Cell companies have been an established feature of Maltese legislation since 2004, following the enactment of the Companies Act (Cell Companies carrying on business of insurance) Regulations, 2004 (the “PCC Regulations”). Since then the cell company concept in Malta has not only taken root among market operators and practitioners but has also influenced the development of other legal frameworks in the insurance and funds sector.
On the 4th of September 2014, the Malta Financial Services Authority (‘MFSA’) issued a Consultation Document on ‘Proposals for Securitisation Cell Companies Regulations 2014’. This is to be issued under the Companies Act (Chapter 386 of the Laws of Malta) and the Insurance Business Act (Chapter 403 of the Laws of Malta). The new draft regulations launched with this consultation, namely the Securitisation Cell Companies Regulations, 2014 (‘the SCC Regulations’), continue to build on the concept by adapting and extending the protected cell company structure to cater for securitisation activity.
The proposed Regulations have been drawn up with the aim of setting out a framework for a new type of Cell Company acting as a special purpose vehicle in Malta – the Securitisation Cell Company (the ‘SCC’). By uniting the highly sophisticated frameworks provided in the Securitisation Act and the Reinsurance Special Purpose Vehicle Regulations with the cell company concept, the proposed Regulations now provide a legally entrenched framework for the segregation of different sets of assets and risk instruments within a single special purpose vehicle, the SCC, thus allowing for the launch of multiple asset-backed or insurance-linked securities without incurring any risk of cross-contamination between the different sets of creditors and investors.
Hence, the proposed framework for securitisation cell companies retains all the benefits introduced by the Securitisation Act while providing increased flexibility, enhanced investor protection and economies of scale.
The Consultation process shall run until the 24th of September 2014, and any comments and feedback to the draft Securitisation Cell Companies Regulations are to be addressed to the MFSA’s Regulatory Development Unit. Kindly forward any queries regarding this Consultation process to email@example.com.