Insurance – Protected Cell Companies


On the 17th of April 2012, The Companies Act (Cell Companies Carrying on Business of Insurance) Regulations came into force under the laws of Malta. These regulations govern the setting up of insurance businesses within a cell company structure, known as a Protected Cell Company (PCC).

Nature of a PCC

The designation Protected Cell Company or PCC must appear in the name of the entity carrying on insurance business in terms of the Regulations as well as in all documentation referring to the company’s registered name. Each cell of a PCC shall have its own distinct name or designation.

The structure of a cell company allows for an entity to purchase a cell within a PCC, via shareholding, and write or broker insurance nosiness through the cell. Whilst a PCC may more than one cell, iat is still deemed to be a single legal person at law and the creation by a PCC of a cell does not create, in respect of that cell, a legal person separate from the company. Accordingly, all insurance transactions and obligations entered into for the benefit of a cell are contracted with the PCC itself.

Creating a PCC

A PCC is a company formed or constituted as such or converted into a PCC and creating within itself one or more cells for the purpose of segregating and protecting the cellular assets of the company in such manner as may be prescribed. In either case, an insurance business licence is required and is granted upon application to the Malta Financial Services Authority, the regulatory body responsible for the regulation and supervision of insurance business in Malta.

The MFSA’s requirements vary depending on the type of insurance business carried out (general insurance, reinsurance, affiliated insurance, insurance management or insurance brokerage).

Creating a Cell within an existing PCC

The MFSA application process follows the same pattern as that of an insurance company. The creation of a cell also requires discussions with and acceptance by the host PCC prior to application.

The application process involves the following:

Due diligence exercise on the owners of each cell to determine that they are fit and proper persons
The preparation of a feasibility study
The submission of the cell’s business plan to the MFSA

Assets of the Company

The PCC may create and issue cell shares the proceeds of which will form cellular assets attributable to a particular cell. The shares are usually held by the holders of the class of shares attributable to that cell, which will be entitled to a dividend.

The assets of a PCC shall be either cellular assets or non-cellular assets. The cellular assets of a PCC comprise the assets of the company attributable to the cells of the company. The non-cellular assets of a PCC comprise the assets of the company which are not cellular assets. The assets attributable to a cell of a PCC comprise:

  • assets represented by the proceeds of cell share capital and reserves attributable to the cell
  • all other assets attributable to the cell

Duties of Directors

Duties of Directors

  • cellular assets separate and separately identifiable from non-cellular assets
  • cellular assets attributable to each cell separate and separately identifiable from cellular assets attributable to other cells
  • 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

The directors of a PCC 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.

This duty on directors is not breached by reason only that the directors of a PCC 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.

  • assets represented by the proceeds of cell share capital and reserves attributable to the cell
  • all other assets attributable to the cell

Income Tax Treatment

For income tax purposes, every cell of a PCC, as well as the core company, is deemed to be a separate legal entity, even though the individual cells are not separate legal entities. Accordingly, the taxable profits of each cell are computed separately, with the profits and losses being apportioned between the individual cells and the core cell. As PCCs are currently only applicable in the context of an insurance business, Article 27 of the ITA is still applicable for the determination of the chargeable income of each individual cell. As a result, each cell is taxed on its business profits at the standard corporate tax rate of 35%, subject to any tax refunds which may apply.


In recent years a number of PCCs have been set up in Malta that provides a direct writing facility into Europe avoiding fronting arrangements. This is often a desirable option for small entities that do not wish to create a stand-alone insurance company, or for those wishing to develop an affiliated insurance business.

Should you require any assistance or advice in connection with setting up of Insurance Underwriting or Intermediary Business in Malta, kindly contact Dr. Christian Farrugia.

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