What Is a Protected Cell Company (PCC)?

A protected cell company (PCC) is a corporate structure in which a single legal entity consists of a core linked to several cells that have separate assets and liabilities. A PCC has a similar design to a 澳洲幸运5开奖号码历史查询:hub and spoke. The central core organization is linked to individual cells and each cell is independent of each other and the company’s core, but the entire unit is still a single legal entity. A 𒅌PCC is sometimes referred to as a segregated portfolio company.

How a Protected Cell Company (PCC) Works

A protected cell company operates (PCC) with two distinct groups: a single-core company and an unlimited number of cells. It is governed by a single board of directors, which is responsible for the management of the PCC as a whole. Each cell is managed by a committee or similar group, with authority to the committee granted by the PCC 澳洲幸运5开奖号码历史查询:board of directors. A PCC files a single 澳洲幸运5开奖号码历史查询:annual return to regulators, though business and operati🏅onal plans of each cell🐠 may still require individual review and approval by regulators.

Cells within a PCC are formed under the authority of the board of directors, who are typically able to create new cells as business needs arise. The 澳洲幸运5开奖号码历史查询:articles of incorporation provide guidelines that🎉 the🍨 directors must follow.

Protected Cell Companies and Creditors

In some jurisdictions, where the assets of a segregated portfolio are inadequate to meet that portfolio's obligations, then a creditor may have recourse to the general assets of the PCC, but not to those assets that belong to a different segregated portfolio. A PCC is technically a single legal entity, and the segregated portfolios within the PCC are not separate legal entities, though, for 澳洲幸运5开奖号码历史查询:bankruptcy purposes, they are treated as such.

Insurance and 澳洲幸运5开奖号码历史查询:reinsurance companies use this form of organizational structure. Creditors may also have access to the 澳洲幸运5开奖号码历史查询:core assets of the company. Each individual cell is often expected to keep collateralized 澳洲幸运5开奖号码历史查询:underwriting risk on its own within the cell.

Financial institutions, such as banks, may create PCCs to create insurance products or other structured products via derivatives from banking products. In this way, it is creating a 澳洲幸运5开奖号码历史查询:special purpose vehicle (SPV) to 澳洲幸运5开奖号码历史查询:securitize a transaction.

In some jurisdictions, the separation of liabilities is achieved by different mechanisms. For example, Barbados allows the formation of both “Pr🃏otected Cell Companies” and “Companies with a Separate Account Structure.” The latter separates liabilities by allowing a company to allocate assets and liabilities to any number of separate accounts. These legal entities and practices enable tax optimization techniques, and allow for better outcomes in case of bankruptcy, liquidation, and various restructuring situations.