On the 17th April 2012, the Companies Act (Recognised Incorporated Cell Companies) Regulations were introduced with the aim to develop and improve on the multi-fund SICAV (Société d’Investissement à Capital Variable) and the ICC SICAV (Investment company which variable share capital in the form of an Incorporated Cell Company) regimes. The launch of the ICC SICAV in February 2011 generated demand revolving around a ‘platform’ model that would involve an ICC carrying out administrative services to any number of Incorporated Cells licensed as collective investment schemes. The RICC Regulations build on the “cellular” concept. The cellular concept provides for the establishment of a cell within a cell company structure. Assets and liabilities are attributed either to the cell company itself, or to a particular separate cell of the cell company. The fact that a company shall be an RICC ought to be identified in the memorandum and articles of Association. Moreover the abbreviation ‘RICC’ must be present at the end of its name.

A RICC may only provide services of an administrative nature and it must be in possession of a Recognition Certificate. The services that may be permitted include services related to the establishment of incorporated cells and the negotiation of service provision agreements and changes thereto, amongst others. These services are standardised and may be provided to any number of incorporated cells (IC).

When the RICC is applying for recognition, it must select the scheme that it will adopt and the service, and it will be limited to incorporating and servicing the type of scheme selected.

The RICC is required to have, at all times, a fit and proper person acting as a ‘Sponsoring Agent’ with responsibility for all aspects of compliance and for acting as the RICC’s point of contact with the Malta Financial Services Authority (MFSA).

According to the Regulations, a recognised incorporated cell company must take the form of a Limited Liability Company and may not carry out any licensable activity requiring a license under the Investment Services Act or other legislation.

The IC shall have separate legal personality and the RICC shall not have the power to enter into transactions on its behalf, and vice-versa. The RICC framework allows ICs to migrate in and out of the RICC they share with other ICs and either relocate to another RICC or establish themselves as separate independent schemes. The separate legal personality of each IC implies that it must comply with certain provisions of the Companies Act relating to payment of annual return fees, filing of accounts, tax returns and it must have its own board of directors.

It is interesting to note that the RICC has the power to expel an IC, subject to approval by the MFSA, if:

• the affairs of the IC have been or are being conducted in an unfairly prejudicial manner vis-à-vis its RICC or any other IC thereof; or
• the IC has been or is being used for fraudulent purposes; or
• to fail to do so would have a serious adverse effect upon the members of the IC or on the RICC.

An incorporated cell may not itself be a recognised incorporated cell company. An RICC has no power, by virtue of its position as an RICC, to enter into transactions on behalf of any of its incorporated cells. Moreover, as incorporated cell has no power, by virtue of its position as an incorporated cell, to enter into transactions on behalf of its recognised incorporated cell company. The Transformation from a non-cellular SICAV into a recognised incorporated cell company, or vice versa, is prohibited.