Belize Protected Cell Companies

Intense competition among traditionally known "offshore" jurisdictions and "onshore" players have caused a visible trend on increasing innovation in the creation and evolution of legal structures, all with the aim of providing better and cost-effective financial services to the international markets.

The Protected Cell Company, a multi-use corporate structure, constitutes a clear reflection of this legal-financial engineering dynamic phenomenon, whose success in the marketplace remains unchallenged. A PCC is a corporate entity which holds assets in one or more segregated cells. The purpose of the structure is to separate the assets in each cell from those in other cells.

Cellular assets are only available to satisfy the creditors of that cell and creditors of other cells have no claim upon them. The assets of each cell must be kept separate and be separately identifiable from non-cellular assets and the assets of other cells. Although the PCC was intended for use by the insurance industry, other users are being attracted to the concept. A PCC facilitates a de-merger and can isolate the liabilities of separate departments of an enterprise.

Protected Cell Companies are commonly used for:

• Captive insurance - for companies whose insurance risks are not sufficiently large to justify formation of their own captive.
  
  
• Rent-a-captive - for companies requiring coverage of one-off and recurring risks.
  
  
• Investment funds - either to hold portfolios with separate asset managers or to enable investors to invest in a common pool of investments, but with individual currency hedges or fee structures.
  
  
• Capital Gains Tax mitigation for private investors.

For each business, activity or agreement contracted, the PCC must disclose which cell is contracting or if the entity is committing its core assets or both, core and specific cell assets. The PCC must have a name and each and every cell must also be clearly identified in the formation documents of the entity. Once formed, these entities may issue shares ("cellular" or "non-cellular" shares, depending on whether they represent an equity interest in a specific cell or in the core assets) or other types of securities. The entity must keep accounting books showing the corresponding patrimonial divisions among the segregated cells and the core cell within the entity.

Legislation allowing the formation of Protected Cell Companies (“PCC”) in Belize is the Protected Cell Companies Act Revised Edition 2000.