CELL COMPANIES IN
GUERNSEY2 / AUGUST 2014 | INCORPORATED CELL COMPANIES IN GUERNSEY
INCORPORATED CELL COMPANIES
This briefing note describes the key features of the incorporated cell company (“ICC”)
and summarises the formation, structure and liquidation procedures particular to this
type of company.
The Companies (Guernsey) Law, 2008 (the “Law”) provides for the creation of the
incorporated cell company. An ICC is a company which has the power to establish
incorporated cells as part of its corporate structure. Like a protected cell company
(“PCC”), an ICC may comprise any number of incorporated cells (“Cells”). However,
unlike a protected cell of a PCC an incorporated cell has many of the attributes of a
non-cellular company. Each incorporated cell has its own board of directors, its own
memorandum and articles of incorporation and each is a separate legal entity which
must be registered at the Guernsey registry and can sue and be sued in its own name.
Because each incorporated cell is a separate legal entity one incorporated cell can enter
into a transaction with another incorporated cell. This is in marked contrast to the cells
of a PCC. However, although each Cell has its own board of directors, the Law requires
that the identity of the board of directors of an ICC is the same as the directors of each
Cell of that ICC. Similarly the secretary of an ICC must also be the secretary of each
of its Cells.
ICC’s are appealing for two main reasons. They enable a form of corporate group
structure to be created but with lower administration costs than a traditional group
of stand-alone non-cellular companies. They may also be regarded as providing even
more robust segregation of assets and liabilities than a PCC because the creation of
incorporated cells is a more formal process than the creation of protected cells and
segregation of the assets of an incorporated cell is slightly less dependent upon the
actions of management.
CATEGORIES OF ICC
The following types of company can be formed as or converted into an ICC:
1. any fund authorised or registered under the Protection of Investors Law, 1987, as
amended (the “POI Law”);
2. any insurer licensed under the Insurance Business (Bailiwick of Guernsey) Law,
2002 (the “Insurance Law”);
3. any other type of company administered by a person licensed under the POI
Law, the Insurance Law, The Banking Supervision (Bailiwick of Guernsey) Law,
1994 (as amended), The Regulation of Fiduciaries, Administration Business and
Company Directors etc (Bailiwick of Guernsey) Law, 2000 (as amended) or The
Insurance Managers and Insurance Intermediaries (Bailiwick of Guernsey) Law,
2002 (as amended).
Banks, insurance managers, insurance intermediaries, licensed fiduciaries and
companies licensed to carry on controlled investment business cannot be formed as or
converted into ICCs.3 / AUGUST 2014 | INCORPORATED CELL COMPANIES IN GUERNSEY
The written consent of the Guernsey Financial Services Commission (“GFSC”) must
be obtained prior to the:
• incorporation an ICC; or
• conversion of an existing company or PCC into an ICC; or
• conversion of an ICC into a non-cellular company.
The letters “ICC” or “Incorporated Cell Company” must be included in the ICC’s
name and the words “Incorporated Cell” or the letters “IC” must be included in the
incorporated cell’s name immediately before the word “Limited”.
INCORPORATION OF A CELL
The members of an ICC may, by special resolution, authorise the incorporation of one
or more incorporated cells. The resolution must specify the memorandum and articles
of incorporation in respect of each Cell and an application to the Registry for the
incorporation of the Cell(s) must be made within three months of the date on which the
special resolution was passed.
STATUS OF A CELL
A Cell is a company governed by the provisions of the Law. However, a Cell may not
itself be an incorporated cell company or a protected cell company.
A Cell is not a subsidiary of its ICC. Whilst an ICC can own shares in its own Cells
and one Cell may own shares in another Cell of the same ICC (unless prohibited by the
Cell’s memorandum and articles of incorporation), a Cell cannot own shares in its ICC.
SEPARATION OF ASSETS AND LIABILITIES
The directors of an ICC and its Cells must keep the assets and liabilities of the ICC
separate and separately identifiable from the assets and liabilities of each of its Cells and
the assets and liabilities of each Cell must be kept separate and separately identifiable
from other Cells. However, the Law allows the assets of the ICC or its Cells to be
collectively invested or managed, provided that they remain separately identifiable.
An ICC cannot enter into transactions on behalf of its Cells and the Cells cannot enter
into transactions on behalf of the ICC or other Cells. The directors and officers of an
ICC and its Cells must clearly identify the ICC or Cell, as appropriate, in respect of
every transaction that the ICC or its Cell enters into.
ADMINISTRATION OF THE CELLS
The ICC is responsible for keeping a register of the members or index of members (if
necessary) of each of its Cells at its registered office. Each Cell of an ICC must have
the same registered office as its ICC. The register of directors and register of secretaries
of an ICC are deemed to constitute the register of directors and register of secretaries
(as appropriate) for each of its Cells. The ICC is also responsible for the completion
and filing not only its own annual validation, but that of each of its Cells with the 4 / AUGUST 2014 | INCORPORATED CELL COMPANIES IN GUERNSEY
Registrar of Companies. It follows that the ICC should maintain all the minute books
and records of its Cells in addition to those of its own.
ACCOUNTS AND AUDITORS
The directors of the ICC are responsible for preparing accounts in respect of the ICC
and its Cells in accordance with the Law and the ICC is responsible for keeping its
accounting records and those in respect of each of its Cells. The ICC may prepare
consolidated accounts and a combined directors’ report in respect of the ICC and its
Like a non-cellular company, a Cell must appoint an auditor for each financial year
unless it has passed a waiver resolution or the directors reasonably resolve that audited
accounts are unlikely to be required.
Like a company, an ICC and its cells must send a copy of its directors’ report, accounts
and auditors’ report to each of its members within twelve months after the end of each
financial year. If a member requests a copy of those documents, the company must
send them out within seven days after the date of the request (provided that he has not
previously made such a request within that financial year). The ICC is responsible for
ensuring that the ICC and its Cells comply with these requirements.
ANNUAL GENERAL MEETINGS
An ICC must hold general meetings of its members unless the members waive the
requirement to do so. In the absence of any requirement in its memorandum and articles
of incorporation or by a special resolution, a Cell is not obliged to hold an annual general
AMENDMENT OF CONSTITUTION OF CELLS
A Cell may alter its memorandum or its articles of incorporation in accordance with
the Law provided that the ICC itself has also passed a special resolution in favour of
the alteration (unless the memorandum or articles of the Cell state that ICC approval
is not required).
A non-cellular company and a PCC can each be converted into an ICC and an ICC can
be converted into a non-cellular company. An incorporated cell may transfer from one
ICC to another and a non-cellular company may convert into an incorporated cell and
transfer to an ICC.
Conversions require approval by special resolution of the shareholders of the affected
companies and cells. The process of transferring an incorporated cell from one ICC to
another also requires a written agreement between the two ICCs. Conversions are not
subject to court or creditor approval, although regulatory consents will be required for
licensed entities. 5 / AUGUST 2014 | INCORPORATED CELL COMPANIES IN GUERNSEY
Because incorporated cells are separately registered legal entities they can migrate and
become registered in other countries and amalgamate with companies and other entities
inside and outside of Guernsey. Cells of a PCC cannot do so directly because they are
not separately registered legal entities. However, a PCC and its cells can convert into an
ICC with incorporated cells to take advantage of these provisions.
WINDING UP AN ICC
The principles applicable to the compulsory or voluntary winding up of a non-cellular
company apply equally to ICCs and their Cells. However, the winding up of an ICC
must be carried out so as not to prejudice the affairs, business and property of any of its
Cells. As a result, during the winding up an ICC may continue to carry on business to
the extent necessary for its Cells to continue business. An ICC that is being wound up
cannot be dissolved until each of its Cells has ceased to exist as a cell of that ICC and
the Court may stay dissolution of the ICC on that basis. The appointment of a liquidator
in respect of an ICC will not affect the position of the directors of a Cell of the ICC
unless the liquidator, the members of the Cell concerned, or the court so resolves in the
course of the winding up.
ADMINISTRATION OF AN ICC
An application to the Court for an administration order in respect of a company may be
made by the company, its directors, any creditor (including a contingent or prospective
creditor), or member of the company, the GFSC (if it is a supervised company or one
engaged in financial services business) or the liquidator, in the case of a company which
is in the process of winding up. This applies equally to ICCs and their Cells except that
in the case of an ICC, any Cell may also make an application for the administration of
its ICC, and in the case of a Cell of an ICC, the ICC may make such an application.
The Court may make an administration order in respect of an ICC or one of its Cells
1. is satisfied that the ICC or Cell in respect of which the order is being made does
not satisfy or is likely to become unable to satisfy the solvency test (as set out in the
Law and essentially constituting a cash flow and a net assets test); and
2. considers that the making of an administration order may either: achieve the survival
of the ICC or Cell in respect of which the order is being made and the whole or
any part of its undertaking, as a going concern; or achieve a more advantageous
realisation of the ICC or Cell’s (as appropriate) assets than would be effected on a
Administration prevents a company from being wound up and prevents proceedings
from being commenced or continued without the leave of the court.
Since each Cell of an ICC is a separate legal person, each is treated as a separate entity
for tax purposes. It is possible for an ICC to have Cells that are resident in Guernsey for
tax purposes as well as Cells which are non-resident and exempt.6 / AUGUST 2014 | INCORPORATED CELL COMPANIES IN GUERNSEY
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Please note that this briefing is only intended to provide a very general overview of the matters to which it
relates. It is not intended as legal advice and should not be relied on as such.
© Carey Olsen 2014
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