Guernsey: a leading jurisdiction for Incorporated Cell Companies
11 February 2021
A Guernsey Incorporated Cell Company can offer some attractive cost savings, flexibility, and benefits compared to ‘traditional’ corporate structures.
At first glance an Incorporated Cell Company might look similar to a corporate group holding structure. The Incorporated Cell Company sits at the ‘top’ of the corporate structure, and one or more companies – known as cells – can be incorporated under the primary entity, almost like subsidiaries.
Our clients use Guernsey Incorporated Cell Companies for several reasons, but one of the most attractive benefits is that Incorporated Cell Companies can effectively create a group structure with any number of separate cells, which remain part of the same overall entity. In this way, Incorporated Cell Companies can be more cost-efficient and easier to manage than setting up a more elaborate corporate structure.
Benefits and flexibility
Each cell’s assets and liabilities are effectively ring-fenced, so the rest of the group is protected from being pursued by creditors or damages incurred by an individual cell’s activities or transactions.
While it’s not uncommon for a jurisdiction’s legislation to limit cell companies’ use from a regulatory perspective, Guernsey’s Incorporated Cell Company regime offers significant freedom and flexibility in this respect. An Incorporated Cell Company may not be suitable for all uses, and advisors might suggest a more’ usual’ corporate holding structure. However, the flexibility afforded by Guernsey’s Incorporated Cell Company framework often makes it an appropriate and attractive option even when the use may be limited in other locations.
Large corporate structures with several entities and holdings can often be complicated to manage from an administrative perspective. Incorporated Cell Companies streamline corporate administration and can allow for simplified management, without losing the benefits of having separate legal entities for different uses.
As cells are legally an individual corporate entity, they are widely recognised vehicles. Incorporated Cell Companies are, therefore, an ideal solution for clients who have international and cross-border business dealings who need a familiar type of corporate vehicle for their partners to do business with.
Incorporated Cell Companies also offer considerable flexibility. Using this model, a client doesn’t have to incorporate limited liability companies every time they want to segregate assets.
If you have multiple assets that you want or need to segregate, then using an Incorporated Cell Company is the perfect vehicle. For example, in “club investment” situations whereby a group of investors with a common investment goal or target asset class, allows each of the investors to elect to invest in some or all of the individual assets by joining, or refraining from investing, in a particular asset or cell. Otherwise, setting up a traditional legal entity for each of these purposes incurs significant legal and incorporation costs. An Incorporated Cell Company allows you to set up one corporate administration structure to support multiple holdings with limited accessible capital. Incorporating each cell into the Incorporated Cell Company is much cheaper than setting up multiple corporate vehicles or holding companies.
How ZEDRA can help
Alongside our client’s advisers, ZEDRA regularly sets up Guernsey Incorporated Cell Companies and handles the ongoing corporate secretarial considerations and the ongoing management of the company and individual cells, acting as directors and managing reporting and compliance.