1. The introduction of the Companies Act (RICCs) Regulations
The launch of the Incorporated Cell Company ('ICC') SICAV in February 2011 generated a lot of interest across the funds sector. Not all business models could be established under the ICC SICAV regime. A demand grew for business models where an ICC could provide administrative services to a number of Incorporated Cells ('ICs') licensed as collective investment schemes ('CISs').
The introduction of the Companies Act (Recognised Incorporated Cell Companies) Regulations fills this void.
2. Characteristics of RICCs
2.1. The legal entity
An recognised incorporated cell company ('RICC') may be only be formed by a limited liability company, whether established immediately as an RICC or constituted as an RICC. Once formed the RICC may issue ICs in terms of the Companies Act (Recognised Incorporated Cell Companies) Regulations (the ‘Regulations’) and provide administrative services to these ICs – administrative services should be understood in terms of the Schedule to the Regulation.
That is, an RICC may only provide services of an administrative nature, in relation to which it must first be issued with a Recognition Certificate in terms of article 9A of the Investment Service Act ('ISA'). The remit of Administrative Services are listed in the Schedule to the Regulations.
As opposed to a SICAV ICC, an RICC may not carry out any licensable activity.
2.2. Authorisation
RICCs need to be recognised by the Malta Financial Services Authority ('MFSA') before they can provide ICs with administrative services. An IC established by an RICC requires a licence to carry out the activities of CIS, granted in terms of S.4, ISA.
2.3. Change of domicile
Foreign entities carrying on functions similar to those of an RICC may be continued in Malta as an RICC.
A body corporate registered, incorporated or constituted under the laws of an approved country or jurisdiction outside Malta and carrying on the activity of a CIS which is similar in nature to a cellular or non-cellular company as known under the laws of Malta, may be continued as an incorporated cell of a recognised incorporated cell company. Conversely, an RICC and/or IC may be continued outside of Malta as a body corporate similar in nature as recognised in the territory in which it is continued. In each case the prior approval of the MFSA is required.
2.4. Incorporation documents of RICCs
Memorandum of Association to state that company is a RICC. Name of Company to include words RICC or 'Recognised Incorporated Cell Company'.
3. Formation requirements of an IC
- To have a name separate to that of the RICC, may be similar to the RICCs name, although sufficiently similar such that it creates confusion;
- Name to include words IC or Incorporated Cell;
- To have its own M&As, entered into by an RICC and any other shareholder;
- RICC to subscribe to at least one share in the IC;
- M&As to state that entity is an IC;
- IC may not own shares in a RICC;
- An IC may own shares in another IC of the same RICC;
- IC must have the same registered address as its RICC;
- Company secretary of an RICC or an IC may be a body corporate;
- IC may have RICC as its only member, and this would not trigger the provisions of the Companies Act regarding single member companies;
- Amendments to M&As of IC to be made by extraordinary resolution of the IC after the written approval of its RICC is obtained;
3.1. Characteristics of an IC
- An IC is a limited liability company with separate legal personality;
- Not a subsidiary of its RICC;
- IC may not be a RICC;
- An IC may be a SICAV or an INVCO;
- An IC should use the standard form documents provided by its RICC, it should not amend such documents without the prior written approval of the RICC. That being said, the Prospectus Directive and Directive 2004/109/EC on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market still apply to ICs.
- RICCs and ICs by virtue of this status alone, cannot enter into transactions on behalf of each other;
- Provisions of the Companies Act and of the ISA apply to RICCs and ICs;
3.2. Separation of assets and liabilities
Directors of the RICC and of the ICs should keep assets and liabilities of the RICC and ICs and between each IC separate at all times; -however, assets of RICCs, and ICs may be collectively managed by an investment manager.
3.3. Relocation of an IC from one RICC to another RICC
An IC may move from one RICC (the “Exiting RICC”) to another RICC (the “Recipient RICC”). A new certificate of incorporation is issued by Registrar once relocation is complete.
3.4. Expulsion of an IC from an RICC
An RICC may expel an IC provided that the MFSA gives its approval for the expulsion and only in so far as at least one of the grounds listed in the law apply.
