COMPANIES ACT (SHIPPING AND AVIATION CELL COMPANIES) REGULATIONS

COMPANIES)

SUBSIDIARY LEGISLATION 386.22

COMPANIES ACT (SHIPPING AND AVIATION CELL

COMPANIES) REGULATIONS

16th June 2020

LEGAL NOTICE 248 of 2020.

(1)

The title of these regulations is the Companies

Act (Shipping and Aviation Cell Companies) Regulations.

(2) These regulations shall apply to any company

conducting shipping or aviation business as defined in article 84E of

the Companies Act.

(1)

In these regulations, unless the context otherwise

requires

"the Act" means the Companies 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

conduct of shipping or aviation business as defined in article

84E of the Act;

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

company in respect of one of its cells pursuant to the

provisions of regulation 9, 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;

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

the company attributable to any cell of the company as

prescribed in these regulations;

"cellular dividend" means a dividend payable by a cell

company in respect of cell shares pursuant to the provisions of

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regulation 9(3);

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

assets of the company which are not cellular assets;

"Registrar" means the person appointed as Registrar of

Companies under the Act;

"relevant activities" means the conduct of shipping or

aviation business as defined in article 84E of the Act.

(2) Words and expressions used in these regulations, which

are also used in the Act, shall in these regulations have the same

meaning as in the Act.

(1)

The Act shall, subject to the provisions of these

regulations, and unless the context otherwise requires, apply

exclusively to a cell company carrying out relevant activities.

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

with the provisions of these regulations or of any other legislation

applicable in terms of these regulations, the provisions of these

regulations and of any such legislation shall prevail and the

provisions of the Act shall, to the extent of the inconsistency, not

apply to a cell company.

(1)

Subject to the provisions of these regulations

(a)

a company may be formed or constituted as a

cell company to carry on relevant activities;

(b)

a company carrying on relevant activities may be

converted, if so authorised by its memorandum and articles of

association, into a cell company;

(c)

a cell company shall, as the case may be, obtain

any licence and, or authorisation in terms of any applicable

law in order to carry on any relevant activities or to be formed

or constituted as a cell company and to carry out specific acts

or procedures whilst being a cell company, as may be

prescribed.

(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 of a cell by a cell company does not

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

company.

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(1)

The name of a cell company shall, without

prejudice to the provisions of the Act, include the expression "Mobile

Assets Protected Cell Company" or "MAPCC".

(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) A cell company shall also indicate in a suitable manner

in all its business letters and forms that it is a cell company.

A person intending to form or constitute a company as a

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

shall deliver to the Registrar for registration the company’s

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

amending the company’s memorandum and articles of association

together with the company’s updated memorandum and articles of

association, as the case may be, which shall be accompanied by the

fee prescribed in item (a) of the Schedule to the Companies Act

(Fees) Regulations and which shall be due for each cell created.

(1)

A cell company may create one or more cells for

the purposes of segregating and protecting cellular assets in the

manner provided in these regulations. The decision or resolution

approving the creation of a cell together with the instruments giving

effect to the decision or resolution, or an authentic copy thereof, shall

be delivered for registration to the Registrar who, being satisfied that

the requirements of this regulation have been complied with, shall

register the cell or cells.

A cell company shall pay the fee prescribed in item (a) of the

Schedule to the Companies Act (Fees) Regulations for each cell

created.

(2) If a company is converted into a cell company in terms

of these regulations, the company shall, within forty days from the

day of its conversion into a cell company, by resolution of its

directors attribute assets of the company to a particular cell of the

company. The company shall, within fourteen days from such

resolution, deliver a notice to the Registrar specifying the subject of

this resolution and outlining the specific description of every asset

being attributed to a particular cell. Upon publication of such notice,

such assets shall be considered to be cellular assets of a particular

cell.

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(3) Pursuant to the provisions of sub-regulation (2) and the

attribution of a particular asset to a cell of a cell company, the interest

of an owner, following the aforementioned attribution, in a registered

aircraft or ship in terms of the Merchant Shipping Act, the Aircraft

Registration Act or any other law or regulation as the case may be,

shall be noted accordingly, as long as any registered mortgagee or

registered security interest holder has provided its consent in this

regard. Such attribution shall not prejudice any rights of any creditor

of the company existing prior to the conversion to a cell company or

that of a registered mortgagee or registered security interest holder in

relation to any registered mortgage or any security interest in terms of

any applicable law or regulation.

(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 cell company attributable to the cells of that cell 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 cell 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

COMPANIES)

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 cell 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 includes references to cell shares.

A cell company shall

(a)

inform, in writing, any person with whom it

transacts relevant activities 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.

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(1)

A creditor of a cell company shall not have any

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

regulations 12 and 13.

(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 cell

company to satisfy a liability not attributable to that cell, that

party shall be liable to the cell 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 sub-regulation shall, after

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

cell 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 cell 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

obliged to make a transfer or payment from cellular assets

attributable to a cell of the company, and those assets are insufficient,

the company shall so far as possible make up for 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 11 and 13, cellular

assets attributable to a cell of a cell company shall

COMPANIES)

(a)

only be available to the creditors of the cell

company who are creditors in respect of that cell and who are

thereby entitled, pursuant to these regulations, to only have

recourse to the cellular assets attributable to that cell;

(b)

be absolutely protected from the creditors of the

cell 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)

Where any liability arises which is attributable

to a particular cell of a cell company

(a)

only the cellular assets attributable to that cell

shall be used to satisfy the liability; and

(b)

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, provided that apportionments may be made out of the assets

attributable to the individual cells towards the costs of the day-to-day

administration of the cell company.

(1)

It shall be lawful 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 another person,

wherever resident or incorporated, and whether or not a cell

company.

(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) 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.

(4) A cell company may invest, or otherwise create a charge

or security interest of whatever nature over, cellular assets, or

otherwise make payments or transfers from cellular assets, or use

cellular assets for the purposes of providing any security in the

ordinary course of the company’s business.

(1)

Without prejudice to the provisions of Part V,

Title II and Part VI of the Act

(a)

proceedings in relation to a cell company shall

respect the status of each cell as a patrimony separate from the

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assets and liabilities of each other cell of the cell company and

the cell company itself in terms of these regulations;

(b)

where a provisional administrator or liquidator is

appointed in terms of the Act, he shall

(i)

deal with the cell company’s assets in

accordance with the provisions of these regulations,

including, but not limited to, regulation 8(1); and

(ii) in the discharge of the claims of

creditors of the cell company, apply the cell company’s

assets to those entitled to have recourse thereto in

accordance with these regulations;

(c)

proceedings under the Act shall apply

mutatis mutandis to a cell as though it were a distinct

legal entity operating in terms of the Act, and with such

modifications as are necessary to accommodate the fact

that the cell is not a company or a distinct legal entity;

and any proceedings in relation to one cell shall not have

any effect on the assets of any other cell of the cell

company or of the cell company itself.

(2) The term "proceedings" in this regulation refers to any

proceedings in terms of Part V, Title II and Part VI of the Act.

(3) A cell, the sole asset of which is an aircraft or aircraft

engines and other related assets shall be deemed to be an "aircraft

company" for the purposes of the Aircraft Registration Act. The

provisions of the Aircraft Registration Act, and to the extent that they

are not defined in these regulations, the terms used in the Aircraft

Registration Act in relation to an aircraft company, shall mutatis

mutandis apply to such cell as though it were a distinct aircraft

company for the purposes of the Aircraft Registration Act and any

proceedings in relation to one cell or its assets shall not have any

effect on any other cell of the cell company or the cell company itself.

Cell companies and their cells shall comply with these

regulations and any agreement which is incompatible with these

regulations shall, to the extent of such incompatibility, be null and

void.

Cell companies and their cells shall comply with the

provisions of Companies Act (Register of Beneficial Owners)

Regulations which shall be applicable mutatis mutandis to cell

companies and their cells.

The provisions of item (a) of the Schedule to the

Companies Act (Fees) Regulations shall be applicable mutatis

mutandis to cell companies and their cells.