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

COMPANIES ACT (INCORPORATED CELL COMPANIES

CARRYING ON BUSINESS OF INSURANCE)

SUBSIDIARY LEGISLATION 386.13

COMPANIES ACT (INCORPORATED CELL

COMPANIES CARRYING ON BUSINESS

OF INSURANCE) REGULATIONS

1st February, 2011 *

LEGAL NOTICE 558 of 2010, as amended by Legal Notice 392 of 2015.

The title of these regulations is the Companies Act

(Incorporated Cell Companies Carrying on Business of Insurance)

Regulations.

(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" shall have the same meaning 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;

"competent authority" means the Malta Financial Services

Authority established by the Malta Financial Services Authority

Act;

"the Continuation Regulations" means the Companies Act

(Continuation of Companies) Regulations, and the Insurance

Business (Continuance of Companies Carrying on Business of

Insurance) Regulations;

"Financial Services Tribunal" means the Tribunal referred to in

article 21 of the Malta Financial Services Authority Act, and the

term "Tribunal" shall be construed accordingly;

"incorporation agreement" means an agreement setting out the

terms upon which a non-cellular company becomes an incorporated

cell of an incorporated cell company in accordance with the

provisions of regulation 22(5)(a);

"incorporated cell" means a cell of an incorporated cell company

created in accordance with the provisions of these regulations;

"incorporated cell company" means an undertaking formed and

registered as, continued as or transformed or divided into, an

incorporated cell company in accordance with the provisions of

these regulations and any other applicable law;

"non-cellular company" means a company which is neither an

*see regulation 1(2) of these Regulations, as originally promulgated, and Legal Notice

38 of 2011.

COMPANIES ACT (INCORPORATED CELL COMPANIES

CARRYING ON BUSINESS OF INSURANCE)

incorporated cell company, an incorporated cell nor a protected cell

"PCC Regulations" means the Companies Act (Cell Companies

Carrying on Business of Insurance) Regulations;

"protected cell" has the same meaning as "cell" in the PCC

Regulations;

"protected c ell company" has the same meaning a s "cell

company" in the PCC Regulations;

"relocation agreement" means an agreement setting out the terms

upon which the relocation of an incorporated cell from one

incorporated cell company to another is to take place in accordance

with the provisions of regulation 23.

(2) These regulations shall apply to undertakings carrying on

business of insurance and the definitions in this regulation shall be

construed accordingly.

(3) Words and expressions used in the Act shall, in these

regulations, have the same meaning as is given to them in the Act.

(1) A company may be formed or constituted as an

incorporated cell company to carry on business of insurance and

may establish incorporated cells in accordance with these

regulations.

(2)

Subject to the provisions of the Continuation Regulations -

(a) a body corporate, registered, incorporated or

constituted under the laws of an approved country or

jurisdiction outside Malta, and carrying on business of

insurance, which is similar in nature to an incorporated

cell company as known under the laws of Malta may

be continued as an incorporated cell company

Provided that, if such body corporate as aforesaid has

a cell or cells which are similar in nature to

incorporated cells as known under the laws of Malta,

the continuation of the body corporate shall require the

simultaneous continuation of all such cells as

incorporated cells;

(b) a body corporate, registered, incorporated or

constituted under the laws of an approved country or

jurisdiction outside Malta, and carrying on business of

insurance, which is similar in nature to a non-cellular

company as known under the laws of Malta may be

continued as an incorporated cell of an incorporated

cell company;

(c) an incorporated cell company may be continued as a

body corporate similar in nature to an incorporated cell

company as known under the laws of Malta under the

laws of a country outside Malta

Provided that, if such incorporated cell company has

an incorporated cell or incorporated cells in existence,

the continuation of the incorporated cell company

COMPANIES ACT (INCORPORATED CELL COMPANIES

CARRYING ON BUSINESS OF INSURANCE)

shall require the simultaneous continuation of all such

incorporated cells under the laws of such country

outside Malta; or

(d) an incorporated cell may be continued as a body

corporate under the laws of a country outside Malta.

(3) For the purpose of sub-regulation (2), the expression

"approved country or jurisdiction" means such country or

jurisdiction as may be established from time to time by guidelines

issued by the Registrar of Companies pursuant to the Continuation

Regulations.

(1) No event described in regulation 3 shall take place

except in accordance with the terms and conditions of the prior

written approval of the competent authority, which approval shall

only be granted in the case of an undertaking which is or which

shall be authorised in terms of article 7 of the Insurance Business

Act to carry on the business of insurance.

(2) The competent authority may, in terms of article 4 of the

Insurance Business Act, issue Insurance Rules applicable to

incorporated cell companies and incorporated cells.

The memorandum of an incorporated cell company shall,

in addition to the matters required by article 69 of the Act, state

that it is an incorporated cell company.

The name of an incorporated cell company shall, in

addition to compliance with the provisions of article 70 of the Act,

include the expression "Incorporated Cell Company" or its

abbreviation "ICC".

(1) The Act shall, subject to the provisions of these

regulations, and unless the context requires otherwise, apply to an

incorporated cell company and to an incorporated cell.

(2) In so far as the provisions of the Act are inconsistent with

the provisions of the Insurance Business Act or these regulations,

the provisions of the Insurance Business Act and these regulations

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

inconsistency, not apply to an incorporated cell company or to an

incorporated cell.

(1) An incorporated cell company may establish an

incorporated cell by virtue of a resolution of the board of directors

(the "cell resolution") which

(a) approves the name of the incorporated cell being

established;

(b) approves the terms of the incorporated cell’s

memorandum and articles of association and resolves

that the said memorandum and articles of association

are to be entered into by the incorporated cell

company; and

(c) authorises, if applicable, the subscription by the

incorporated cell company of a share or shares in the

incorporated cell.

COMPANIES ACT (INCORPORATED CELL COMPANIES

CARRYING ON BUSINESS OF INSURANCE)

(2) An incorporated cell shall not be validly constituted unless

a copy of the resolution shall be delivered to the Registrar and the

memorandum and articles are entered into as is described in sub-

regulation (3) and a certificate of registration is issued in terms of

the Act in respect thereof.

(3) The memorandum and articles of association of an

incorporated cell shall be entered into by

(a) the incorporated cell company, whether the

incorporated cell company is subscribing to a share or

shares in the incorporated cell or otherwise; and

(b) such persons, other than the incorporated cell

company, subscribing to shares in the incorporated

cell.

(4) The memorandum of association of an incorporated cell

shall state that it is an incorporated cell.

(5) The memorandum or articles of association of an

incorporated cell shall contain a provision that the incorporated cell

may not own shares in its incorporated cell company.

(6) Without prejudice to article 110 of the Act and unless

expressly prohibited by the articles of association of the

incorporated cell, an incorporated cell shall be permitted to own

shares in any other incorporated cell of its incorporated cell

company.

Without prejudice and in addition to compliance with the

provisions of article 70 of the Act, the name of an incorporated

cell -

(a) shall include the expression "Incorporated Cell"; and

(b) may be similar to that of the incorporated cell

company of which it forms part but shall not be so

similar as, in the opinion of the Registrar, it could

create confusion.

(1) An incorporated cell is a limited liability company

with separate legal personality.

(2) An incorporated cell is not a subsidiary of its incorporated

cell company solely by virtue of the fact of it being an incorporated

cell of its incorporated cell company.

(3) An incorporated cell may not itself be an incorporated cell

company or a protected cell company.

(4) An incorporated cell shall have the same registered office

as its incorporated cell company at all times.

(5) Without prejudice to the requirements of article 6 of the

Act, an incorporated cell company and an incorporated cell shall

also indicate in a suitable manner in all of their business letters and

forms that they are an incorporated cell company or an

incorporated cell, as applicable.

COMPANIES ACT (INCORPORATED CELL COMPANIES

CARRYING ON BUSINESS OF INSURANCE)

(1) It shall be the duty of the directors of an incorporated

cell company and of the directors of each incorporated cell, as

applicable

(a) to keep the assets and liabilities of the incorporated

cell company separate and separately identifiable from

the assets and liabilities of its incorporated cells; and

(b) to keep the assets and liabilities of each incorporated

cell separate and separately identifiable from the

assets and liabilities of the other incorporated cells of

the incorporated cell company.

(2) The duty imposed by sub-regulation (1) is not breached by

reason only that the directors cause or permit assets of the

incorporated cell company or of any of its incorporated cells to be

collectively invested, or collectively managed by an investment

manager

Provided that the assets so invested or managed shall remain

separately identifiable in accordance with sub-regulation (1).

(1) An incorporated cell company shall have no power, by

virtue of its position as an incorporated cell company, to enter into

transactions on behalf of any of its incorporated cells.

(2) An incorporated cell shall have no power, by virtue of its

position as an incorporated cell, to enter into transactions on behalf

of its incorporated cell company.

(3) The directors or officers of an incorporated cell company or

of an incorporated cell shall ensure that, in respect of every

transaction entered into, it is identified or specified whether the

transaction is being entered into by the incorporated cell company

or by the incorporated cell, and if the transaction is entered into by

an incorporated cell, which incorporated cell.

(1) Save as otherwise provided by these regulations, the

provisions of the Act shall apply to an incorporated cell company

and to an incorporated cell as if a reference in the Act

(a) to a company were a reference to an incorporated cell

company or an incorporated cell;

(b) to the directors of a company were a reference to the

directors of the incorporated cell company or an

incorporated cell;

(c) to the memorandum or articles of association of a

company were a reference to the memorandum or

articles of the incorporated cell company or an

incorporated cell;

(d) to the members of a company were a reference to the

members of the incorporated cell company or an

incorporated cell;

(e) to shares in a company were a reference to shares in

the incorporated cell company or an incorporated cell;

(f) to assets and liabilities of a company were a reference

to the assets and liabilities of the incorporated cell

COMPANIES ACT (INCORPORATED CELL COMPANIES

CARRYING ON BUSINESS OF INSURANCE)

company or an incorporated cell; and

(g) to the share capital of a company were a reference to

the share capital of the incorporated cell company or

an incorporated cell.

(2) Save as otherwise provided by these regulations, the

provisions of the Insurance Business Act shall apply to an

incorporated cell company and to an incorporated cell as if a

reference in the Insurance Business Act

(a) to an undertaking were a reference to an incorporated

cell company or an incorporated cell;

(b) to the directors of an undertaking were a reference to

the directors of the incorporated cell company or an

incorporated cell;

(c) to the memorandum or articles of association of an

undertaking were a reference to the memorandum or

articles of the incorporated cell company or an

incorporated cell;

(d) to the members of an undertaking were a reference to

the members of the incorporated cell company or an

incorporated cell;

(e) to shares in an undertaking were a reference to shares

in the incorporated cell company or an incorporated

cell;

(f) to assets and liabilities of an undertaking were a

reference to the assets and liabilities of the

incorporated cell company or an incorporated cell; and

(g) to the share capital of an undertaking were a reference

to the share capital of the incorporated cell company or

an incorporated cell.

(1) Notwithstanding anything contained in the definition

of company secretary in article 2 and in article 138(3) of the Act,

the company secretary of an incorporated cell company and of an

incorporated cell may be a body corporate.

(2) Notwithstanding the provisions of the Act, an

incorporated cell may have its incorporated cell company as its only

member and the provisions of articles 212 and 214(2)(b)(i) shall not

apply in relation thereto in such case.

An incorporated cell company and an incorporated cell

shall each submit an annual return containing the information

required by the Seventh Schedule to the Act.

The financial statements of an incorporated cell shall not

be consolidated with those of an incorporated cell company or of

other incorporated cells except when the incorporated cell is a

subsidiary of the incorporated cell company and only to such

In addition to the requirements of article 177 of the Act,

COMPANIES ACT (INCORPORATED CELL COMPANIES

CARRYING ON BUSINESS OF INSURANCE)

the directors’ report of the incorporated cell company shall also

include the names and registration numbers of all of its

incorporated cells.

(1) Without prejudice to sub-regulation (3), an

incorporated cell company shall be dissolved and wound up in

accordance with article 41 of the Insurance Business Act and

regulations made thereunder.

(2) Without prejudice to article 41 of the Insurance Business

Act and regulations made thereunder, an incorporated cell company

that has been dissolved and wound up shall not be struck off the

register until each of its incorporated cells have been either -

(a) transformed into non-cellular companies in accordance

with regulation 22; or

(b) relocated to another incorporated cell company under

regulation 23; or

(c) expelled under regulation 24; or

(d) continued as a body corporate under the law of another

jurisdiction under regulation 3; or

(e) struck-off,

and the Registrar has obtained the consent of the competent

authority.

(3) The provisions contained in the Insurance Business

(Reorganisation and Winding up of Insurance Undertakings)

Regulations shall apply to the dissolution and winding up of the

incorporated cell company and incorporated cells.

(1) Without prejudice to the provisions of regulation

18(1), the appointment of a liquidator in respect of an incorporated

cell company shall not affect the position of its incorporated cells

subject to any direction to the contrary given during the course of a

winding up by

(a) the Court; or

(b) the competent authority.

(2) The competent authority may make an application to the

Court for the Court to give a direction under sub-regulation (1).

The competent authority may be heard on any application

to the Court requesting the dissolution and winding up of an

incorporated cell company or an incorporated cell.

The memorandum and articles of association of an

incorporated cell may be amended by an extraordinary resolution of

the incorporated cell following the written approval of its

incorporated cell company.

(1) A company may, by extraordinary resolution in

accordance with article 79 of the Act and any other applicable

provisions of the Act, and in compliance with these regulations,

and provided it is authorised to do so by its memorandum of

association, be transformed

COMPANIES ACT (INCORPORATED CELL COMPANIES

CARRYING ON BUSINESS OF INSURANCE)

(a) from a non-cellular company into an incorporated cell

company or into an incorporated cell;

(b) from an incorporated cell company having no

incorporated cells or from an incorporated cell, into a

non-cellular company;

(c) from a protected cell company having no protected

cells, into an incorporated cell company;

(d) from an incorporated cell company having no

incorporated cells into a protected cell company.

(2)

(a) A protected cell company which has one or more

protected cells may, in accordance with Part IX and

any other applicable provisions of the Act, and in

compliance with these regulations, be divided into an

incorporated cell company and one or more

incorporated cells.

(b) Where a protected cell company is divided in

accordance with paragraph (a), the non-cellular assets,

rights, liabilities and obligations of the company and

all claims, actions and legal proceedings concerning

the non-cellular part of the company shall be allocated

and delivered to the recipient incorporated cell

company; and the assets, rights, liabilities and

obligations of each protected cell and all claims,

actions and legal proceedings concerning each

protected cell shall be allocated and delivered to a

separate

recipient

company

constituting

an

incorporated cell.

(c) Notwithstanding the provisions of paragraph (b), upon

the division becoming effective, the right of secondary

recourse against the non-cellular assets of the

protected cell company provided for in the PCC

Regulations shall be extinguished.

(3)

(a) A company shall not carry out any of the operations

mentioned in sub-regulation (1) except with the

approval of the board of directors.

(b) In a division of a protected cell company as is

mentioned in sub-regulation (2), each of the directors

of the company shall sign a declaration stating that he

has made a full enquiry into the affairs of the company

and each of its protected cells, and that, having so

done, he is of the opinion that the company and each of

its protected cells are able to discharge their liabilities

as they fall due and that there are no creditors of the

company or of the protected cells whose interests will

be unfairly prejudiced by the division.

(4) The operations mentioned in sub-regulations (1) and (2)

shall not be carried out except with the prior written approval of the

competent authority and in accordance with such terms and

conditions as the competent authority may establish and such

directives as the competent authority may issue.

COMPANIES ACT (INCORPORATED CELL COMPANIES

CARRYING ON BUSINESS OF INSURANCE)

(5)

(a) A non-cellular company that intends to transform itself

into an incorporated cell shall enter into an

incorporation agreement with an incorporated cell

c o m p a n y. T h e i n c o r p o r a t i o n a g r e e m e n t s h a l l b e

approved by

(i)

the board of directors and by an extraordinary

resolution of both the non-cellular company and

the incorporated cell company; and

(ii) the competent authority.

(b) An incorporated cell that intends to transform itself

into a non-cellular company shall, within fourteen

days of the extraordinary resolution taken to so

transform, notify its incorporated cell company in

writing of such decision.

(6) In addition to any document which is required to be

delivered to the Registrar for registration in accordance with the

applicable provisions of the Act, a company which intends to carry

(a) any of the operations mentioned in sub-regulations (1)

and (2), shall deliver to the Registrar for registration

evidence of the written approval of the competent

authority required under sub-regulation (4);

(b) any of the operations mentioned in sub-regulation (1),

shall deliver to the Registrar for registration evidence

of the approval by the board of directors required

under sub-regulation (3)(a);

(c) the operation mentioned in sub-regulation (2), shall

deliver to the Registrar for registration the declaration

mentioned in sub-regulation (3)(b).

(1) An incorporated cell that intends to relocate from one

incorporated cell company (the "Exiting ICC") to another

incorporated cell company (the "Recipient ICC") shall notify the

competent authority of its intention. The competent authority may

impose such conditions and issue such directives as it may deem

necessary in the circumstances.

(2)

The relocation of the incorporated cell shall only take place

(a) it has the written consent of the competent authority to

so relocate;

(b) the incorporated cell passes an extraordinary

resolution to so relocate and amends its memorandum

and articles of association accordingly; and

(c) a relocation agreement has been entered into between

the incorporated cell and the Recipient ICC and is

approved in accordance with sub-regulation (3).

(3)

(a) A relocation agreement shall be submitted to the

competent authority for prior approval.

(b) A relocation agreement shall also be approved by

COMPANIES ACT (INCORPORATED CELL COMPANIES

CARRYING ON BUSINESS OF INSURANCE)

(i)

the board of directors and an extraordinary

resolution of the incorporated cell;

(ii) the board of directors and an extraordinary

resolution of the Recipient ICC; and

(iii) the board of directors of the Exiting ICC.

(4) An Exiting ICC shall within seven days of the approval by

its board of directors of the relocation agreement, ensure that all

records, documents and other information pertaining to the

incorporated cell are duly transferred to the Recipient ICC.

(5) The Recipient ICC shall, within fourteen days of a

relocation agreement, deliver to the Registrar for registration

(a) evidence of the competent authority’s written consent;

(b) a copy of the extraordinary resolution described in

sub-regulation (2)(b) together with the memorandum

and articles of association of the incorporated cell

being relocated;

(c) a copy of the relocation agreement and the respective

resolutions approving such agreement;

(d) a declaration made in accordance with sub-regulation

(6), signed by each director of the incorporated cell

which is being relocated; and

(e) the incorporated cell’s original certificate of

registration.

(6) The declaration referred to in sub-regulation (5)(d) shall

state that each such director believes on reasonable grounds that

(a) the incorporated cell being relocated is able to

discharge its liabilities as they fall due;

(b) there are no creditors of the incorporated cell being

relocated whose interests will be unfairly prejudiced

by the transfer; and

(c) the relocation agreement has been approved and

executed in accordance with this regulation.

(7) Upon delivery to the Registrar of the documents referred to

in sub-regulation (5), the Registrar shall, if those documents

comply with this regulation

(a) register the relocation of the incorporated cell and the

new memorandum and articles of the incorporated

cell;

(b) issue to the incorporated cell a new certificate of

registration indicating the name of the Recipient ICC;

and

(c) record that the incorporated cell has ceased to be an

incorporated cell of the Exiting ICC.

(8) Upon the issue of the new certificate of registration as

aforesaid

(a) the incorporated cell ceases to be an incorporated cell

COMPANIES ACT (INCORPORATED CELL COMPANIES

CARRYING ON BUSINESS OF INSURANCE)

of the Exiting ICC;

(b)

the incorporated cell becomes an incorporated cell of

the Recipient ICC;

(c)

all property and rights to which the incorporated cell

was entitled immediately before the issue of the new

certificate remain the property and rights of the

incorporated cell;

(d)

all liabilities and all contracts, debts and other

obligations to which the incorporated cell was subject

immediately before the issue of the new certificate

remain the liabilities, contracts, debts and other

obligations of the incorporated cell; and

(e)

all actions and other legal proceedings which,

immediately before the issue of the new certificate

were pending by or against the incorporated cell may

be continued by or against the incorporated cell.

(9)

The operation of sub-regulation (8) shall not be regarded

(a) as a transfer of business of insurance as provided in

Part VIII of the Insurance Business Act and such part

shall not apply to such transfer;

(b) as a breach of any contractual provision prohibiting,

restricting or regulating the assignment or transfer of

rights or liabilities or change of control; or

(c) as giving rise to any remedy by a party to a contract or

other instrument, as an event of default under any

contract or other instrument or as causing or

permitting the termination of any contract or other

instrument, or of any obligation or relationship.

(10) An incorporated cell may not be relocated under this

regulation if the relocation were to be inconsistent with the

memorandum or articles of association of

(a) the incorporated cell; or

(b) the Recipient ICC.

(1) An incorporated cell company may, subject to the

approval of the competent authority and on the grounds listed in

sub-regulation (2), expel an incorporated cell.

(2)

The grounds referred to in sub-regulation (1) are

(a) that the affairs of the incorporated cell are being or

have been conducted in a manner which is unfairly

prejudicial to its incorporated cell company or any

incorporated cell of that company or its incorporated

cells;

(b) that the incorporated cell is being or has been used for

fraudulent purposes; or

(c) that to fail to do so would have a serious adverse effect

upon the insured, the policyholder or any other

interested person relating to the incorporated cell.

COMPANIES ACT (INCORPORATED CELL COMPANIES

CARRYING ON BUSINESS OF INSURANCE)

(3) In determining whether to approve an expulsion in terms of

sub-regulation (1), the competent authority shall take into

consideration any representations made to it by the incorporated

cell company, the incorporated cell and any other party deemed to

have a material interest in the business of the relevant incorporated

cell, and may give such directions as it deems fit.

(4) The provisions of this regulation are without prejudice to

any and all powers granted to the competent authority under the

Insurance Business Act.

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

competent authority -

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

formed or constituted as an incorporated cell company;

(b) to refuse to issue an approval to an incorporated cell

company to establish incorporated cells;

(c) to refuse to issue an approval for a non-cellular

company carrying on business of insurance to

transform itself into an incorporated cell company;

(d) to refuse to issue an approval for a protected cell

company to be divided into an incorporated cell

company and incorporated cells;

(e) to refuse to issue an approval for an incorporated cell

to transform itself into a non-cellular company

carrying on business of insurance;

(f) to refuse to issue an approval for an incorporated cell

to relocate from one incorporated cell company to

another incorporated cell company; and

(g) to refuse to issue an approval for a non-cellular

company carrying on business of insurance to

transform itself into an incorporated cell,

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 shall

apply, mutatis mutandis, to appeals that may be brought before the

Tribunal under this regulation.