Isle Of Man To Introduce Protected Cell Legislation

by Amanda Banks, Tax-News.com, London

04 September 2001

The findings of a detailed review of developments in Protected Cell legislation conducted by the Insurance and Pensions Authority (IPA) has prompted the Isle of Man Treasury to introduce legislation that will extend the formation of Protected cell Companies (PCCs) on the Island to companies in general. PCC legislation is particularly relevant to captive insurance business, but the IPA review has led the Treasury to believe that there may be opportunities for it to be used by other types of companies.

Earlier this year Legislative Council member, Alan Crowe, urged the authorities to adopt the legislation. He pointed to other jurisdictions such as Guernsey and Bermuda which have protected cell company laws in place, saying the Isle of Man also needs the legislation to be introduced in order to compete: 'It is a way to strengthen captive insurance business in the Isle of Man [and] is another company vehicle to demonstrate the benefits of the Isle of Man,' he said.

As a corporate entity, a protected cell company holds assets in one or more segregated cells. Assets in each cell are separate from those in the other cells. In this way companies that are not large enough to form a captive in their own right can utilise a captive-type structure.

As the Protected Cell Company historically has been particularly relevant to captive insurance and the Island's market is particularly keen to be afforded the opportunity to use such vehicles, the government says it expects its decision will be welcomed by the Island's captive insurance industry.

In the Financial Supervision Commission's (FSC) Annual Report, head of companies division, Jane Bates said a range of amendments to the proposed legislation is intended to enhance 'the Island's "company" product to ensure that it remains a fully competitive jurisdiction.'

Ms Bates added that the IPA Review addresses 'a number of outstanding issues, including certain changes to facilitate the orderly dissolution of companies, a power for the commission to be able to standardise searching, a review of the terms under which foreign companies are required to register and the position of bearer shares.'

Draft clauses are due to be included in the Companies (Amendment) Bill, which the FSC is preparing for the Tynwald legislative session 2001/2002.

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