On 3rd March 2020, Act V of 2020 was published and among various amendments, it provided for the addition of Article 84E in the Companies Act, having the purpose of creating a new structure to be used by companies known as ‘cell companies’ within the shipping and aviation fields.
‘Shipping or aviation business’ is defined as any/all of the following:
- the ownership, operation (under charter, lease or otherwise), administration and management (including personnel engagement, employment or management whether on board or otherwise) of any ship or of any aircraft or aircraft engine and the carrying on of all ancillary financial, security, commercial and other activities in connection therewith; or
- the holding of shares or other equity interests in any undertaking, whether Maltese or otherwise, established solely or mainly for the carrying on or carrying out of any one or more of the activities referred to in this definition and the carrying on of all ancillary financial, security, commercial and other activities in connection therewith; or
- the activities of a parent company which holds shares or other equity interests in undertakings, whether Maltese or otherwise, where any one or some of these undertakings is established solely or mainly for the carrying on or carrying out of any one or more of the activities referred to in this definition and the carrying on of all ancillary financial, security, commercial and other activities in connection therewith; or
- the raising of capital through loans, the issue of guarantees or the issue of securities by an undertaking when the purpose of such activity is to achieve the objects or activities stated in the preceding sub-paragraphs for the undertaking itself or for any other undertaking within the same group; or
- the carrying on of such other objects or activities within the maritime or the aviation sector and related or connected matters which the Minister may, on the advice of the Authority, from time to time prescribe by regulations
A ‘cell company’ is a company formed/constituted as such or, converted into a cell company, and creating within itself one or more cells to segregate and protect the cellular assets of the company. Companies with this structure may be either (a) formed/constituted as a cell company to carry on shipping/ aviation business as defined in Article 84E of the Companies Act or else (b) a company carrying on such business may be converted into a cell company, provided that it is authorised to do so by its Memorandum and Articles of Association. Cell companies are distinguished from other companies by their name, which needs to have the words ‘Mobile Assets Protected Cell Company’ or ‘MAPCC’.
Although a cell company may create one or more cells, it is still a single legal entity. The assets of a cell company shall be either cellular assets or non-cellular assets. The assets attributable to a cell of a cell company comprise assets represented by the proceeds of cell share capital and reserves attributable to the cell and all other assets attributable to the cell.
A cell company may in regard to any of its shares, create and issue cell shares where in such case, the proceeds of the issue of which i.e. the cell share capital, shall involve the cellular assets attributable to the cell in respect of which the cell shares were issued.
Cell Companies are obliged to inform third parties that they are dealing with a cell company and that there are regulations specifically dealing with creditors and recourse of creditors to cellular assets. Such companies also need to comply with the provisions of the Companies Act (Register of Beneficial Owners) Regulations.