect of a particular Cell;
      (B) whether any creditor is or is not a creditor in respect of a particular Cell;
      (C) whether any liability is or is not attributable to a particular Cell; or
      (D) the amount to which any liability is limited
      the QFC Civil and Commercial Court, on the application of the PCC, and without prejudice to any other right or remedy of any person, may issue a declaration in respect of the matter in dispute.
      (2) The QFC Civil and Commercial Court, on hearing an application for a declaration under Article 104(1) may:
      (A) direct that any person shall be heard on the application;
      (B) make an interim declaration, or adjourn the hearing, conditionally or unconditionally;
      (C) make the declaration subject to such terms and conditions as it thinks fit; or
      (D) direct that the declaration shall be binding upon such persons as may be specified.
      Amended by QFCA RM2012-1 (as from 11th April 2012)

    • Article 105 - PCC to inform persons they are dealing with PCC

      (1) A PCC shall prior to transacting with a person:
      (A) inform any person with whom it transacts that it is a PCC; and
      (B) for the purposes of that transaction, identify or specify the Cell in respect of which that person is transacting, unless that transaction is not a transaction in respect of a particular Cell.
      (2) If, in contravention of Article 105(1), a PCC:
      (A) fails to inform a person that he is transacting with a PCC, and that person is otherwise unaware that, and has no reasonable grounds to believe that, he is transacting with a PCC; or
      (B) fails to identify or specify the Cell in respect of which a person is transacting, and that person is otherwise unaware of, and has no reasonable basis of knowing, which Cell he is transacting with;
      then, in either such case:
      (C) the directors shall (notwithstanding any provision to the contrary in the PCC's articles of association or in any contract with the PCC or otherwise) incur personal liability to that person in respect of the transaction; and
      (D) the directors shall have a right of indemnity against the Non-Cellular Assets of the PCC, unless they were fraudulent, reckless or negligent, or acted in bad faith.
      (3) Notwithstanding the provisions of Article 105(2)(1), the QFC Civil and Commercial Court may relieve a director of all or part of his personal liability thereunder if he satisfies the QFC Civil and Commercial Court that he ought to be so relieved because:
      (A) he was not aware of the circumstances giving rise to his liability and, in being not aware, he was neither fraudulent, reckless or negligent, nor acted in bad faith; or
      (B) he expressly objected, and exercised such rights as he had as a director, whether by way of voting power or otherwise, so as to try to prevent the circumstances giving rise to his liability.
      (4) Where, pursuant to the provisions of Article 105(3), the QFC Civil and Commercial Court relieves a director of all or part of his personal liability under Article 105(2)(C), the QFC Civil and Commercial Court may order that the liability in question shall instead be met first by any other director or directors whose personal liability is not relieved and thereafter, if necessary, from such of the Cellular or Non-Cellular Assets of the PCC as may be specified in the order.
      (5) Any provision in the articles of association of a PCC, and any other contractual provision under which the PCC may be liable, which purports to indemnify directors in respect of conduct which would otherwise disentitle them to an indemnity against Non-Cellular Assets by virtue of Article 105(2)(D), shall be void.
      Amended by QFCA RM2012-1 (as from 11th April 2012)

    • Article 106 - Attribution of Non-Cellular Assets and Liabilities

      (1) Liabilities of a PCC not otherwise attributable to any of its Cells shall be discharged from the PCC's Non-Cellular Assets.
      (2) Income, receipts and other property or rights of or acquired by a PCC not otherwise attributable to any Cell shall be applied to and comprised in the PCC's Non-Cellular Assets.

    • Article 107 - Provisions in relation to winding up of PCC

      (1) Notwithstanding any statutory provision or rule of law to the contrary, in the winding up of a PCC (whether compulsory or voluntary or subject to the supervision of the QFC Civil and Commercial Court and whether solvent or insolvent):
      (A) the assets forming part of the estate shall only be the Non-Cellular Assets;
      (B) the winding up shall not terminate any agency, or in any way whatsoever affect the authority or power, of any Officer, administrator, servant or agent of the PCC or any other person appointed over the PCC or any of the Cellular Assets; and
      (C) if and to the extent that any liquidator of the PCC has any dealing with, or has possession custody or control of, any of the Cellular Assets, he shall be subject to the duty set out in Article 95(2) as if he were a director.
      Amended by QFCA RM2012-1 (as from 11th April 2012)

    • Article 108 - Transfer of Cellular Assets from PCC

      (1) Subject to the provisions of Article 108(3), the Cellular Assets attributable to any Cell of a PCC, but not the Non-Cellular Assets of a PCC, may be transferred to another person, wherever resident or incorporated, and whether or not a PCC.
      (2) A transfer under Article 108(1) of Cellular Assets attributable to a Cell of a PCC shall not of itself entitle creditors of that PCC to have recourse to the assets of the person to whom the Cellular Assets were transferred.
      (3) No transfer of the Cellular Assets attributable to a Cell of a PCC may be made except under the authority of, and in accordance with the terms and conditions of, an order of the QFC Civil and Commercial Court under this Article (a "Cell transfer order").
      (4) The QFC Civil and Commercial Court shall not make a Cell transfer order in relation to a Cell of a PCC unless it is satisfied:
      (A) that the creditors of the PCC entitled to have recourse to the Cellular Assets attributable to the Cell consent to the transfer; or
      (B) that those creditors would not be unfairly prejudiced by the transfer.
      (5) The QFC Civil and Commercial Court, on hearing an application for a Cell transfer order:
      (A) may make an interim order or adjourn the hearing, conditionally or unconditionally; or
      (B) may dispense with any of the requirements of Article 108(4).
      (6) The QFC Civil and Commercial Court may attach such conditions as it thinks fit to a Cell transfer order, including conditions as to the discharging of claims of creditors entitled to have recourse to the Cellular Assets attributable to the Cell in relation to which the order is sought.
      (7) The QFC Civil and Commercial Court may make a Cell transfer order in relation to a Cell of a PCC notwithstanding that:
      (A) a liquidator has been appointed to act in respect of the PCC or the PCC has passed a resolution for voluntary winding up; or
      (B) an administration order has been made in respect of the Cell, the PCC or any other Cell thereof.
      (8) Notice of an application to the QFC Civil and Commercial Court for a Cell transfer order shall be served upon:
      (A) any liquidator or administrator of the PCC or the Cell concerned;
      (B) the Regulatory Authority; and
      (C) such other persons (if any) as the QFC Civil and Commercial Court may direct.
      (9) The provisions of this Article are without prejudice to any power of a PCC lawfully to make payments or transfers from the Cellular Assets attributable to any Cell of the PCC to a person entitled, in conformity with the provisions of this Part, to have recourse to those Cellular Assets.
      (10) For the avoidance of doubt, a PCC shall not require a Cell transfer order in order to invest, and change investment of, Cellular Assets or otherwise to make payments or transfers from Cellular Assets in the ordinary course of the PCC's Business.
      Amended by QFCA RM2012-1 (as from 11th April 2012)

    • Article 109 - Administration orders in relation to PCCs or Cells

      (1) Notwithstanding any statutory provision or rule of law to the contrary, an administrator may be appointed under the Insolvency Regulations in respect of a PCC or in respect of one or more Cells of a PCC.
      (2) Where an administrator is appointed under the Insolvency Regulations in respect of one or more Cells of a PCC, the relevant provisions of the Insolvency Regulations shall apply as if references therein to a Company were to be interpreted as references to a Cell.