By virtue of the implementation of Article 84E to the Companies Act, companies which trade in shipping and aviation are now empowered with the opportunity of converting into a cell company.
This is all possible through the introduction of Legal Notice 248 of 2020 which came into effect on 16th June 2020. Those companies carrying out shipping and aviation undertakings who in turn incorporate such cell companies must bear the title “Mobile Assets Protected Cell Company” or better yet “MAPCC”.
The Business Registry is vested with the prerogative of approving the incorporation of a cell company after such company has each cell allocated with its own name or designation. The possibility of those engaged in the shipping or aviation business to set up a cell company provides for segregating and protecting the cellular assets of the company including segregated accounts, compartments or units. As such, MAPCC are burdened with a host of requirements which naturally ought to be adhered to.
One of which is the obligation of having directors able to establish a visible, constant, and discernible discrepancy between assets appertaining to a cell company and those non-cellular assets. In order to perform this obligation, directors are strictly required to keep and maintain separate records, accounts, statements, and other ancillary documents which may be deemed essential in order to preserve a tangible division between the assets and liabilities of every particular MAPCC cell, whilst also keeping a distinction between the MAPCC’s non-cellular assets.
Similar to the situation vis-à-vis agents of mandates (mandatories), a cell company is obliged to make third parties aware who the aforementioned company is entering discussions with that such an individual is trading with a cell company.
An MAPCC may issue shares in relation to any of its cells whereby such cell shares constitute cell share capital. Having said that, it goes without saying that an MAPCC is able to issue cellular dividends in virtue of cellular assets and liabilities or profits deriving from a specific cell. It is essential that even when issuing a dividend, each cell has to be kept distinct from another, in the sense that when assessing whether dividends can be distributed or not, the accounts of the other distinct cells need to be kept separate, hence, the financial position of one singular cell cannot compromise the decision of issuing dividends vis-à-vis another cell.
The same thing can be said in respect of the MAPCC’s non-cellular assets. Once again, this distinction must be kept when incurring additional liabilities. When a particular cell incurs liability, such cell ought to make good for such liabilities through its own assets, and cannot resort to the assets of other cell companies. Naturally, this also applies in a creditor scenario, in the sense that a creditor may not attack the assets of other cells but only that of the cell which is indebted to the creditor.
At first glance, it may seem that the fact that each cell ought to be distinguished from another is a disadvantage for an MAPCC but upon closer examination, this facility is the most advantageous aspect of cell companies. Since each cell has its own patrimony and thus distinct from the parent or core cell company and other cells alike, so it is possible for the seclusion of each cell as well as the structuring of every individual cell.
Hence, the source and assets of each cell are protected intrinsically having the guarantee that neither the core company nor other cells may exploit the former cell’s assets. The process of cell incorporation is not laborious, hence allowing for a rapid and effortless procedure allowing a newly incorporated cell to start its operations quickly. Segregating the affairs of one cell will not hinder those of other cells since each cell has in place a board of directors as well as a customized memorandum and articles of association.
Once again, the fact that each cell is distinct from another is beneficial to other cells because the dissolution or insolvency of a particular cell does not conjure a parallel outcome in respect of other cells or the core company.
Moreover, in the case of wanting to dissolve a cell company, it can be done with ease and is in fact much easier to close down a cell than it is to close down a conventional company. One of the most beneficial outcomes of a cell is the fact that cell companies in Malta are subjected to an advantageous tax imputation system. For assistance please email our tax department at PKF Malta on firstname.lastname@example.org