Jersey introduces advances to cell company investment structures

New legislation in Jersey permits the creation of cell companies and includes innovative features extending the scope of their use for investment purposes.

Phil Austin, Chief Executive of Jersey Finance Limited, said: 'We are not first to the market with PCC legislation, but we have consulted widely and taken into account lessons learned elsewhere.  The result is an enhancement to the traditional features of a PCC and the introduction of the ICC concept.  Under this new legislation, Jersey has strengthened the asset protection provisions, avoided many of the problems identified with PCCs in other jurisdictions whilst providing the simplified management benefits associated with cell companies.'

Jersey legislators have introduced the concept of an Incorporated Cell Company (ICC), alongside an enhanced version of the traditional Protected Cell Company (PCC), to provide investors with greater flexibility when choosing a cell structure to meet their investment objectives.

The new ICC involves the formation of separate, legally recognised cells within the overall structure, with each cell established as a separate incorporated Jersey company.  This is in contrast to the traditional PCC where all the cells combined create one legal entity and each cell is not treated as a separate legal personality.

The measures, which Island practitioners describe as the first significant advance from the original PCC model, are expected to provide a boost generally to the Island's investment capabilities in the institutional market, particularly for the insurance sector and in support of international capital markets activity.

Alex Ohlsson, partner at Carey Olsen, said: 'The ability to incorporate cells with a Jersey cell company is an extremely useful refinement to existing cell company legislation.  This will be a particularly attractive feature for structured debt transactions and insurance based structures.  Incorporation is widely accepted as an effective mechanism for ring fencing liabilities.  This structure has been designed specifically to meet the requirements of rating agencies and counterparties.'

Click here to read the most recent hedgeweek special report on Jersey Hedge Fund Services.

 

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