ZRC INTERNATIONAL TRUST INC

A. Introduction

 

 

Protected Cell Companies (“PCC”) is one of the most innovative creations offered by most International Business Financial Centre (“IBFC”) mainly to cater for alternative solutions to traditional corporate structure and significantly to mine the full potential of the IBFC’s advantages. Principally, PCC is a company which segregates the assets and liabilities of different classes of shares from each other and from the general assets of the PCC. The income, assets and liabilities of each cell are kept separate from all other cells. A PCC, therefore, operates as a network arrangement with a central core and individual cells, albeit legally it is a single company. 

 

 

B. Labuan Protected Cell Companies

 

 

Protected cell companies can be an alternative solution to standard corporate structures. As one of the innovative business structures on offer in Labuan IBFC, protected cell companies may also be structured to further enhance the insurance and mutual funds industries, particularly in providing cover for uninsurable risks and plenty of flexibility in managing risk portfolios. They can also be used as an efficient tax planning tool, besides serving as an effective asset protection tool and wealth management vehicle.

 

A Labuan protected cell company (PCC) may be incorporated as a Labuan company or converted from an existing Labuan company. A Labuan PCC is a limited liability company with a legal entity that has the ability to form “cells”. The cells of a Labuan PCC may comprise:

 

• a core for holding non-cell assets or general assets; and

• any number of cells with the intention of segregating and protecting the assets of each respective cell.

 

Neither the core nor the individual cells created are separate legal entities but nonetheless, each cell is legally separated from any other cell and each has sufficient attributes to carry on business independently under the “umbrella” of the Labuan PCC.

 

 

C. Permitted Use of Labuan Protected Cell Companies

 

 

A Labuan PCC has the ability to hold assets or investments divided into a number of classes to cater to the different objectives of different individual investors, while at the same time preserving the independence of each cell.

 

A Labuan PCC shall only conduct:

 

• Labuan captive insurance business, on such terms as provided under Part VII of the Labuan Financial Services and Securities Act 2010 (LFSSA);

• Labuan captive takaful business, on such terms as provided under Part VII of the Labuan Islamic Financial Services and Securities Act 2010 (LIFSSA); or

• A mutual fund business as defined under Part III of the LFSSA; and 

• Business as an Islamic mutual fund as defined under Part IV of the LIFSSA.

 

 

D. Key Features of Labuan Protected Cell Companies

 

 

• Labuan Protected Cell Companies (“Labuan PCC”) is a single legal entity (“core” and “cell” are not separate entities)

 

• Each cell has its own capital and the assets and liabilities of each cell are ring-fenced by law from the liabilities attributable to any other cell.

 

• The assets allocated to each specific cell may only be liable for liabilities incurred by such cell and thus creditors have access to that particular cell only.

 

• A Labuan PCC can either be newly incorporated or, alternatively, an existing Labuan Company can be converted to a Labuan PCC.

 

• A Labuan PCC must maintain separate records of each cell assets and it must be kept distinct from the general assets.

 

• A Labuan PCC can only have one Board of Director, who manages the affairs of the Labuan PCC as a whole. A committee can be appointed by the Directors to monitor the operation of the cell.

 

• No minimum capital requirement: Only imposed for the LPCC or the cell(s) except in the case of insurance business and/or mutual fund. 

 

• Unlimited number of cells: may have unlimited number of cells and each cell having its own name or designation. 

 

• Protection of creditors pursuant to Section 130W & 130X of the LCA 1990: A person dealing with a LPCC must be informed of the LPCC status and the cell with which the relevant transactions are taking place must be identified.

 

• Dealings and transactions of cell assets between cells and with Third Parties: LPCC may transfer cell assets from one cell to another or amalgamate or consolidate one or more cells, provided Labuan FSA gives its consent, once it is satisfied that shareholders and creditors will not be unfairly prejudiced or the consent of creditors has been obtained

 

 

 

Our dedicated teams are more than happy to assist you in establishing, structuring and planning your Labuan PCC. Contact us today at info@zrctrust.com for free initial consultation without any obligation.