Application and Registration Requirements

• Protected Cell Companies intending to conduct Insurance, Captive Insurance or Mutual Fund activities are subject to Guidelines on Insurance and Insurance-Related Activities, Captive Insurance Business and Mutual Funds issued by Labuan FSA, contained herein.
• Application to establish a Protected Cell Company must be done through a licensed Trust company in Labuan.
• Prior to the incorporation or conversion to Protected Cell Company, the applicant must obtain a licence and approval/consent from Labuan FSA to conduct the insurance, captive insurance or mutual fund business. 
• Unless the application relates to a Labuan Company intending to convert to a Protected Cell Company and which already holds the relevant license or registration, further supporting information and documentation relating to the companies proposed business will be required, depending upon the type of licence or registration sought.
• Once approval/consent has been given to operate as a Protected Cell Company, a Labuan Company may be incorporated by submitting the following to Labuan FSA:
  a)    The Memorandum and Articles of Association
  b)    A certified copy of the approval letter from Labuan FSA
  c)    Payment of the relevant fees
  d)    Any other documents and/or information as may be required by  Labuan FSA for registration
  e)    Forms relating to the appointment of director.

With regard to the documentation and information requirements on incorporation of a Labuan company, please refer to an earlier section of this guide.

Annual Fees

The Protected Cell Company is required to pay the following annual licence fees initially upon registration with Labuan FSA and thereafter, on an annual basis on or before 15 January each year:

Insurance and Captive Insurance
Core Cell	MYR30,000
For each Individual Cell	MYR10,000

Mutual Fund
Core cell	MYR  5,000
For each individual cell	MYR  2,000

Operational  Requirements

Name of the Protected Cell Company

The Protected Cell Company must include in its name the words “Protected Cell Company” or the letters “PCC”. In addition, each cell is required to have its own distinct name or designation. The Memorandum or Articles of Association of the Company must also indicate that the said articles refer to a Protected Cell Company.

Disclosure

A Protected Cell Company must notify all persons entering into transactions with it that it is a Protected Cell Company.  In addition, the Protected Cell Company must specify the particular cell that is entering the transaction and make it clear that only the assets of that cell will be available to meet that said cell’s liabilities.

Share Capital and Dividends

A Protected Cell Company may issue a ‘cell share’ with a separate certificate of title to distinguish it from other shares, including shares of other cells. In addition to the Register of Shareholders, a Protected Cell Company must maintain an index containing details of each cell shareholder and the particular cell to which the ‘cell shares’ relate.

Dividends may be paid in relation to ‘cell shares’ by reference to the performance of the cell for which the cell shares have been issued. The profit or losses and/ or the assets and liabilities of other cells are not taken into account. All Labuan Protected Cell Companies are required to carry on business in any currency other than the Malaysian currency except as permitted by the relevant authorities.

General and Cell assets

The assets of a Protected Cell Company are represented by either cell assets held within, or on behalf of, the individual cells or general assets which are held by the core cell and not related to any particular cell.

Assets are legally segregated between individual cells and records must be maintained to clearly identify and separate assets from assets of other cells and general assets.

Dealings and transactions of cell assets between cells and with Third Parties

A Protected Cell Company 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.

When dealing with third parties, other than in the normal course of business, no transfer of cell assets may be made unless :

• The directors are satisfied that creditors have consented to the transfer or that the creditors will not be unfairly prejudiced and Labuan FSA has consented to the transfer.
• Acting on the directors’ resolution, the shareholders pass a special resolution agreeing to the transfer.

Reduction of Capital

The share capital of a Protected Cell Company and the cell capital of the individual cells may be reduced in accordance with provisions relating to the reduction of share capital of Labuan Companies, provided that the amount of the share capital of its general assets will not be reduced to an amount less than the cell capital of any of its cell assets.

Receivership, Winding Up and Cell Liquidation

The provisions relating to the distribution of property of a Labuan Company apply to a Protected Cell Company and its individual cells. The insolvency of an individual cell should not affect the Protected Cell Company or the other remaining individual cells.

Rights of Creditors

The rights of creditors are limited to the assets of the individual cell incurring the liability,  and creditors should not attach their rights to the assets of another individual cell.  Additional protective measures to ensure the integrity of the cells, include:

• Any party found responsible for using cell assets of one unrelated cell to satisfy the liabilities of another debtor cell must make good the loss incurred by that unrelated cell.
• Similarly, any party responsible for seizing assets belonging to one cell to satisfy the liability of another cell is deemed to hold such assets ‘on trust’ for the Protected Cell Company which, in turn, will apply any proceeds received from the seized assets to compensate the cell affected.
  

In the event individual cell assets are insufficient to discharge the individual cell’s liabilities, the cell creditors may have recourse to the non-cellular assets of the core cell.

Liabilities

As indicated above, only the cell assets of the cell that incurs a liability may be used to satisfy that said liability, and the creditor has no right of recourse against the assets of other cells.

If a liability does not relate to a particular cell, the liability is to be satisfied from the Protected Cell Company’s general assets. In addition, the cell assets attributable to a particular cell are also protected from any claims from Shareholders of the Protected Cell Company.