User:Atlaspcc/protectedCells

What is a Protected Cell Company?

The purpose of forming a Protected Cell Company (PCC) or converting into a PCC is to create, within an insurance company, one or more cells to segregate and protect the assets of each cell. Assets belonging to a PCC are classified into cellular or non-cellular (which are known as the core) assets. Directors must keep both types of assets identifiable keeping separate records and accounts.

A PCC may create and issue cell shares (often preference shares) the proceeds of which go to cellular assets attributable to the cell. A PCC may pay dividend to the owners of the cell shares.

Assets attributable to a cell are only available to creditors in respect of that cell and are absolutely protected from all the other creditors of the PCC. Where a liability arises attributable to a particular cell, the assets of that cell shall primarily be used to settle that liability. Should the assets of that cell be insufficient to meet its liabilities, then the PCC’s non-cellular assets are secondarily used. Other cells remain untouched.

This gives cell owners the confidence that their assets and liabilities are segregated and are separate from those of other cell owners. Even if the core company for any reason goes into liquidation, each cell would still be fully protected and may not be called upon to pay for the insolvency of the core. The cell owners retain assets and could repatriate and look for another core host.