Published: 2001-11-01
Key Benefits:
Protected Cell Companies
© Government of Gibraltar (www.gibraltarlaws.gov.gi)
2001-22
PROTECTED CELL COMPANIES ACT 2001
Principal Act
Act. No. 2001-22 Commencement 1.11.2001
Assent 12.7.2001
Amending
enactments
Relevant current
provisions
Commencement
date
Act. 2003-13 ss. 17 and 25(5)(a)(ii). 31.7.2003
LN. 2003/098 s. 24(5)(a)(ii). 4.9.2003
Act. 2013-25 ss. 2, 9(1), 9(6)(e), 11, 18(8)(b),
20(1)(f), 20(3)(c), 25(1)(e) & 25(3)(b)
31.10.2013
2014-14 2(1), 2A, 9(6)(b), (12), (13), 17, 18(7),
19(1), (2), (3), (3A), (4), (5), 20(1),
(2), (3), 20A, 21(1), (2), (3), (4), (5),
(6), 22(1), (2), (3), (4A), (5), (5A), (7),
23, 24(3A), (4)(b), (5)(a), (6),
25(2)(b), 26(6), 28
1.11.2014
English sources
None cited
Protected Cell Companies
© Government of Gibraltar (www.gibraltarlaws.gov.gi)
2001-22
Protected Cell Companies
© Government of Gibraltar (www.gibraltarlaws.gov.gi)
2001-22
ARRANGEMENT OF SECTIONS
Section
1. Title and commencement.
2. Interpretation.
2A. Disapplication of provisions of Insolvency Act 2011.
PART I
FORMATION & ATTRIBUTES
3. Protected cell companies.
4. Creation of cells.
5. Cellular and non-cellular assets.
6. Position of creditors.
7. Recourse to cellular assets by creditors.
8. Cell shares and share capital.
9. Reduction of cell share capital.
10. Name and memorandum of protected cell company.
11. Consent of the Chief Executive required for protected cell company.
12. Incorporation of company as protected cell company.
13. Liability of cellular assets.
14. Disputes as to liability attributable to cells.
15. Company to inform persons they are dealing with protected cell
company.
16. Attribution of non-cellular assets and liabilities.
17. Provisions in relation to winding up of protected cell company.
18. Transfer of cellular assets from protected cell company.
PART II
CELL LIQUIDATION
19. Cell liquidation orders.
20. Applications for cell liquidation orders.
20A. Application of Insolvency Act 2011 to cell liquidations.
21. Functions of cell liquidator and effect of cell liquidation order.
22. Discharge and variation of cell liquidation orders.
23. Remuneration of cell liquidator.
PART III
ADMINISTRATION ORDERS
24. Administration orders in relation to protected cell companies or
cells.
25. Applications for administration orders.
26. Functions of administrator and effect of administration order.
Protected Cell Companies
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2001-22
27. Discharge and variation of administration orders.
28. Remuneration of administrator.
PART IV
GENERAL PROVISIONS
29. Offences.
Protected Cell Companies
© Government of Gibraltar (www.gibraltarlaws.gov.gi)
2001-22
AN ACT TO PROVIDE FOR PROTECTED CELL COMPANIES IN
GIBRALTAR.
Title and commencement.
1. This Act may be cited as the Protected Cell Companies Act 2001 and
comes into operation on the day appointed by the Minister by notice in the
Gazette.
Interpretation.
2.(1) In this Act, unless the context requires otherwise–
“administration order” means an order of the Court under section 24 in
relation to a protected cell company or a cell thereof;
“administrator” means the person appointed as such by an administration
order;
“cell” means a cell created by a protected cell company for the purpose of
segregating and protecting cellular assets in the manner provided by
this Act;
“cell liquidation” means the liquidation of a cell under a cell liquidation
order;
“cell liquidation order” means an order made under section 19;
“cell liquidator” means the person appointed as cell liquidator under a
cell liquidation order;
“cell shares” means shares created and issued by a protected cell
company in respect of one of its cells pursuant to the provisions of
section 8, the proceeds of the issue of which (the “cell share
capital”) shall be comprised in the cellular assets attributable to that
cell;
“cell share capital” means the proceeds of issue of cell shares;
“cell transfer order” means an order of the Court under section 18(3)
sanctioning the transfer of the cellular assets attributable to any cell
of a protected cell company to another person;
“cellular assets” of a protected cell company means the assets of the
company attributable to the company's cells pursuant to section
5(4);
Protected Cell Companies
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2001-22
“cellular dividend” means a dividend payable by a protected cell
company in respect of cell shares pursuant to the provisions of
section 8(3);
“Chief Executive” means the person appointed under section 8 of the
Financial Services Commission Act 2007;
“licensed insolvency practitioner” has the meaning specified in the
Insolvency Act 2011;
“liquidation”, in relation to a protected cell company, means liquidation
under the Insolvency Act 2011;
“liquidator”, in relation to a protected cell company, means a liquidator
or provisional liquidator appointed under the Insolvency Act 2011 or a
voluntary liquidator;
“Minister” means the Minister with responsibility for Trade, Industry and
Telecommunications;
“non-cellular assets” of a protected cell company comprise the assets of
the company which are not cellular assets;
“prescribed” means prescribed by regulations;
“protected cell company” means a company incorporated as, or
converted into, a protected cell company in accordance with the
provisions of this Act;
“Registrar” means the Registrar of Companies;
“transaction” means anything (including, without limitation, any
agreement, arrangement, dealing, disposition, circumstance, event
or relationship) whereby any liability arises or is imposed; and
cognate expressions shall be construed accordingly.
“voluntary liquidation” means voluntary liquidation under the Companies
Act 2014;
“voluntary liquidator” means a liquidator appointed under Part X of the
Companies Act 2014;
(2) Expressions used in this Act shall (unless the context requires
otherwise) have the same meanings as in the Companies Act.
Disapplication of provisions of Insolvency Act 2011.
2A. Parts 2 and 3 of the Insolvency Act 2011 do not apply in relation to a
protected cell company.
Protected Cell Companies
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2001-22
PART I
FORMATION & ATTRIBUTES
Protected cell companies.
3.(1) Subject to the provisions of this Act, a company may be–
(a) incorporated as a protected cell company;
(b) converted, if so authorised by its articles, into a protected cell
company.
(2) For the avoidance of doubt, and notwithstanding that a protected cell
company may have created one or more cells under this Act–
(a) a protected cell company is a single legal person; and
(b) the creation by a protected cell company of a cell does not
create, in respect of that cell, a legal person separate from the
company.
(3) The provisions of the Companies Act shall, subject to the provisions of
this Act, and unless the context requires otherwise, apply in relation to a
protected cell company.
Creation of cells.
4. A protected cell company may create one or more cells for the purpose of
segregating and protecting cellular assets in the manner provided by this
Act.
Cellular and non-cellular assets.
5.(1) The assets of a protected cell company shall be either cellular assets or
non-cellular assets.
(2) It shall be the duty of the directors of a protected cell company–
(a) to keep cellular assets separate and separately identifiable
from non-cellular assets; and
(b) to keep cellular assets attributable to each cell separate and
separately identifiable from cellular assets attributable to
other cells.
Protected Cell Companies
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2001-22
(3) The cellular assets of a protected cell company comprise the assets of
the company attributable to the cells of the company.
(4) The assets attributable to a cell of a protected cell company comprise–
(a) assets represented by the proceeds of cell share capital and
reserves attributable to the cell;
(b) all other assets attributable to the cell.
(5) For the purposes of subsection (4), the expression “reserves” includes
retained earnings, capital reserves and share premiums.
(6) The non-cellular assets of a protected cell company comprise the assets
of the company which are not cellular assets.
(7) Notwithstanding the provisions of subsection (2), the directors of a
protected cell company may cause or permit cellular assets and non-cellular
assets to be held–
(a) by or through a nominee; or
(b) by a company the shares and capital interests of which may be
cellular assets or non-cellular assets, or a combination of both.
(8) The duty imposed by subsection (2) is not breached by reason only that
the directors of a protected cell company 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 in accordance with subsection (2).
Position of creditors.
6.(1) The rights of creditors of a protected cell company shall correspond
with the liabilities provided for in section 13.
(2) No such creditor shall have any rights other than the rights referred to
in this section and in sections 7 and 13.
(3) There shall be implied (except in so far as the same is expressly
excluded in writing) in every transaction entered into by a protected cell
company the following terms–
(a) that no party shall seek, whether in any proceedings or by any
other means whatsoever or wheresoever, to make or attempt to
use any cellular assets attributable to any cell of the company to
satisfy a liability not attributable to that cell;
Protected Cell Companies
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2001-22
(b) that if any party succeeds by any means whatsoever or
wheresoever in using any cellular assets attributable to any cell
of the company to satisfy a liability not attributable to that cell,
that party shall be liable to the company to pay a sum equal to
the value of the benefit thereby obtained by him; and
(c) that if any party succeeds in seizing or attaching by any means
or otherwise levying execution against any cellular assets
attributable to any cell of the company to satisfy a liability not
attributable to that cell, that party shall hold those assets or
their proceeds on trust for the company and shall keep those
assets or proceeds separate and identifiable as such trust
property.
(4) All sums recovered by a protected cell company as a result of any such
trust as is described in subsection (3)(c) shall be credited against any
concurrent liability imposed under the implied term set out in subsection
(3)(b).
(5) Any asset or sum recovered by a protected cell company under the
implied term set out in subsection (3)(b) or (3) (c) or by any other means
whatsoever or wheresoever in the events referred to in those subsections
shall, after the deduction or payment of any costs of recovery, be applied by
the company so as to compensate the cell affected.
(6) In the event of any cellular assets attributable to a cell of a protected
cell company being taken in execution in respect of a liability not
attributable to that cell, and in so far as such assets or compensation in
respect thereof cannot otherwise be restored to the cell affected, the
company shall–
(a) cause or procure its auditor, acting as expert and not as
arbitrator, to certify the value of the assets lost by the cell
affected; and
(b) transfer or pay to the cell affected, from the cellular or non-
cellular assets to which the liability was attributable, assets or
sums sufficient to restore to the cell affected the value of the
assets lost.
(7) Where under subsection (6)(b) a protected cell company is obliged to
make a transfer or payment from cellular assets attributable to a cell of the
company, and those assets are insufficient, the company shall so far as
possible make up the deficiency from its non-cellular assets.
Protected Cell Companies
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2001-22
(8) This section shall apply to cellular and non-cellular assets of a
protected cell company wherever situated.
Recourse to cellular assets by creditors.
7. Without prejudice to the provisions of sections 6 and 13, cellular assets
attributable to a cell of a protected cell company–
(a) shall only be available to the creditors of the company who are
creditors in respect of that cell and who are thereby entitled, in
conformity with the provisions of this Act, to have recourse to
the cellular assets attributable to that cell;
(b) shall be absolutely protected from the creditors of the company
who are not creditors in respect of that cell and who
accordingly are not entitled to have recourse to the cellular
assets attributable to that cell.
Cell shares and share capital.
8.(1) A protected cell company may, in respect of any of its cells, create and
issue shares (“cell shares”) the proceeds of the issue of which (“cell share
capital”) shall be comprised in the cellular assets attributable to the cell in
respect of which the cell shares were issued.
(2) The proceeds of the issue of shares other than cell shares created and
issued by a protected cell company shall be comprised in the company's
non-cellular assets.
(3) A protected cell company may pay a dividend (a “cellular dividend”)
in respect of cell shares.
(4) Cellular dividends may be paid in respect of cell shares by reference
only to the cellular assets and liabilities, or the profits, attributable to the cell
in respect of which the cell shares were issued; and accordingly, in
determining whether or not profits are available for the purpose of paying a
cellular dividend, no account need be taken of–
(a) the profits and losses, or the assets and liabilities, attributable
to any other cell of the company; or
(b) non-cellular profits and losses, or assets and liabilities.
Reduction of cell share capital.
9.(1) Except in the case of a protected cell company which is authorised by
the Chief Executive as a collective investment scheme and which is
Protected Cell Companies
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2001-22
redeeming units or shares in accordance with its scheme particulars, a
protected cell company or a holder of cell shares in a cell of a protected cell
company may apply to the Court for an order authorising the company to
reduce the cell share capital–
(a) where the applicant is the company, of any of the company 's
cells; or
(b) where the applicant is the holder of cell shares, of the cell in
which the cell shares are held;
and no reduction of cell share capital may be made except under the
authority of, and in accordance with the terms and conditions of, an order of
the Court under this section.
(2) In particular, and without prejudice to the generality of subsection (1),
the Court may by order authorise the protected cell company–
(a) to extinguish or reduce the liability on any cell shares in respect
of cell share capital not paid up; or
(b) with or without extinguishing or reducing any liability on any
cell shares–
(i) to cancel any paid-up cell share capital which is lost or
unrepresented by available cellular assets; or
(ii) to pay off any paid-up cell share capital which exceeds
the company’s wants;
and the company may, so far as is necessary, alter its memorandum
accordingly.
(3) The Court shall not make an order authorising the reduction of cell
share capital unless it is satisfied–
(a) that the creditors of the company entitled to have recourse to
the cellular assets attributable to the cell in question consent to
the reduction; or
(b) that those creditors would not be unfairly prejudiced by the
reduction.
(4) The Court may dispense with the consent of a creditor upon the
company securing payment of its liability to the creditor in such form and
manner as the Court may direct.
Protected Cell Companies
© Government of Gibraltar (www.gibraltarlaws.gov.gi)
2001-22
(5) Notice of an application to the Court for an order authorising the
reduction of cell share capital shall, at least four weeks before the
application is made, be placed in the Gazette setting out the terms of the
application and the date, time and place of the hearing.
(6) Notice of an application to the Court for an order authorising the
reduction of cell share capital shall be given to–
(a) the protected cell company (except where the company is itself
the applicant);
(b) the cell liquidator (if any);
(c) the liquidator (if any) of the company;
(d) the administrator (if any) of the cell or the company;
(e) the Chief Executive , in respect of a protected cell company
falling under section 11(1)(a) or (b);
(f) all holders of cell shares of the cell (other than the applicant, in
cases where the applicant is the holder of such shares); and
(g) such other persons as the Court may direct;
who shall each be given an opportunity of making representations to the
Court before the order is made.
(7) The Court may dispense with the requirement to give notice to any
person or body mentioned in subsection (6).
(8) The Court, on hearing an application for an order authorising the
reduction of cell share capital, may make an interim order, or adjourn the
hearing, conditionally or unconditionally.
(9) An order of the Court authorising the reduction of cell share capital–
(a) shall be deemed to be substituted for the corresponding part of
the protected cell company’s memorandum; and
(b) shall have effect as if originally contained therein;
but without prejudice to anything done in accordance with the provisions of
the memorandum before the date of the order.
(10) If a protected cell company’s cell share capital is reduced, no past or
present holder of cell shares of the cell in question shall (subject to the
Protected Cell Companies
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2001-22
following provisions of this section) be liable in respect of any cell share to
any call or contribution exceeding the amount of the difference (if any)
between the following amounts–
(a) the amount of the cell share as fixed by the order of the Court
authorising the reduction of cell share capital; and
(b) the amount paid on the cell share or (if appropriate) the reduced
amount deemed to have been paid on it.
(11) Subsection (12) and (13) apply if–
(a) a creditor whose consent is required under this section to the
reduction of cell share capital has not, without neglect or
default on his part, been given written notice by the company
that his consent to the reduction is required; and
(b) after the reduction of cell share capital, the cellular assets
attributable to the cell in question (when account is taken of the
company’s non-cellular assets, unless there are no creditors in
respect of that cell entitled to have recourse to the company’s
non-cellular assets) are or are likely to be insufficient to
discharge the claims of creditors in respect of that cell.
(12) Every person who, at the date of the order of the Court authorising the
reduction of cell share capital, was a holder of cell shares of the cell in
question shall be liable to contribute, towards payment of the liability in
question, an amount not exceeding that which he would have been liable to
contribute if the liquidation of the company had commenced on the day
before that date.
(13) If a liquidator or voluntary liquidator is appointed in relation to a
protected cell company, or if a cell liquidation order is made in respect of
the cell of the company in relation to which the order of the Court
authorising the reduction of cell share capital was made, the Court, on the
application of the creditor in question and upon proof of the matters set out
in subsection (11)(a), may if it thinks fit settle a list of persons accordingly
so liable to contribute, and may make and enforce calls and orders against
the contributories settled on the list as if they were ordinary contributories in
the liquidation or voluntary liquidation.
(14) Nothing in subsection (11),(12) or (13) shall affect the rights of the
contributories among themselves.
(15) Any officer of a protected cell company who–
Protected Cell Companies
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2001-22
(a) wilfully conceals the name of a creditor whose consent is
required under this section to the reduction of the company’s
cell share capital;
(b) wilfully misrepresents the nature or amount of the debt or
claim of any such creditor; or
(c) aids, abets, connives in or is privy to any such concealment or
misrepresentation as is described in paragraph (a) or (b);
is guilty of an offence and liable–
(i) on summary conviction, to a fine up to level 5 on the
standard scale, imprisonment for a term up to 3 months
or both;
(ii) on conviction on indictment, to a fine, imprisonment for
a term up to 2 years or both.
Name and memorandum of protected cell company.
10.(1) The name of a protected cell company shall, include the expression
“Protected Cell”, “PCC” or any cognate expression approved in writing by
the Registrar.
(2) The memorandum of a protected cell company shall state that it is a
protected cell company.
(3) A protected cell company may, in order to comply with subsection (2),
alter its memorandum by special resolution.
(4) Unless and until a protected cell company has complied with the
provisions of this section, it shall be deemed not to be a protected cell
company.
(5) Each cell of a protected cell company shall have its own distinct name
or designation.
Consent of the Chief Executive required for protected cell company.
11.(1) Subject to subsection (2), a company may not be incorporated as a
protected cell company, and an existing company may not be converted into
a protected cell company, except in accordance with the terms and
conditions of the written consent of the Chief Executive, which shall only be
granted in the case of a company–
Protected Cell Companies
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2001-22
(a) which is (or which will be) a Gibraltar insurer as defined in
section 2 of the Financial Services (Insurance Companies) Act;
or
(b) which is (or which will be) a collective investment scheme
authorised by the Authority under the Financial Services
(Collective Investment Schemes) Act, 2011.
(2) A company–
(a) which is established principally for the purposes of issuing
bonds, notes or loan or other debt securities or instruments,
secured or unsecured, in respect of which the repayment of
capital and interest is to be funded from the company’s
investments; and
(b) which is not required to be licensed or authorised under the
Financial Services (Investment and Fiduciary Services) Act or
the Financial Services (Markets in Financial Instruments) Act
2006,
may not be incorporated as a protected cell company, and an existing
company may not be converted into a protected cell company except in
accordance with the terms and conditions of the written consent of the Chief
Executive.
(3) The Minister may by regulations prescribe any other class or
descriptions of company which may be incorporated as or converted into a
protected cell company with the consent of the Chief Executive.
(4) The Chief Executive may, from time to time, in such manner as he
thinks fit–
(a) vary or revoke any term or condition subject to which a consent
under subsections (1) or (2) was granted; and
(b) impose any new term or condition in relation to any such
consent.
Incorporation of company as protected cell company.
12. A person wishing to incorporate a company as a protected cell company
shall make an application to the Registrar for the registration of the
company's memorandum and articles in accordance with the Companies
Act, the provisions of which shall apply accordingly.
Liability of cellular assets.
Protected Cell Companies
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13.(1) Subject to the provisions of subsection (2), and save to the extent
that the company may have agreed that a liability shall be the liability solely
of the company’s non-cellular assets, or of the cellular assets attributable to
a particular cell of the company, where any liability arises which is
attributable to a particular cell of a protected cell company–
(a) the cellular assets attributable to that cell shall be primarily
used to satisfy the liability;
(b) the company’s non-cellular assets shall be secondarily used to
satisfy the liability, provided that the cellular assets attributable
to the relevant cell have been exhausted; and
(c) any cellular assets not attributable to the relevant cell shall not
be used to satisfy the liability.
(2) In the case of loss or damage which is attributable to a particular cell of
a protected cell company and which is caused by fraud, the loss or damage
shall be the liability solely of the company’s non-cellular assets, without
prejudice to any liability of any person other than the company.
(3) Any liability not attributable to a particular cell of a protected cell
company shall be the liability solely of the company’s non-cellular assets.
(4) Notwithstanding the above provisions of this section–
(a) the liabilities under subsection (1)(a) of the cellular assets
attributable to a particular cell of a protected cell company shall
abate rateably until the value of the aggregate liabilities equals
the value of those assets except that the provisions of this
paragraph shall be disregarded in assessing the existence and
extent of any secondary liability under subsection (1)(b);
(b) the liabilities of the company’s non-cellular assets shall abate
rateably until the value of the aggregate liabilities equals the
value of those assets:
(5) This section shall apply to the assets of the company wherever situated.
Disputes as to liability attributable to cells.
14.(1) In the event of any dispute as to–
(a) whether any right is or is not in respect of a particular cell;
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(b) whether any creditor is or is not a creditor in respect of a
particular cell;
(c) whether any liability is or is not attributable to a particular cell;
(d) the amount to which any liability is limited;
the Court, on the application of the protected cell company, and without
prejudice to any other right or remedy of any person, may issue a declaration
in respect of the matter in dispute.
(2) The Court, on hearing an application for a declaration under subsection
(1)–
(a) may direct that any person shall be heard on the application;
(b) may make an interim declaration, or adjourn the hearing,
conditionally or unconditionally;
(c) may make the declaration subject to such terms and conditions
as it thinks fit;
(d) may direct that the declaration shall be binding upon such
persons as may be specified.
Company to inform persons they are dealing with protected cell
company.
15.(1) A protected cell company shall–
(a) inform any person with whom it transacts that it is a protected
cell company; and
(b) for the purposes of that transaction, identify or specify the cell
in respect of which that person is transacting, unless that
transaction is not a transaction in respect of a particular cell.
(2) If, in contravention of subsection (1), a protected cell company–
(a) fails to inform a person that he is transacting with a protected
cell company, and that person is otherwise unaware that, and
has no reasonable grounds to believe that, he is transacting with
a protected cell company; or
(b) fails to identify or specify the cell in respect of which a person
is transacting, and that person is otherwise unaware of, and has
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no reasonable basis of knowing, which cell he is transacting
with;
then, in either such case–
(i) the directors shall (notwithstanding any provision to the
contrary in the company’s articles or in any contract with
the company or otherwise) incur personal liability to that
person in respect of the transaction; and
(ii) the directors shall have a right of indemnity against the
non-cellular assets of the company, unless they were
fraudulent, reckless or negligent, or acted in bad faith.
(3) Notwithstanding the provisions of subsection (2)(i), the Court may
relieve a director of all or part of his personal liability thereunder if he
satisfies the Court that he ought to be so relieved because–
(a) he was not aware of the circumstances giving rise to his
liability and, in being not aware, he was neither fraudulent,
reckless or negligent, nor acted in bad faith; or
(b) he expressly objected, and exercised such rights as he had as a
director, whether by way of voting power or otherwise, so as to
try to prevent the circumstances giving rise to his liability.
(4) Where, pursuant to the provisions of subsection (3), the Court relieves
a director of all or part of his personal liability under subsection (2)(i), the
Court may order that the liability in question shall instead be met first by
any other director or directors whose personal liability is not relieved and
thereafter, if necessary, from such of the cellular or non-cellular assets of the
protected cell company as may be specified in the order.
(5) Any provision in the articles of a protected cell company, and any
other contractual provision under which the protected cell company may be
liable, which purports to indemnify directors in respect of conduct which
would otherwise disentitle them to an indemnity against non-cellular assets
by virtue of subsection (2)(ii), shall be void.
Attribution of non-cellular assets and liabilities.
16.(1) Liabilities of a protected cell company not otherwise attributable to
any of its cells shall be discharged from the company’s non-cellular assets.
(2) Income, receipts and other property or rights of or acquired by a
protected cell company not otherwise attributable to any cell shall be applied
to and comprised in the company’s non-cellular assets.
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Provisions in relation to winding up of protected cell company.
17.(1) Notwithstanding the provisions of the Insolvency Act 2011 or Part X
of the Companies Act 2014 or any other statutory provision or rule of law to
the contrary, in the liquidation or voluntary liquidation of a protected cell
company–
(a) the assets forming part of the estate shall only be the
non-cellular assets;
(b) the liquidation or voluntary liquidation shall not
terminate any agency, or in any way whatsoever affect
the authority or power, of any officer, receiver,
administrator, servant or agent of the protected cell
company in respect of the cellular assets;
(c) if and to the extent that any liquidator of the protected
cell company has any dealing with, or has possession
custody or control of, any of the cellular assets, he shall
be subject to the duty set out in section 5(2) hereof as if
he were a director.
(2) The Insolvency Act 2011 and Part X of the Companies Act 2014
apply to the liquidation or voluntary liquidation of a protected cell company
subject to such modifications as are necessary to give effect to subsection
(1) and, in the event of any conflict between the provisions in the Insolvency
Act 2011, or Part X of the Companies Act 2014, and this Act, this Act
prevails.
Transfer of cellular assets from protected cell company.
18.(1) Subject to the provisions of subsection (3), the cellular assets
attributable to any cell of a protected cell company, but not the non-cellular
assets of a protected cell company may be transferred to another person,
wherever resident or incorporated, and whether or not a protected cell
company.
(2) A transfer, under subsection (1), of cellular assets attributable to a cell
of a protected cell company shall not of itself entitle creditors of that
company to have recourse to the assets of the person to whom the cellular
assets were transferred.
(3) No transfer of the cellular assets attributable to a cell of a protected cell
company may be made except under the authority of, and in accordance with
the terms and conditions of, an order of the Court under this section (a “cell
transfer order”).
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(4) The Court shall not make a cell transfer order in relation to a cell of a
protected cell company unless it is satisfied–
(a) that the creditors of the company entitled to have recourse to the
cellular assets attributable to the cell consent to the transfer; or
(b) that those creditors would not be unfairly prejudiced by the
transfer.
(5) The Court, on hearing an application for a cell transfer order–
(a) may make an interim order or adjourn the hearing,
conditionally or unconditionally;
(b) may dispense with any of the requirements of subsection (4).
(6) The Court may attach such conditions as it thinks fit to a cell transfer
order, including conditions as to the discharging of claims of creditors
entitled to have recourse to the cellular assets attributable to the cell in
relation to which the order is sought.
(7) The Court may make a cell transfer order in relation to a cell of a
protected cell company notwithstanding that–
(a) a liquidator or voluntary liquidator has been appointed in
respect of the protected cell company;
(b) a cell liquidation order has been made in respect of the cell or
any other cell of the company;
(c) an administration order has been made in respect of the cell,
the company or any other cell thereof.
(8) Notice of an application to the Court for a cell transfer order shall be
served upon–
(a) any liquidator or receiver of the company or any cell liquidator
of the cell concerned;
(b) the Chief Executive , in respect of a protected cell company
falling under section 11(1)(a) or (b); and
(c) such other persons (if any) as the Court may direct.
(9) The provisions of this section are without prejudice to any power of a
protected cell company lawfully to make payments or transfers from the
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cellular assets attributable to any cell of the company to a person entitled, in
conformity with the provisions of this Act, to have recourse to those cellular
assets.
(10) For the avoidance of doubt, a protected cell company shall not require
a cell transfer order to invest, and change investment of, cellular assets or
otherwise to make payments or transfers from cellular assets in the ordinary
course of the company’s business.
PART II
CELL LIQUIDATION
Cell liquidation orders.
19.(1) Subject to the provisions of this section, if in relation to a protected
cell company the Court is satisfied–
(a) that the cellular assets attributable to a particular cell of the
company (when account is taken of the company's non-cellular
assets, unless there are no creditors in respect of that cell
entitled to have recourse to the company's non-cellular assets)
are or are likely to be insufficient to discharge the claims of
creditors in respect of that cell;
(b) that the making of an administration order under section 24 in
respect of that cell would not be appropriate; and
(c) that the making of an order under this section would achieve
the purposes set out in subsection (3);
the Court may make an order under this section (a cell liquidation order) in
respect of that cell.
(2) A cell liquidation order may be made in respect of one or more cells.
(3) A receivership order is an order directing that the business and cellular
assets of or attributable to a cell shall be managed by a person specified in
the order (the cell liquidator) for the purposes of–
(a) the orderly winding up of the business of or attributable to the
cell; and
(b) the distribution of the cellular assets attributable to the cell to
those entitled to have recourse thereto.
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(3A) The Court shall not appoint a person as cell liquidator under a cell
liquidation order unless the person is a licensed insolvency practitioner.
(4) A cell liquidation order –
(a) may not be made if a liquidator has been appointed to act in
respect of the protected cell company;
(b) may be made in respect of a cell subject to an administration
order under section 24;
(c) shall cease to be of effect upon the appointment of a liquidator
to act in respect of the protected cell company, but without
prejudice to prior acts.
(5) No resolution for the appointment of a voluntary liquidator of a
protected cell company any cell of which is subject to a cell liquidation
order shall be effective without leave of the Court.
Applications for cell liquidation orders.
20.(1) An application for a cell liquidation order in respect of a cell of a
protected cell company may be made by–
(a) the company;
(b) the directors of the company;
(c) any creditor of the company in respect of that cell;
(d) any holder of cell shares in respect of that cell;
(e) the administrator of that cell; or
(f) the Chief Executive , in respect of a protected cell company
falling under section 11(1)(a) or (b).
(2) The Court, on hearing an application–
(a) for a cell liquidation order; or
(b) for leave, pursuant to section 19(5), for a resolution for the
appointment of a voluntary liquidator;
may make an interim order or adjourn the hearing, conditionally or
unconditionally.
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(3) Notice of an application to the Court for a cell liquidation order in
respect of a cell of a protected cell company shall be served upon–
(a) the company;
(b) the administrator (if any) of the cell;
(c) the Chief Executive in respect of a protected cell company
falling under section 11(1)(a) or (b); and
(d) such other persons (if any) as the Court may direct;
who shall each be given an opportunity of making representations to the
Court before the order is made.
Application of Insolvency Act 2011 to cell liquidations.
20A.(1) The Insolvency Act 2011 applies to a cell liquidation as if the cell
was a company in liquidation under that Act and, for the purposes of the cell
liquidation, the cell shall be treated as if it were a separate legal person.
(2) Notwithstanding subsection (1)–
(a) the appointment of the cell liquidator and the powers and duties
of the cell liquidator are confined to the cell in respect of which
the cell liquidation order is made; and
(b) in a cell liquidation, the provisions of the Insolvency Act 2011
are subject to such modifications as are necessary to give effect
to this Act and in the event of any conflict between the
provisions in the Insolvency Act 2011 and this Act, this Act
prevails.
Functions of cell liquidator and effect of cell liquidation order.
21.(1) The cell liquidator –
(a) may do all such things as may be necessary for the purposes set
out in section 19(3); and
(b) shall have all the functions and powers of the directors in
respect of the business and cellular assets of or attributable to
the cell.
(2) The cell liquidator may at any time apply to Court–
(a) for directions as to the extent or exercise of any function or
power;
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(b) for the cell liquidation order to be discharged or varied; or
(c) for an order as to any matter arising in the course of the
liquidation of the cell.
(3) In exercising his functions and powers the cell liquidator is deemed to
act as the agent of the protected cell company, and shall not incur personal
liability except to the extent that he is fraudulent, reckless or grossly
negligent, or acts in bad faith.
(4) Any person dealing with the cell liquidator in good faith is not
concerned to enquire whether the cell liquidator is acting within his powers.
(5) When an application has been made for, and during the period of
operation of, a cell liquidation order, no proceedings may be commenced or
continued against the protected cell company in relation to the cell in respect
of which the cell liquidation order was applied for or made except with the
consent of the cell liquidator or the leave of the Court and subject (where the
Court gives leave) to such terms and conditions as the Court may impose.
(5A) Subsection (5) applies in place of section 159 of the Insolvency Act
2011 in relation to an application for a cell liquidation order.
(6) During the period of operation of a cell liquidation order –
(a) the functions and powers of the directors shall cease in respect
of the business and cellular assets of or attributable to the cell
in respect of which the order was made; and
(b) the cell liquidator of the cell shall be deemed a director of the
protected cell company in respect of the non-cellular assets of
the company, unless there are no creditors in respect of that cell
entitled to have recourse to the company's non-cellular assets.
Discharge and variation of cell liquidation orders.
22.(1) The Court shall not discharge a cell liquidation order unless it
appears to the Court that the purpose for which the order was made has been
achieved or substantially achieved or is incapable of achievement.
(2) The Court, on hearing an application for the discharge or variation of a
cell liquidation order, may make any interim order or adjourn the hearing,
conditionally or unconditionally.
(3) Upon the Court discharging a cell liquidation order in respect of a cell
of a protected cell company on the ground that the purpose for which the
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order was made has been achieved or substantially achieved, the Court may
direct that any payment made by the receiver to any creditor of the company
in respect of that cell shall be deemed full satisfaction of the liabilities of the
company to that creditor in respect of that cell; and the creditor’s claims
against the company in respect of that cell shall be thereby deemed
extinguished.
(4) Nothing in subsection (3) shall operate so as to affect or extinguish any
right or remedy of a creditor against any other person, including any surety
of the protected cell company.
(4A) Creditors of a cell that is subject to a cell liquidation order shall be
regarded as preferential creditors of the cell to the extent that they would be
preferential creditors under the Insolvency Act 2011 if–
(a) the cell was a company; and
(b) the cell liquidator was a liquidator appointed under the
Insolvency Act 2011.
(5) Subject to the provisions of–
(a) this Act and, in particular subsection (4A); and
(b) any agreement between the protected cell company and any
creditor thereof as to the subordination of the debts due to that
creditor to the debts due to the company’s other creditors;
the company’s cellular assets attributable to any cell of the company in
relation to which a cell liquidation order has been made shall, in the winding
up of the business of or attributable to that cell under the provisions of this
Part of this Act, be realised and applied in satisfaction of the company’s
liabilities attributable to that cell pari passu.
(6) Any surplus shall thereafter be distributed (unless the memorandum or
articles provide otherwise)–
(a) among the holder of the cell shares or the person otherwise
entitled to the surplus; or
(b) where there are no cell shares and no such persons, among the
holders of the non-cellular shares;
in each case according to their respective rights and interests in or against
the company.
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(7) The Court may, upon discharging a cell liquidation order in respect of
a cell of a protected cell company, direct that the cell shall be dissolved on
such date as the Court may specify.
(8) Immediately upon the dissolution of a cell of a protected cell company,
the company may not undertake business or incur liabilities in respect of that
cell.
Remuneration of cell liquidator.
23. The remuneration of a cell liquidator shall be fixed by the Court
applying the general principles set out in section 466 of the Insolvency Act
2011 and the remuneration, and any expenses properly incurred by him,
shall be payable, in priority to all other claims, from–
(a) the cellular assets attributable to the cell in respect of which the
cell liquidator was appointed; and
(b) to the extent that these may be insufficient, the non-cellular
assets of the protected cell company.
PART III
ADMINISTRATION ORDERS
Administration orders in relation to protected cell companies or cells.
24.(1) Subject to the provisions of this section, if in relation to a protected
cell company the Court is satisfied–
(a) that the cellular assets attributable to a particular cell of the
company (when account is taken of the company's non-cellular
assets, unless there are no creditors in respect of that cell
entitled to have recourse to the company’s non-cellular assets)
are or are likely to be insufficient to discharge the claims of
creditors in respect of that cell; or
(b) that the company’s cellular assets and non-cellular assets are or
are likely to be insufficient to discharge the liabilities of the
company;
and the Court considers that the making of an order under this section may
achieve one of the purposes set out in subsection (4), the Court may make an
order under this section (an “administration order”) in respect of that cell or
(as the case may be) in respect of that company.
(2) An administration order may be made in respect of one or more cells.
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(3) An administration order is an order directing that, during the period for
which the order is in force, the business and assets of or attributable to the
cell or, as the case may be, the business and assets of the company, shall be
managed by a person (an “administrator”) appointed for the purpose by the
Court.
(3A) The Court shall not appoint a person as administrator under an
administration order unless the person is a licensed insolvency practitioner.
(4) The purposes for which an administration order may be made are–
(a) the survival as a going concern of the cell or (as the case may
be) of the company;
(b) the more advantageous realisation of the business and assets of
or attributable to the cell or (as the case may be) the business
and assets of the company than would be achieved by a cell
liquidation or (as the case may be) by the liquidation of the
company.
(5) An administration order, whether in respect of a protected cell
company or a cell thereof–
(a) may not be made if:
(i) a liquidator has been appointed to act in respect of the
protected cell company;
(ii) Deleted
(iii) the company is one which section 11(2) applies and its
Memorandum of Association so provides;
(b) shall cease to be of effect upon the appointment of a liquidator
to act in respect of the company, but without prejudice to prior
acts.
(6) No resolution for the appointment of a voluntary liquidator of a
protected cell company which, or any cell of which, is subject to an
administration order shall be effective without the leave of the Court.
Applications for administration orders.
25.(1) An application for an administration order may be made by–
(a) the company;
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(b) the directors of the company;
(c) the shareholders or any class of shareholders of the company or
of any cell;
(d) any creditor of the company (or, where the order is sought in
respect of a cell, any creditor of the company in respect of that
cell); or
(e) the Chief Executive , in respect of a protected cell company
falling under section 11(1)(a) or (b).
(2) The Court, on hearing an application–
(a) for an administration order; or
(b) for leave, under section 24(6), for a resolution for the
appointment of a voluntary liquidator;
may make an interim order or adjourn the hearing, conditionally or
unconditionally.
(3) Notice of an application to the Court for an administration order in
respect of a protected cell company or a cell thereof shall be served upon–
(a) the company;
(b) the Chief Executive in respect of a protected cell company
falling under section 11(1)(a) or (b); and
(c) such other persons (if any) as the Court may direct
who shall each be given an opportunity of making representations to the
Court before the order is made.
Functions of administrator and effect of administration order.
26.(1) The administrator of a cell of a protected cell company–
(a) may do all such things as may be necessary for the purpose set
out in section 24(4) for which the administration order was
made; and
(b) shall have all the functions and powers of the directors in
respect of the business and cellular assets of or attributable to
the cell.
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(2) The administrator of a protected cell company–
(a) may do all such things as may be necessary for the purpose set
out in section 24(4) for which the administration order was
made; and
(b) shall have all the functions and powers of the directors in
respect of the business and assets of the company, including its
cells.
(3) The administrator may at any time apply to the Court–
(a) for directions as to the extent or exercise of any function or
power;
(b) for the administration order to be discharged or varied; or
(c) for an order as to any matter arising in the course of his
administration.
(4) In exercising his functions and powers the administrator is deemed to
act as the agent of the protected cell company, and shall not incur personal
liability except to the extent that he is fraudulent, reckless or grossly
negligent, or acts in bad faith.
(5) Any person dealing with the administrator in good faith need not
enquire whether the administrator is acting within his powers.
(6) When an application has been made for, and during the period of
operation of, an administration order, no proceedings may be commenced or
continued against the protected cell company in relation to the cell in respect
of which the administration order was applied for or made except with the
consent of the administrator or the leave of the Court and subject (where the
Court gives leave) to such terms and conditions as the Court may impose.
(7) During the period of operation of an administration order–
(a) in respect of a cell of a protected cell company–
(i) the functions and powers of the directors shall cease in
respect of the business and cellular assets of or
attributable to the cell; and
(ii) the administrator shall be deemed a director of the
company in respect of the company’s non-cellular assets,
unless there are no creditors of the company in respect of
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that cell entitled to have recourse to the non-cellular
assets;
(b) in respect of a protected cell company, the functions and
powers of the directors shall cease.
Discharge and variation of administration orders.
27.(1) The Court shall not discharge an administration order unless it
appears to the Court that–
(a) the purpose for which the order was made has been achieved or
is incapable of achievement; or
(b) it would otherwise be desirable or expedient to discharge the
order.
(2) The Court, on hearing an application for the discharge or variation of
an administration order, may make any interim order or adjourn the hearing,
conditionally or unconditionally.
(3) Upon discharging an administration order, the Court may direct–
(a) where the administration order was made in respect of a
protected cell company, that any payment made by the
administrator to any creditor of the company shall be deemed
full satisfaction of the liabilities of the company to that
creditor; and the creditor's claims against the company shall be
thereby deemed extinguished;
(b) where the administration order was made in respect of a cell,
that any payment made by the administrator to any creditor of
the company in respect of that cell shall be deemed full
satisfaction of the liabilities of the company to that creditor in
respect of that cell; and the creditor's claims against the
company in respect of that cell shall be thereby deemed
extinguished.
(4) Nothing in subsection (3) shall operate so as to affect or extinguish any
right or remedy of a creditor against any other person, including any surety
of the protected cell company.
Remuneration of administrator.
28. The remuneration of an administrator shall be fixed by the Court
applying the general principles set out in section 466 of the Insolvency Act
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2011 and the remuneration,, and any expenses properly incurred by him,
shall be payable in priority to all other claims–
(a) in the case of the administration of a cell, from–
(i) the cellular assets attributable to the cell; and
(ii) to the extent these may be insufficient, the noncellular
assets of the protected cell company; and
(b) in the case of the administration of a protected cell company,
from:
(i) the non-cellular assets of the company; and
(ii) to the extent these may be insufficient, the cellular assets,
in such shares or proportions as the Court may direct.
PART IV
GENERAL PROVISIONS
Offences.
29. A person who, in connection with an application under section 12 for
the incorporation of a company as a protected cell company, or for the
conversion of an existing company into a protected cell company–
(a) makes a statement which he knows or has reasonable cause to
believe to be false, deceptive or misleading in a material
particular;
(b) recklessly makes a statement, dishonestly or otherwise, which
is false, deceptive or misleading in a material particular;
(c) produces or furnishes or causes or permits to be produced or
furnished any information or document which he knows or has
reasonable cause to believe to be false, deceptive or misleading
in a material particular; or
(d) recklessly produces or furnishes or recklessly causes or permits
to be produced or furnished, dishonestly or otherwise, any
information or document which is false, deceptive or
misleading in a material particular;
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shall be guilty of an offence and liable on summary conviction to a fine up
to level 5 on the standard scale, to imprisonment for a term not exceeding
three months, or to both.