The Companies Act (SICAV Incorporated Cell Companies) Regulations 2010 (hereinafter referred to as the “Incorporated Cell Regulations”), have been published by Legal Notice 559 of 2010 and have come into force on the 1st February, 2011. These Regulations provide for the establishment of incorporated cell structures specifically adapted to funds, thus extending the Maltese legislation applicable to cell companies, first introduced in the insurance sector, to the funds sector.

The possibility of setting up multi-fund Collective Investment Schemes containing multiple, segregated sub-funds with ring-fenced assets and liabilities has existed in Maltese law, since 2003, in the form of the Companies Act (Investment Companies with Variable Share Capital) Regulations, known as the “SICAV Regulations”. The new Incorporated Cell Regulations go a step further allowing the registration and licensing of “Incorporated Cells” structured with different “patrimonies” under the umbrella of the Incorporated Cell Company (ICC). While under the SICAV Regulations a fund and its segregated sub-funds form one single legal entity and the sub-fund has no separate legal identity, each Incorporated Cell of an Incorporated Cell Company has separate legal personality and is treated as a separate company forming part of the ICC Scheme. At the same time, the overall Scheme may still be structured to retain certain core features that will allow it to scale up to desired efficiency levels.

The Incorporated Cell Company Regulations also provide that a segregated multi-fund company may be transformed into an incorporated cell company, and that a cell of an Incorporated Cell Company may be relocated from one such company to another in accordance with the said Regulations.

Regulatory Approach

The new Regulations stipulate that the business to be carried out by an Incorporated Cell Company is limited to the business of a collective investment company with variable share capital as defined in the Companies Act and the SICAV Regulations. Each Incorporated Cell of an Incorporated Cell Company would need to be licensed separately as collective investment schemes in terms of the Investment Services Act, 1994, albeit forming part of the Incorporated Cell Company. Accordingly, in terms of its own licence an Incorporated Cell will be able to operate independently from its Incorporated Cell Company.

Applicability of Investment Services Rules

The Investment Services Rules for Retail Collective Investment Schemes and the Investment Services Rules for Professional Investor Funds shall apply to Incorporated Cell Companies and Incorporated Cells established as Collective Investment Schemes as appropriate, taking into account the provisions of Regulation 14 of Legal Notice 559 of 2010. References to  'umbrella fund' and 'sub-fund' shall be construed as references to 'Incorporated Cell Company' and 'Incorporated Cell' respectively.

Insofar as regulatory fees are concerned, the application and supervisory fees which are applicable to 'the Scheme' rather than 'the sub-funds', shall apply to each of the Incorporated Cells of an Incorporated Cell Company.

This information note is for general information purposes only and does not have any legal force whatsoever. Any person wishing to look into the exact position at law should consult the relevant legislation. Any comments or suggestions on the content of this overview should be addressed to the Regulatory Development Unit, MFSA. 

MFSA Ref: 9-2011