Protected Cell Companies: Untangling The Cellular Knot

Guernsey was the first jurisdiction to introduce Protected Cell Companies. It did so in 1997 and other 'offshore' jurisdictions followed soon after, including Cayman, Bermuda, Gibraltar and Malta. In more recent years a segregated company regime has been implemented in many states of the United States, in the United Kingdom, Dublin and Luxembourg. Segregated business transactions therefore now take place across many jurisdictions around the world.

Protected Cell Company legislation was enacted primarily to encourage growth of the captive insurance industry, by bringing captive promoters together under a single corporate entity but enabling the segregation of assets between them for satisfying third party claims and limiting their liability accordingly. The clear statutory intention is therefore that the assets attributable to a particular 'cell' (a legal fiction) are not available to meet the claims of creditors of other cells. The limitation serves a similar purpose