IN422 - Family Offices and Cell Company Investment

Guernsey pioneered the concept of Cell Companies initially to provide for segregated captive insurance. There entities are also referred to as Segregated Cell Companies and Segregated Portfolio Companies.

Creative Uses of Cell Companies

Since the introduction of the Protected Cell Company (PCC), the cell company concept has been further enhanced by the innovation of the Incorporated Cell Company (ICC). Subsequent changes to Cell Company Legislation have further strengthened the cell company proposition as a highly versatile tool.

Other than undertaking licensed activities, there is no restriction on what Cell Companies can legitimately be used for. This has opened up the full scope of what they can achieve. PCCs and ICCs, whilst similar, have structural differences and one type of cell company may be more suitable than another depending on the circumstances. 

How Can Cell Companies be Used?

The following activities are some examples of how cell companies can be used:

  • An alternative to a traditional group holding structure
  • To provide private trust companies and family office solutions
  • For family governance and succession planning 
  • As a multi-purpose vehicle
  • For private investment funds
  • For real estate ownership
  • To hold intellectual property and for royalty ownership
  • Tax planning 

This Article explores the potential in using a cell company for family office purposes. Please also see Article 378 Why Use Private Trust Companies and Private Trust Foundations.

If you are interested in any of the other possible uses detailed above, please contact the Dixcart office in Guernsey: advice.guernsey@dixcart.com.

Private Trust Companies and Family Office Solutions

The well-recognised use of Private Trust Companies (PTCs) that allow a family and/or professional advisers to participate on the PTC board can be extended further through Cell Companies. Assets can be segregated according to risk or ownership participation, assisting in the management and enjoyment of the required assets.

Cell Companies can act as corporate trustee with underlying cells holding the assets with common or differing legal and beneficial interests. This type of structuring extends very well to Family Offices and the separation of roles and functions through cells.

Family Governance and Succession Planning

Different assets and beneficial interests can be apportioned between Cell Companies to help segregate entitlements, whilst preserving the advantages of the pooled cellular framework.

Different share classes can be issued to suit the type of benefit to be given.

Ultimately, either the core or underlying cells can be gifted during the owners’ lifetime or when they die. In addition, ownership via a Guernsey Cell Company can avoid the requirement for foreign probate formalities.

Through the use of a Cell Company in tandem with the use of trusts, a family's wealth can be apportioned and the succession effectively and efficiently  stage-managed.

Additional Information

For further information regarding Guernsey Protected Cell Companies (PCC) and Incorporated Cell Companies (ICC) please contact Bruce Watterson or John Nelson at the Dixcart office in Guernsey: advice.guernsey@dixcart.com, or your regular Dixcart contact.

 

Categories: Jurisdiction, Guernsey, Year, 2016