Monday, 7 March 2016
UK: HM Treasury consultation - the framework for insurance special purpose vehicles and protected cell companies
HM Treasury has published a consultation paper in which it sets out the key features of the proposed new framework for insurance special purpose vehicles (ISPVs): see here (pdf). Chapter four explores the corporate structure for ISPVs, and explains that the Treasury proposes to amend companies and insolvency law to allow for the creation of protected cell companies, thereby permitting pools of assets and liabilities - cells - to be segregated within the company. The protected cell company would have separate legal personality but the cells within it would not have legal personality as they do in some jurisdictions where they are known as incorporated cell companies (see, e.g., Guernsey and the Companies (Guernsey) Law, 2008; and the Isle of Man and the Incorporated Cell Companies Act 2010 [pdf]). The Treasury states that it is not proposing to introduce incorporated cell companies in the UK, but may reconsider if there is demand. Under the proposed UK regime, a new cell within the protected cell company would be created by board resolution. The duties of directors would be the same as those for companies incorporated under the Companies Act 2006 and the Company Directors Disqualification Act 1986 would apply to directors of protected cell companies. The other chapters in the consultation paper consider the taxation of ISPVs and their authorisation and supervision by the Prudential Regulation Authority and the Financial Conduct Authority. The PRA is expected to publish a supervisory statement with further information on the authorisation process by the middle of the year.