Guernsey Incorporated Cell Companies offer a cost-effective way to own aircraft

Previously, aircraft leasing companies incorporated separate companies for each of the aircraft in their portfolio – the aircraft are purchased and subsequently leased by this entity.

While this is a perfectly acceptable way of managing a fleet, the downside for larger aircraft leasing companies, is that they can typically end up with dozens of companies that they then need to manage and administer, which can be both costly and complex to manage.

Trusts are sometimes used in the place of separate companies, and again, while a perfectly acceptable way to structure, trusts can present some challenges: trusts are not universally familiar structures and may not always be a common entity where aircraft lessors operate. Likewise, trusts are subject to both common law and statutory law which are quite different from company law, this can create a legal headache, should any litigation arise.

It’s here that Guernsey’s Incorporated Cell Company can offer a number of benefits to aircraft owning companies.

The use of an Incorporated Cell Company for holding aircraft

Incorporated Cell Companies can have any number of separate cells, while remaining part of the same overall entity. This means that a separate cell can be created for each aircraft in the fleet without having to set up a standalone corporate entity for each aircraft which then has to be managed individually.

Guernsey Incorporated Cell Companies can:

• Support easier, more streamlined administration and management when compared to typical corporate structures
• Provide a high level of efficiency and offer meaningful flexibility
• Allow for legal segregation of assets and liabilities
• Give aircraft leasing companies the ability to operate aircraft with a widely recognised corporate, type structure. This can also facilitate interaction with lenders, who are typically involved with the financing and re­financing of aircraft.

Guernsey Incorporated Cell Companies are increasingly popular for aircraft lessors. Cost-efficiency and ability to structure multiple aircraft much more simply are key drivers. The fact that Incorporated Cell Companies allow for the legal segregation of assets and liabilities is another particularly advantageous feature of Incorporated Cell Companies as it means that the failure of one cell will not affect the solvency or viability of another. Likewise, each cell can be tailored as necessary for the individual circumstances of the separate assets, while also taking into account the interests of the company at large.

An Incorporated Cell Company is a robust and cost-effective alternative to traditional corporate structures, while maintaining flexibility and an ability to ensure that assets are ring-fenced in the Incorporated Cell Companies individual cells. This segregation and separate legal status also allow an individual cell company to be severable from the Incorporated Cell Company core entity and may be an attractive feature when wishing to create legally distinct governance for a particular cell.

With Guernsey on the European Union’s list of fully cooperative tax jurisdictions and with Moneyval determining in 2016 that the jurisdiction has a mature legal and regulatory system and that the financial institutions are highlight competent, knowledgeable and aware of their obligations an Incorporated Cell Company in Guernsey offers an optimal, cost-effective solution for holding multiple aircraft.