COMPANIES ACT (CELL COMPANIES CARRYING ON BUSINESS OF INSURANCE) REGULATIONS

SUBSIDIARY LEGISLATION 386.10

COMPANIES ACT (CELL COMPANIES CARRYING

ON BUSINESS OF INSURANCE) REGULATIONS

30th April, 2010

LEGAL NOTICE 243 of 2010, as amended by Legal Notices 391 of 2015

and 201 of 2024.

The title of these regulations is the Companies Act (Cell

Companies Carrying on Business of Insurance) Regulations.

(Regulation 16)

Notification to the Registrar

Reg. No. of Cell Company........................

Notice of approval for the transfer of the cellular assets of a cell

company to another cell company

Name of Cell Company............................................................

Name of Cell...............................................................................

Delivered by............................................................................

To the Registrar of Companies

I/We hereby give you notice that the draft terms of agreement

have been delivered to the competent authority in terms of Insurance

Rules made specifically for the purposes of the Companies Act (Cell

Companies Carrying on Business of Insurance) Regulations (S.L.

386.10). It is being proposed, and approval is being sought from the

competent authority, that the Cell Company transfers the cellular

*Revoked by these regulations.

assets attributable to any one of its cells [include name of cell/s] to

another cell company [include name of Cell Company] authorised

under Article 7 of the Insurance Business Act (Cap. 403)/ enrolled as

an insurance manager under the Insurance Distribution Act (Cap. 487)/

enrolled as an insurance broker under the Insurance Distribution Act

(Cap. 487)*.

Signature of Director/s (a)..........................................

This form must be completed in typed form.

(a)

In the case of a company having more than two directors,

this declaration is to be submitted and signed by the majority of

directors.

*Delete as necessary

(1)

In these regulations, unless the context otherwise

requires -

"the Act" means the Companies Act;

"approved auditor" and "auditor" shall have the same meaning

assigned to them by article 21(10) of the Insurance Business Act;

"business of insurance" has the same meaning as is assigned to it

in article 2(1) of the Insurance Business Act, and shall include

business carried on by a captive insurance undertaking and a

captive reinsurance undertaking as defined in the Insurance

Business Act, the business of insurance manager, as well as the

business of insurance broking under the Insurance Distribution Act;

"cell" means a cell created by a cell company for the purpose of

segregating and protecting the cellular assets of the company in the

manner provided by these regulations and includes a reference to

segregated accounts, compartments or units within a company

having multiple accounts, compartments or units, by whatever

name designated, and the word "cellular" shall be interpreted and

applied accordingly;

"cell company" is a company formed or constituted as such or

converted into a cell company and creating within itself one or

more cells for the purposes of segregating and protecting the

cellular assets of the company in accordance with the provisions of

these regulations, and in relation to the business of insurance

manager, as well as the business of insurance broking, reference to

"company" shall include reference to a partnership en commandite

or a similar or equivalent body corporate, which has its capital

divided into shares;

"cell shares" means shares created and issued by a cell company

in respect of one of its cells pursuant to the provisions of regulation

10, the proceeds of the issue of which (the "cell share capital")

shall be comprised in the cellular assets attributable to that cell;

"cell share capital" means the proceeds of issue of cell shares;

"cell transfer approval" means an approval of the competent

authority under regulation 16 approving the transfer of the cellular

assets attributable to any cell of a cell company to another person;

"cellular assets" of a cell company means the assets of the

company attributable to any cell of the company pursuant to

regulation 9(4);

"cellular dividend" means a dividend payable by a cell company

in respect of cell shares pursuant to the provisions of regulation

10(3);

"competent authority" means the Malta Financial Services

Authority established by the Malta Financial Services Authority

Act;

"Insurance Rule" has the same meaning as is assigned to it by

article 2 of the Insurance Business Act;

"non-cellular assets" of a cell company comprise the assets of the

company which are not cellular assets.

(2) Words and expressions which are also used in the Act

shall, in these regulations, have the same meanings as in the Act.

Added by

(Regulation 17)

L.N. 201 of 2024.

Declaration of Solvency or Insolvency of a cell

Reg. No. of Cell Company........................

Name of Cell Company..............................................

Name of Cell........................................................................

Delivered by............................................................................

To the Registrar of Companies

I/We <Name & Surname> being the director/s (a) of (b) <Name

of cell company>. hereby declare in accordance with regulation 17(3)

of the Companies Act (Cell Companies Carrying on Business of

Insurance) Regulations (S.L. 386.10) that cell <NAME OF THE

CELL> is being wound up and that I/we have made a full inquiry into

the affairs of the said cell and have formed the opinion that the said

cell is solvent/ insolvent*.

A statement of the cell’s assets and liabilities made up to <Day>

………....day of <Month>………… of the year <Year>……………..

is being attached as part of this declaration.

Signature.........................................................................................

<Name>

Director/s

Dated this ………………….<Day> day of ………….<Month>

of the year <Year>.

This form must be completed in typed form.

This declaration is to be delivered together with the notice of

dissolution.

(a)

In the case of a cell company having more than two

directors, this declaration is to be submitted and signed by the majority

of directors.

(b)

State cell company name.

* Delete as necessary

(1)

Subject to the provisions of these regulations

(a) a company may be formed or constituted as a cell

company to carry on business of insurance; or

(b) a company carrying on business of insurance may be

converted, if so authorised by its memorandum and

articles of association, into a cell company.

(2) Notwithstanding that a cell company may have created one

or more cells

(a) a cell company is a single legal person; and

(b) the creation by a cell company of a cell does not

create, in respect of that cell, a legal person separate

from the company.

(3) Save as otherwise provided for by these regulations, the

provisions of the Act, the Insurance Business Act and the Insurance

Distribution Act, as the case may be, shall apply to a cell company

Provided that, in so far as the provisions of the Act are

inconsistent with the provisions of the Insurance Business Act and

the Insurance Distribution Act, as the case may be, the provisions of

the Insurance Business Act and the Insurance Distribution Act shall

prevail and the provisions of the Act shall, to the extent of the

inconsistency, not apply to a cell company.

(1) The name of a cell company shall, without prejudice to

the provisions of the Act, include the expression "Protected Cell

Company" or "PCC".

(2) The memorandum and articles of association of a cell

company shall state that it is a cell company.

(3) A company shall not be deemed to be a cell company until

it has complied with the provisions of this regulation.

(4) Each cell of a cell company shall have its own distinct

name or designation.

(5)

In addition to, and without prejudice to article 6 of the Act,

a cell company shall also indicate in a suitable manner in all its

business letters and forms that it is a cell company.

(1) A company may not be formed or constituted as a cell

company, and an existing company may not be converted into a cell

company, except in accordance with the terms and conditions of the

written approval of the competent authority which shall only be

granted in the case of a company which will, when formed or

constituted, be authorised or, when converted, is an undertaking

authorised in terms of article 7 of the Insurance Business Act to

carry on business of insurance or a company enrolled in the

M a n a g e r s ’ L i s t o r B r o k e r s ’ L i s t i n t e r m s o f t h e Insurance

Distribution Act.

(2) An authorised reinsurance undertaking, or a captive

insurance undertaking or a captive reinsurance undertaking may be

formed or constituted as a cell company or may be converted into a

cell company in terms of these regulations.

(3) For the purposes of these regulations, the competent

authority may, by Insurance Rules, from time to time, specify or

restrict the classes of insurance a cell company may carry on, and

the class or classes of persons, for, or in relation to whom, a cell

may be created by a cell company.

(4) The competent authority may, from time to time, in such a

manner as it deems appropriate

(a) vary or revoke any term or condition subject to which

an approval under sub-regulation (1) was granted; and

(b) impose any new term or condition in relation to any

such approval.

An application for the approval of the competent authority

for the formation or constitution of a company as a cell company,

for the conversion of an existing company into a cell company or

for the creation of a new cell shall be made to the competent

authority in such form and manner, and shall be accompanied by

such documents and information verified in such manner, as the

competent authority may, from time to time, determine.

A person wishing to form or constitute a company as a cell

company, or convert an existing company into a cell company shall

d e l i v e r t o t h e R e g i s t r a r f o r r e g i s t r a t i o n o f t h e c o m p a n y ’s

memorandum and articles, or a copy of the resolution amending the

company’s memorandum or articles, as the case may be.

Subject to the prior written approval of the competent

authority, a cell company may create one or more cells for the

purposes of segregating and protecting cellular assets in the manner

provided by these regulations.

(1) The assets of a cell company shall be either cellular

assets or non-cellular assets.

(2)

It shall be the duty of the directors of a cell company to

keep

(a) cellular assets separate and separately identifiable

from non-cellular assets;

(b) cellular assets attributable to each cell separate and

separately identifiable from cellular assets attributable

to other cells; and

(c) separate records, accounts, statements and other

documents as may be necessary to evidence the assets

and liabilities of each cell as distinct and separate from

the assets and liabilities of other cells in the same

company.

(3) The cellular assets of a cell company comprise the assets of

the company attributable to the cells of the company.

(4)

The assets attributable to a cell of a cell company 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 sub-regulation (4), the expression

"reserves" includes retained earnings, capital reserves and share

premiums.

(6) The non-cellular assets of a cell company comprise the

assets of the company which are not cellular assets.

(7) Notwithstanding the provisions of sub-regulation (2), the

directors of a cell company may cause or permit cellular assets and

non-cellular assets to be held by a company, 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 sub-regulation (2) is not breached by

reason only that the directors of a cell company 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 sub-regulation (2).

(1) A cell company may, in respect of any of its cells,

create and issue shares ("cell shares") the proceeds of the issue of

which ("cell share capital") 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 cell company, shall be comprised in the

non-cellular assets of the company.

(3) A cell company may pay a dividend (a "cellular dividend")

in respect of cell shares.

(4) Cellular 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 profits are

available for the purposes of paying a cellular dividend, no account

shall be taken of -

(a) the profits and losses, or the assets and liabilities,

attributable to any other cell of the company; or

(b) non-cellular profits and losses, or non-cellular assets

and liabilities.

(5) Unless the context otherwise requires, references to shares

in the Act include references to cell shares.

(1) A cell company shall

(a) inform, in writing, any person with whom it transacts

business of insurance that it is a cell company; 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.

(1) A creditor of a cell company shall not have any rights

other than the rights referred to in this regulation and in regulations

13 and 14.

(2) In every transaction entered into by a cell company, there

shall be implied, the following terms, namely that -

(a) no party shall seek, whether in any proceedings or by

any other means whatsoever, to make or attempt to use

any cellular assets attributable to any cell of the

company to satisfy a liability not attributable to that

cell; and

(b) if any party succeeds by any means whatsoever in

using any cellular assets attributable to any cell of the

company to satisfy a liability not attributable to that

cell, that party shall be liable to the company to pay a

sum equal to the value of the benefit thereby obtained

by him.

(3) Any asset or sum recovered by a cell company under the

implied term set out in sub-regulation (2)(b) or by any other means

whatsoever in the events referred to in that paragraph shall, after

the deduction or payment of any costs of recovery, be applied by

the company so as to compensate the cell affected.

(4) In the event of an executive warrant being issued or

enforced on any cellular assets attributable to a cell of a cell

company in respect of a liability not attributable to that cell, and in

so far as such assets or compensation in respect thereof cannot

otherwise be restored to the cell affected, the company 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.

(5)

Where under sub-regulation (4)(b) a cell company is

COMPANIES ACT (CELL COMPANIES

CARRYING ON BUSINESS OF INSURANCE)

obl iged to make a transfer or pa ym en t from c ell ular asset s

a t t r i b u t a b l e t o a c e l l o f t h e co m p a n y, a n d t h o s e a s s e t s a r e

insufficient, the company shall so far as possible make up the

deficiency from its non-cellular assets.

(6) This regulation shall apply to cellular and non-cellular

assets of a cell company wherever such assets are situated.

Without prejudice to regulations 12 and 14, cellular assets

attributable to a cell of a cell company shall -

(a) only be available to the creditors of the company who

are creditors in respect of that cell and who are thereby

entitled, in conformity with these regulations, to have

recourse to the cellular assets attributable to that cell;

(b) be absolutely protected from the creditors of the

company 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.

(1) Subject to the provisions of regulation 15, where any

liability arises which is attributable to a particular cell of a cell

company -

(a) the cellular assets attributable to that cell shall be

primarily used to satisfy the liability;

(b) the company’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) Any liability not attributable to a particular cell of a cell

company shall be the liability solely of the company’s non-cellular

assets.

(3)

Notwithstanding the above provisions of this regulation -

(a) the liabilities under sub-regulation (1)(a) of the

cellular assets attributable to a particular cell of a cell

company 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 sub-regulation (1)(b);

(b) the liabilities of the company’s non-cellular assets

shall abate rateably until the value of the aggregate

liabilities equals the value of those assets.

(4) This regulation shall apply to the cellular or non-cellular

assets of the company wherever such assets are situated.

(1) Notwithstanding the provisions of regulation 14,

where a cell exclusively carries on business of affiliated insurance

or business of reinsurance and provided that it is specifically

permitted by the memorandum and articles of association of the

cell company, the company may, by specific written agreement to

that effect, provide that only the cellular assets of that cell may be

utilised to satisfy the cellular liability of such cell

Provided that, where the business of the cell in question

relates to compulsory insurance, the cell company shall be obliged

to establish to the satisfaction of the competent authority sufficient

guarantees for the protection of insureds, policyholders, creditors

or other interested parties.

(2)

For the purposes of this regulation

"business of affiliated insurance" means the business of a cell

which carries on business of insurance or reinsurance restricted to

risks originating from

(a) an undertaking being the sole holder of the cell shares

of the particular cell; or

(b) undertakings in which the undertaking referred to in

paragraph (a) holds a participating interest; or

(c) an undertaking being the sole user of the particular

cell; or

(d) undertakings which are the sole users of the particular

cell and in which the undertaking referred to in

paragraph (c) holds a participating interest;

"business of reinsurance" means the business of a cell which

carries on an activity consisting in accepting risks ceded by an

insurance undertaking or by another reinsurance undertaking; and

"compulsory insurance" means any insurance which a person is

required by law to have in effect.

(3) Specific written agreements entered into in terms of sub-

regulation (1) shall be operative as between the contracting parties,

and shall not be of prejudice or advantage to third parties.

(4) A cell which exclusively carries on business of affiliated

insurance or business of reinsurance and which has entered into a

specific written agreement which provides that only the cellular

assets of that cell may be utilised to satisfy the cellular liability of

such cell, in line with this regulation, before the entry into force of

the Companies Act (Cell Companies Carrying on Business of

Insurance) (Amendment) Regulations, 2024 may continue to pursue

the business on the basis of the said specific written agreement

entered into in accordance with sub-regulation (1), as approved by

the competent authority prior to the entry into force of the

Companies Act (Cell Companies Carrying on Business of

Insurance) (Amendment) Regulations, 2024 in line with this

regulation, until ten (10) years from the date of the coming into

force of the said regulations, without prejudice to anything done or

omitted to be done under the provisions of these regulations, the

Insurance Business Act, and regulations and Insurance Rules issued

thereunder

Provided that where a cell continues to pursue the

business of affiliated insurance or business of reinsurance on the basis

of the specific written agreement entered into in accordance with sub-

regulation (1), such cell shall continue to comply with and adhere to

the provisions of these regulations during the specified ten (10) years

Provided further that, for the purposes of this regulation,

during the specified ten (10) years, the provisions of paragraph 5.5.95 of

Chapter 5 of the Insurance Rules shall not apply.

(5) Without prejudice to sub-regulation (4), this regulation shall

cease to have effect on the date of coming into force of the Companies

Act (Cell Companies Carrying on Business of Insurance)

(Amendment) Regulations, 2024 and shall only remain applicable to

those specific written agreements entered into in accordance with sub-

regulation (1) before the entry into force of the Companies Act (Cell

Companies Carrying on Business of Insurance) (Amendment)

Regulations, 2024.

(1) Notwithstanding the provisions of regulations 14 and

15, where a cell

(a)

exclusively carries on business of affiliated

insurance;

(b)

holds eligible basic own funds to cover the

Solvency Capital Requirement which shall not be less than the

Minimum Capital Requirement as though the said cell were an

authorised insurance undertaking or an authorised reinsurance

undertaking, in accordance with the requirements of article 15

and 17 of the Insurance Business Act, and any regulations and

Insurance Rules made for the purposes of the said articles; and

(c)

is specifically permitted by the memorandum and

articles of association of the cell company,

the cell company may, by specific written agreement to

that effect, provide that only the cellular assets of that cell may be

utilised to satisfy the cellular liability of such cell

Provided that where the business of the cell in question

relates to compulsory insurance, the cell company shall be obliged to

establish to the satisfaction of the competent authority sufficient

guarantees for the protection of insureds, policyholders, creditors or

other interested parties;

(2)

For the purposes of this regulation

"business of affiliated insurance" means the business of a cell

which carries on business of insurance or reinsurance restricted to

risks originating from

(a)

an undertaking being the sole holder of the cell

shares of the particular cell; or

(b)

undertakings in which the undertaking referred to

in paragraph (a) holds a participating interest; and

"compulsory insurance" means any insurance which a person is

required by law to have in effect.

(3) Specific written agreements entered into in terms of sub-

regulation (1) shall be operative as between the contracting parties, and

shall not be of prejudice or advantage to third parties.

(1)

It shall be lawful, subject to the provisions of sub-

regulation (3)

(a) for the cellular assets attributable to any cell of a cell

company, but not the non-cellular assets of a cell company,

to be transferred to

(i)

another cell company authorised under

article 7 of the Insurance Business Act;

(ii)

an authorised insurance undertaking or a

European insurance undertaking or a European

reinsurance undertaking as defined in the Insurance

Business Act;

(iii) a third country insurance undertaking as

defined in the Insurance Business Act; or

(iv) another cell of the same cell company

Provided that the cellular assets

attributable to a cell of a cell company may be

transferred to another cell of the same cell company, only

where

(aa) the transferring cell does not apply

the provisions of regulation 15; and

(bb) the shareholders of the transferring

cell and the receiving cell are the same persons;

(b) for the cellular assets attributable to any cell of a cell

company, enrolled in the Managers List, as defined in

the Insurance Distribution Act, but not the non-cellular

assets of a cell company, to be transferred to

(i)

a cell company enrolled as an insurance

manager under the Insurance Distribution Act; or

(ii)

an insurance manager enrolled under the

Insurance Distribution Act;

(c)

for the cellular assets attributable to any cell of a

cell company, enrolled in the Brokers List, as defined in the

Insurance Distribution Act, but not the non-cellular assets of a

cell company, to be transferred to

(i)

a cell company enrolled as an insurance

broker under the Insurance Distribution Act; or.

(ii)

an insurance broker enrolled under the

Insurance Distribution Act.

(2) A transfer, pursuant to sub-regulation (1), of cellular assets

attributable to a cell of a cell company shall not of itself entitle

creditors of that company to have recourse to the other assets of the

person to whom the cellular assets were transferred.

(3) No transfer of the cellular assets attributable to a cell of a

cell company may be made except with the specific written

approval of the competent authority (a "cell transfer approval").

(4) For the purpose of this regulation, the competent authority

may, by Insurance Rules, determine the procedure to be adopted for

the transfer of cellular assets from a cell company.

(5)

Repealed by Legal Notice 201 of 2024.

(6) The competent authority may subject a cell transfer

approval to such conditions as it may from time to time deem fit to

impose, 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 competent authority may issue a cell transfer approval

in relation to a cell of a cell company notwithstanding that a

liquidator has been appointed to act in respect of the company or

the company has passed a resolution for voluntary winding up

Provided that, the company proves to the satisfaction of the

competent authority that the transfer would not unfairly prejudice

creditors or other third parties.

(8) Notwithstanding the provisions of this regulation, a cell

company may make payments or transfers from the cellular assets

attributable to any cell of the company to a person entitled to have

recourse to those cellular assets.

(9) A cell company shall not require a cell transfer approval to

invest, and change investment of, cellular assets, or otherwise to

make payments or transfers from cellular assets in the ordinary

course of the company’s business.

(10) For the purposes of sub-regulations 1(a)(i), 1(b)(i) and

1( c) (i ), art ic le 83 o f th e A ct sha ll not apply. I n such case,

immediately after having sought the competent authority’s approval

in terms of sub-regulation (3), but before the cell transfer approval

is granted, the cell company intending to transfer the cellular assets

of a cell shall deliver to the Registrar for registration, a notice in

accordance with Schedule I, and the Registrar shall publish such

notic e on a website m aintained by h im i n ac cordance w ith

Insurance Rules issued hereunder.

(11) Where the competent authority has granted a cell transfer

approval, for the purposes of sub-regulation (1) and (3), the cell

company transferring the cellular assets shall deliver to the

Registrar for registration a copy of the cell transfer approval issued

by the competent authority.

(12) Where all the cellular assets of a cell of a cell company

have been transferred to another company, the Registrar shall

(a) proceed with striking off the name of the cell from

under the name of the cell company;

(b) register the name of the cell under the other company;

and

(c) inform the competent authority accordingly.

(1) In the event of the ceasing of a cell, the run-off or

servicing of a cell; and the winding up of a cell, the prior consent of

the competent authority, given in writing, shall be required.

(2) For the purpose of this regulation, the competent authority

may, by Insurance Rules, determine the procedure to be adopted for

the ceasing, run-off or servicing and winding up of a cell.

(3) Where the cell company informs the competent authority that

one of its cells intends to cease to carry on business, the said cell

company shall deliver to the Registrar for registration, a notice in

accordance with Schedule II informing the Registrar that one of its

cells shall be wound up, together with a confirmation of solvency or

insolvency of such cell.

(1) In relation to cells carrying on business of affiliated

insurance, a cell company shall not be required to make a

contribution to the Protection and Compensation Fund established

under article 49 of the Insurance Business Act in terms of 7(2) of

the Protection and Compensation Fund Regulations and no

payment of claims shall be made out of the Fund in relation to such

business.

(2) For the purposes of this regulation, "business of affiliated

insurance" has the same meaning as is assigned to it by regulation

15.

(1) Any person who is aggrieved by a decision of the

competent authority -

(a) to refuse to issue an approval for a company to be

constituted or formed as a cell company under

regulation 5; or

(b) for an existing company to be converted into a cell

company under regulation 5; or

(c) to refuse to issue an approval to a cell company to

create one or more cells under regulation 8; or

(d) to refuse to issue a cell transfer approval under regulation

16,

may appeal against the decision to the Financial Services Tribunal.

(2) The provisions of article 21 of the Malta Financial Services

Authority Act and article 57 of the Insurance Business Act and

article 50 of the Insurance Distribution Act shall apply mutatis

mutandis, as if the appeal has been made in terms of the Insurance

Business Act.

Cell companies and their cells shall comply with these

regulations and any agreement incompatible with these regulations

shall, to the extent of such incompatibility, be null and void.

Every authorisation, approval or order taken or

commenced under the Companies Act (Cell Companies Carrying

on Business of Insurance) Regulations, 2004, * shall continue to be

valid and in force, as if such authorisation, approval or order were

taken or commenced under these regulations.