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Third Supplement to the Gibraltar Gazette
No. 3,228 of 14th June 2001
Page 2

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PART I

FORMATION & ATTRIBUTES

Protected cell companies.

3.(1) Subject to the provisions of this Ordinance, a company may be–

(a) incorporated as a protected cell company;

(b) converted, if so authorised by its articles, into a protected cell company.

(2) For the avoidance of doubt, and notwithstanding that a protected cell company may have created one or more cells under this Ordinance–

(a) a protected cell company is a single legal person; and

(b) the creation by a protected cell company of a cell does not create, in respect of that cell, a legal person separate from the company.

(3) The provisions of the Companies Ordinance shall, subject to the provisions of this Ordinance, and unless the context requires otherwise, apply in relation to a protected cell company.

Creation of cells.

4. A protected cell company may create one or more cells for the purpose of segregating and protecting cellular assets in the manner provided by this Ordinance.

Cellular and non-cellular assets.

5.(1) The assets of a protected cell company shall be either cellular assets or non-cellular assets.

(2) It shall be the duty of the directors of a protected cell company–

(a) to keep cellular assets separate and separately identifiable from non-cellular assets; and

(b) to keep cellular assets attributable to each cell separate and separately identifiable from cellular assets attributable to other cells.

(3) The cellular assets of a protected cell company comprise the assets of the company attributable to the cells of the company.

(4) The assets attributable to a cell of a protected cell company comprise–

(a) assets represented by the proceeds of cell share capital and reserves attributable to the cell;

(b) all other assets attributable to the cell.

(5) For the purposes of subsection (4), the expression “reserves” includes retained earnings, capital reserves and share premiums.

(6) The non-cellular assets of a protected cell company comprise the assets of the company which are not cellular assets.

(7) Notwithstanding the provisions of subsection (2), the directors of a protected cell company may cause or permit cellular assets and non-cellular assets to be held–

(a) by or through a nominee; or

(b) by a company the shares and capital interests of which may be cellular assets or non-cellular assets, or a combination of both.

(8) The duty imposed by subsection (2) is not breached by reason only that the directors of a protected cell company cause or permit cellular assets or non-cellular assets, or a combination of both, to be collectively invested, or collectively managed by an investment manager, provided that the assets in question remain separately identifiable in accordance with subsection (2).

Position of creditors.

6.(1) The rights of creditors of a protected cell company shall correspond with the liabilities provided for in section 13.

(2) No such creditor shall have any rights other than the rights referred to in this section and in sections 7 and 13.

(3) There shall be implied (except in so far as the same is expressly excluded in writing) in every transaction entered into by a protected cell company the following terms–

(a) that no party shall seek, whether in any proceedings or by any other means whatsoever or wheresoever, to make or attempt to use any cellular assets attributable to any cell of the company to satisfy a liability not attributable to that cell;

(b) that if any party succeeds by any means whatsoever or wheresoever in using any cellular assets attributable to any cell of the company to satisfy a liability not attributable to that cell, that party shall be liable to the company to pay a sum equal to the value of the benefit thereby obtained by him; and

(c) that if any party succeeds in seizing or attaching by any means or otherwise levying execution against any cellular assets attributable to any cell of the company to satisfy a liability not attributable to that cell, that party shall hold those assets or their proceeds on trust for the company and shall keep those assets or proceeds separate and identifiable as such trust property.

(4) All sums recovered by a protected cell company as a result of any such trust as is described in subsection (3)(c) shall be credited against any concurrent liability imposed under the implied term set out in subsection (3)(b).

(5) Any asset or sum recovered by a protected cell company under the implied term set out in subsection (3)(b) or (3) (c) or by any other means whatsoever or wheresoever in the events referred to in those subsections shall, after the deduction or payment of any costs of recovery, be applied by the company so as to compensate the cell affected.

(6) In the event of any cellular assets attributable to a cell of a protected cell company being taken in execution in respect of a liability not attributable to that cell, and in so far as such assets or compensation in respect thereof cannot otherwise be restored to the cell affected, the company shall–

(a) cause or procure its auditor, acting as expert and not as arbitrator, to certify the value of the assets lost by the cell affected; and

(b) transfer or pay to the cell affected, from the cellular or non-cellular assets to which the liability was attributable, assets or sums sufficient to restore to the cell affected the value of the assets lost.

(7) Where under subsection (6)(b) a protected cell company is obliged to make a transfer or payment from cellular assets attributable to a cell of the company, and those assets are insufficient, the company shall so far as possible make up the deficiency from its non-cellular assets.

(8) This section shall apply to cellular and non-cellular assets of a protected cell company wherever situated.

Recourse to cellular assets by creditors.

7. Without prejudice to the provisions of sections 6 and 13, cellular assets attributable to a cell of a protected cell company–

(a) shall only be available to the creditors of the company who are creditors in respect of that cell and who are thereby entitled, in conformity with the provisions of this Ordinance, to have recourse to the cellular assets attributable to that cell;

(b) shall be absolutely protected from the creditors of the company who are not creditors in respect of that cell and who accordingly are not entitled to have recourse to the cellular assets attributable to that cell.

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