What is a PCC?
A protected cell company (PCC) operates in two parts – the company core (Jatco Insurance Brokers PCC Ltd) and the cells (for instance, Lex Risk Solutions Cell). A PCC has within itself one or more “cells”, within its company structure, for the purpose of segregating and protecting the cellular assets of the company from those of other cells or the assets of the core itself. Once established a PCC can form cells for third parties.
The core part comprises all non-cellular assets including the company’s core share capital, investments, liabilities and so forth. The core share capital may be the minimum required at law or it may be larger depending on its activities. The core does not need to take any of the insurance broking risk itself, but must be solvent at all times based on the business written by the whole company, including the cells.
The cells are independent from each other and from a legislative point of view are protected from each other. A cell is formed by the creation and issue of a class of cell shares within the cell company in respect of each individual cell. Each shareholder of a cell receives its own dividend stream. The core and its cells are to be treated as one legal entity, as the cells do not have separate legal personality. It is only in the case of tax purposes that each cell is treated as a separate entity. A protected cell transacts insurance business through the licence held by the PCC. The assets of any one particular cell are only available to the shareholders and creditors of that cell i.e. creditors of another cell have no right of recourse against them.
The PCC has a single board of directors which takes responsibility for the transactions within the core and each of the cells and for the statutory and regulatory compliance and corporate governance requirements of the company as a whole. The board of directors of the cell company has ultimate responsibility for all cells and cellular assets. The board may delegate the management and administration of a cell, or parts thereof, to a cell committee which may include representatives of the cell owner.