The Isle of Man is a well-established International Finance Centre, offering innovative corporate structures that cater to various private and business needs.
Among these, cell companies have gained popularity due to their flexibility, cost-effectiveness, and asset protection benefits.
The Isle of Man recognises two types of cell companies: A Protected Cell Company (PCCs) and an Incorporated Cell Company (ICCs).
A Protected Cell Company (PCC) and an Incorporated Cell Company (ICC) are distinct corporate structures that both utilise cells, but with different legal personalities.
A PCC is a single legal entity with cells that have separate assets and liabilities, but the cells themselves are not separate legal entities. The revenue streams, assets and liabilities of each cell are kept separate from other cells.
Protected Cell Company (PCC)
Each cell of a PCC operates independently and is protected from the liabilities of other cells. While the PCC itself is a single legal entity, the assets and liabilities of each cell are ring-fenced, ensuring creditors of one cell have no claim against the assets of another.
Advantages of a PCC:
- Cost effective: Establishing new cells within an existing PCC is often more cost-effective than setting up entirely new companies.
- Structural simplicity: A PCC is subject to a single company framework, making compliance easier compared to multiple standalone entities.
- Speed of setup: Creating a new cell within a PCC is typically faster than incorporating a separate company.
- Risk management: Each cell can be used for different ventures, providing risk containment within a structured framework.
Who might use a PCC and why?
Private funds
Investment funds often utilise cell companies to manage distinct investment strategies within a single governance structure.
A PCC can be particularly beneficial for umbrella funds, where each cell represents a different sub-fund, with its own investment policy, asset allocation, and investor base. This ensures the risks and returns associated with each strategy are contained within the relevant cell.
Wealth management and family offices
For high-net-worth individuals and family offices, cell companies offer an effective means of asset protection, succession planning, and risk management.
A PCC allows family wealth to be structured into separate cells, each designated for different assets which might include real estate, private equity, or luxury assets such as yachts and aircraft. This ensures liabilities related to one asset class do not impact others.
A cell structure provides a clear and efficient framework for intergenerational wealth transfer, allowing different family members to control specific assets within the same overall corporate framework.
No action should be taken on the basis of this note, nor should it be construed as amounting to tax, legal or VAT advice. Suitable, specific and professional advice should always be obtained in respect of any particular issue.
