Ring-Fencing Aviation Assets

Summary: Recent amendments to the Companies Act provide for the incorporation of cell companies for the aviation business, thereby giving companies operating in this sector the ability to ring-fence certain assets.

Article

Provision in the Companies Act for the incorporation of, or conversion into, so-called 'cell companies' was first introduced in 1998 as part of the amendments to other laws contemplated by the new Insurance Business Act promulgated at the time. Although it was only later in 2011, with the introduction of the  Companies Act (Incorporated Cell Companies Carrying on Business of Insurance) Regulations, that it became first possible to use cells in practice, since then they have been widely used with success in the insurance sector. The use of cell companies was later widened making them available to securitisation vehicles and investment companies with variable share capital.