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Wednesday, 1 December 2021
HomeTaxationCompanyCell Companies in the maritime and aviation sectors

Cell Companies in the maritime and aviation sectors

Cell companies are companies that separate their business into “protected cells” through a segregated portfolio in which the assets and liabilities of different classes are separated from the core business of the company, thus limiting litigation damages and financial impacts to a single cell and protecting the company’s core business.

In Malta, the provisions of the Companies Act for the incorporation or conversion of so-called ‘cell companies’ were first introduced in 1998, as part of the new Insurance Business Act enacted at the time. It was only later, in 2011, with the introduction of the Companies Act (Incorporated Cell Companies Carrying on Business of Insurance), that this type of company could be used for the first time. It was mainly the insurance sector that benefited, before being extended to various types of variable capital investment companies.

The latest step came about a year ago, on 3 March 2020, with a reform of the Companies Act that extended the cell company to the aviation and maritime sectors: not only for those who own or operate aircraft and vessels, but also their management and all related ancillary activities, including providers of security services and companies with equity interests in aviation.

Following the advantages already available to insurance, securitisation and collective investment undertakings, aviation companies can therefore also ring-fence their assets in such a way that they are beyond the reach of creditors or other third parties who have claims on assets relating to another airframe.

In the event of the insolvency of one cell, there will be no effect on the solvency or otherwise of the other cells or of the company itself. This is achieved because each company has the ability to create within itself one or more independent departments in order to place and protect specific assets. Operating in Malta in the aviation and maritime sectors is made easier by the fact that a system such as the cellular company system is able to protect the company from the risks involved in its business.

For specific advice please contact the Malta Business Agency offices by filling out the form below.

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