Aviation and Shipping |  Apr 06, 2020

Cell Companies for Aviation and Shipping Companies

Act V of 2020 (hereinafter referred to as ‘the Act’) was published on 3rd March 2020 and provides a number of amendments to various financial services laws. The most pertinent of these amendments in relation to the shipping and aviation sectors is found in Part V of the Act, which caters for the amendments to the Companies Act, Chapter 386 of the laws of Malta.

By means of the introduction of a new Article 84E in the Companies Act, companies in the shipping and/or aviation sectors are now given the possibility to convert into cell companies.

Before delving any further into the meaning of the inclusion of this new article, it would be wise to look at the way the Companies Act defines a cell company. This definition is provided for in Article 84A(2)(d) of the Companies Act where it states that a cell company is one which is “… formed or constituted as such or converted into a cell company and creating within itself one or more cells for the purpose of segregating and protecting the cellular assets of the company in such a manner as may be prescribed;…”. Thus, from this definition it is clear that it is possible for a company to have multiple cells and each cell is deemed to be its own separate legal entity, independent from all other cells of the company.

Prior to the publication of Act of Act V of 2020, this notion was only considered in relation to the sectors of insurance and securitisation. However, through the inclusion of the new Article 84E, the Minister responsible is now grated the power to make regulations regarding cell companies “carrying on or engaged in shipping or aviation business.” This article also stipulates that certain legislative requirement must be satisfied in order for shipping and/or aviation companies to reap the benefits from this cell company structure.

For the purposes of this article, the term ‘shipping and aviation business’ includes the ownership, operation (under charter, lease or otherwise), administration and management of any ship or any aircraft or aircraft engine and the carrying on of all ancillary financial, security, commercial and other activities in connection therewith. The term ‘shipping and aviation business’ is also applicable with regards to the Parents company or the company which holds shares or other equity interest in any undertaking, whether Maltese or otherwise, established solely or mainly for the carrying on or carrying out of any of the aforementioned activities. Furthermore, this term also refers to the raising of capital through loans, the issue of guarantees or the issue of securities by an undertaking when the purpose of such activity is to achieve the objects or activities mentioned previously, be it for the undertaking itself or for another undertaking within the same group. It is important to note that for the purposes of this article, any reference to the term ‘company’ also includes references to a partnership en commandite or any similar or equivalent body corporate which has it’s capital divided into shares.

For more information, kindly contact us on transport@gvzh.com.mt

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Key Contacts

Michael Grech | GVZH Advocates | Malta Law Firm

Michael Grech


Katrina Abela - GVZH Advocates - Malta Law Firm

Katrina Abela


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