Protected Cell Companies: A unique legal entity

Renowned for its favorable economic environment and robust legal framework, Mauritius is at the forefront of innovation in the financial services sector. Among the innovative legal structures provided by this jurisdiction, Protected Cell Companies (PCCs) are emerging as an attractive solution for foreign businesses seeking to optimize their risk management, protect their assets and ensure an efficient operational structure.

What is a Protected Cell Company (PCC)?

Protected Cell Companies (PCC) are a unique legal structure offered in Mauritius, designed for international companies seeking flexibility and asset protection. However, it’s important to weigh the pros and cons of choosing this type of business structure, including the upfront costs and regulatory considerations. Below are the key features of PCCs:

What are PCCs?

PCCs are essentially companies with a basic structure and the ability to create separate compartments called “cells”, which act as mini-companies within the main company, with the following:

Assets and liabilities: Each cell has its own set of assets and liabilities, which means that if one cell has financial issues, it will not affect the others. This guarantees protection for your investment.

Operations: Cells can be used for specific business activities, allowing you to separate operations and risks.

Why choose a PCC?

Here are some of the key benefits of opting for a PCC:

Asset protection: The separate cell structure protects the assets held in each cell from other cells’ liabilities.

Tax benefits: Mauritius providesattractive tax incentives for certain types of income generated through PCCs.

Flexibility and efficiency: PCCs allow you to establish multiple companies under a single legal framework, making administration more straightforward and reducing costs.

Confidentiality: Information about the ownership of each cell can be kept confidential, enhancing their privacy.

Things to consider when creating a PCC in Mauritius

Start-up costs: Establishing an PCC may involve legal and administrative fees.

Regulation: PCCs are regulated by the Financial Services Commission (FSC) of Mauritius.

Complexity: While providing greater flexibility, the structure can be more complex to manage than a traditional company.

Who can benefit from a PCC?

PCCs are suitable for a variety of business ventures, including:

Investments: Holding and managing a diversified portfolio of assets across multiple cells.

Captive insurance: Setting up a cell for a captive insurance company to manage its own business risks.

International trade: Setting up separate cells for import/export activities involving different products or geographies.

What are the benefits of Protected Cell Companies?

PCCs provide effective asset protection by isolating risks within each cell. This ensure the protection of one cell’s assets from creditors or legal action against another cell or the parent company.

By providing a clear separation of assets and liabilities, PCCs facilitate risk management by identifying and managing the risks associated with each activity or project separately.

The PCC structure enables efficient management of business activities by providing operational flexibility. Companies can manage multiple activities or projects under a single entity, reducing administrative costs and simplifying regulatory compliance.

PCSs provide enhanced confidentiality by enabling the protection of each cell’s sensitive business information. Moreover, the creation of new cells is relatively easy, providing greater flexibility for launching new projects or diversifying activities.

Establishing and managing a PCC in Mauritius

The establishment and management of PCCs in Mauritius is governed by a clear and transparent legal framework. Companies must comply with the regulatory requirements set by the Financial Services Commission (FSC) of Mauritius.

The process of establishing a PCC involves the drafting of appropriate legal documents, such as the Memorandum and Articles of Association of each cell. These documents must be approved by the relevant authorities before the PCC becomes operational.

Companies must set up robust risk management mechanisms and maintain ongoing regulatory compliance, including the regular submission of financial and compliance reports to the FSC.

How to use a PCC

PCCs are used in a variety of industries, including:

Insurance companies, to separate the risks associated with different portfolios or lines of business.

Fund managers, to create funds with different investment strategies or investor groups.

Corporations, to hold and manage diversified assets while isolating the risks associated with each asset.

Summing up

Protected Cell Companies stand out as a valuable legal innovation for companies operating in Mauritius and beyond. By offering asset protection, effective risk management, and operational flexibility, PCCs enable companies to thrive in a dynamic and competitive business environment. Contact StraFin for tailored support and expertise for your project.