As of 3rd March 2020, the Maltese Companies Act, contemplates the possibility of setting-up cell companies within the areas of maritime and aviation.
Such amendment is a revolution in an industry, such as the shipping one, based on asset ring fencing via multiple single-ship companies; thus allowing ship operators and aviation players the possibility to achieve higher efficiencies in terms of corporate and tax governance.
Act V of 2020 amends various financial services laws, including the Companies Act.
Of particular importance for our purposes is the introduction of Article 84E to the Companies Act which permits the minister responsible for the registration of commercial partnerships to make regulations regarding cell companies carrying on or engaged in the shipping or aviation business.
The amendment goes on to authorise the Minister responsible to provide for the formation, constitution, authorisation and regulation of incorporated cell companies and incorporated cells as limited liability companies with separate legal personality, a set up commonly used in the insurance sector.
The possibility of those engaged in the shipping or aviation business to set up a cell company provides for segregating and protecting the cellular assets of the company including segregated accounts, compartments or units.
The Budget Measures Implementation Act, 2020 also includes changes to the definition of 'company' in relation to cell companies.
The reference to cell companies in the definition of 'company' in article 2(1) of the ITA is no longer limited to cell companies as defined in the Companies Act (Cell Companies Carrying on Business of Insurance) Regulations and Securitisation Cell Company Regulations. With effect from 20th March 2020 a cell company shall be construed by reference to the Companies Act or any regulations made thereunder, thereby extending to inter alia, incorporated cells of SICAVs and cell companies engaged in the maritime and aviation sectors in respect of which the Minister of Finance has recently, through Act V of 2020, been granted powers to make regulations.
This is an exciting change for the transport industry with various benefits being possible as a result of the segregation of assets without the formation of individual companies.
The transport team within KPMG Malta looks forward to the publication of further guidance in this regard and will follow up with further updates once available.
Originally published 12 May 2020
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