Malta: New Regulations on Recognised Incorporated Cell Companies

The Companies Act (Recognised Incorporated Cell Companies) Regulations (“the Regulations”) (L.N. 119 of 2012), issued in the Government Gazette on 17th April 2012, have introduced a new legal structure, namely, the Recognised Incorporated Cell Company (RICC) as a possible alternative to the ICC SICAV, that is, the Société d'Investissement À Capital Variable (SICAV) in the form of an Incorporated Cell Company.
 
The MFSA met the demand for a ‘platform’ model which would involve an incorporated cell company providing administrative services such as routine contractual matters and start-up support to a number of Incorporated Cells licensed as collective investment schemes that would not normally require the engagement of a Recognised Fund Administrator.  The new Recognised ICC legal framework sets out specific conditions which are separate from those applying to the ICC SICAV regime which was launched in February 2011.
 
A collective investment scheme may be established as a SICAV ICC that operates under a CIS licence in accordance with the Companies Act (SICAV Incorporated Cell Companies) Regulations or one may opt for a platform serving purely for the provision of administrative services to incorporated cells in terms of the Companies Act (Recognised Incorporated Cell Companies) Regulations.
 
The Regulations build on the “cellular” concept of establishing a cluster of cell companies group under an incorporated cell company structure.  The “recognised incorporated cell company” is a limited liability company in the form of an incorporated cell company having the possibility of establishing incorporated cells (ICs). Incorporated cells established by an RICC are constituted as investment companies in their own right, having separate legal personality. Incorporated cells require a licence under the Investment Services Act in order to carry out the activities of a collective investment scheme. The RICC is to be constituted in accordance with the Regulations in order to provide administrative services. Unlike the SICAV ICC structure, the RICC may not carry out any licensable activity, its memorandum and articles of association are to be restricted to the provision of administrative services to its incorporated cells.
 
The RICC does not operate under a CIS Licence as in the case of the SICAV ICC structure but operates under a Recognition Certificate. The RICC may only provide administrative services once it obtains the recognition of the MFSA in terms of the Investment Services Act and may only provide one or more of the administrative services laid down in the Regulations.  The RICC is to commence the provision of administrative services to its incorporated cells within six months of the date of issue of the Recognition Certificate by the MFSA.
 
The RICC Regulations provide a flexible legal framework allowing the following transformations:
 
• From a non-cellular company (an ordinary company which is not an RICC, an IC or a segregated multi-fund company) into an ICC or into an IC
• From an RICC or IC into a non-cellular company
• From a segregated multi-fund company into an IC or from an IC to a segregated multi-fund company
 
The RICC, however, may not be transformed into a non-cellular SICAV or vice versa.
 
The Regulations also lay down provisions for the relocation and expulsion of incorporated cells and continuation or redomicilation.
 
The Regulations have also been supplemented by a set of MFSA Investment Services Rules for Recognised Persons regulating the Application Process for Recognised Incorporated Cell Companies (RICCs) and On-going Recognition Requirements for RICCs including inter alia organisational requirements, conduct of business rules, compliance and outsourcing rules.
 
Supplementary conditions have also been introduced for Professional Investor Funds established as Incorporated Cells under a Recognised Incorporated Cell Company and Retail Non-UCITs and UCITS schemes established as Incorporated Cells under a Recognised Incorporated Cell Company.