More about PCCs and why Mauritius is the perfect jurisdiction for setting one up!
As advanced in a previous article, Protected Cell Companies are set up, as Global Business Corporations, under the legislation that the firm will remain a single entity with different segregated cells. This provides more opportunities, additional flexibility and security for international investment structuring since the assets and liabilities of each cell are legally separate from one another. A PCC has significant features with regards to factors such as its names, taxation rules, capital requirements or legal entity. More important features of a PCC Issuance of shares: A Protected Cell Company has the right to issue shares in the capital of its cells. These are known as cell shares. The income gained from the issuance of cell shares will be merged together with the cell’s assets. If earning is derived from the issuance of shares other than the shares of its cell, this will form part of the non-cellular assets of the PCC. Core shares are going to carry voting rights of the PCC. On the other hand, cellular shares have all voting rights pertaining to a specific cell. This will ensure maximum protection to the investors of each cell regarding its corporate governance issues. Dividend: Dividends to the shareholders of each cells are paid independently from one another. They are payable only by reference to the profits made by each cell. However, the PCC will be taxed as a single organisation. It is worthwhile noting that dividends from a local resident company in Mauritius, are not subject to any tax. Why is Mauritius the ideal jurisdiction to establish a PCC? Several factors should be taken into consideration when setting up a PCC. Its establishment is a matter that should be taken very seriously since a PCC has different strategies, different internal rules for different cells. There are also several group of investors/ stakeholders involved. Additionally, a PCC will have to conduct cross-border and global transactions. As such, it is essential for your PCC to carry out operations in an International Financial Centre (IFC) that can communicate with other jurisdictions efficiently and in a timely manner. The Mauritius IFC boasts interesting features such as: A flexible and appropriate legislation, Exchange liberalisation, Free repatriation of profits and capital, No capital duty on issued capital, Confidentiality and banking secrecy and Strong regulatory framework. Advantages of setting up a PCC in Mauritius The firm would be able to enjoy the Double Taxation Avoidance Agreements the country has with many emerging and developed economies around the globe. They would also benefit from Investment Promotion and Protection Agreements (IPPA), There are no capital gains or inheritance tax involved, No withholding tax on distributions made to any country and The island is at a strategic location with a convenient time zone. If you wish to learn more about PCCs or you want to set up one in Mauritius, feel free to get in touch with us.
Everything about Protected Cell Companies in Mauritius
The Protected Cell Company (PCC) was introduced in 2000 under the Protected Cell Companies Act 1999 of Mauritius. It can be set up only as a Global Business Company. The concept of this legislation allows a firm to remain a single entity while creating different segregated cells. As such, the assets and liabilities of each cell are legally separate from one another regardless of the fact that the company is corporately or individually owned. This implies that the PCC protects one cell from contagion from others, a form of legal segregation called ringfencing. The main benefit of PCCs Because each cell is isolated from the other, the liability of the PCC arising from transaction attributable to one cell will impact on its assets only. For instance, in case of bankruptcy of one specific cell, creditors will leverage the assets of that particular cell only to honour its liabilities. Thus, the PCC provides more opportunities, additional flexibility and security for international investment structuring. Setting up of PCCs A PCC set up as a Global Business Company (GBC) will be able to benefit from the Double Taxation Avoidance Agreements executed by Mauritius with more than 40 countries across the globe. Additionally, even companies which have already been established in Mauritius may apply and convert into PCCs, on the condition that their constitution authorises this conversion. Lastly, through continuation, a company incorporated in a foreign jurisdiction can be registered as a PCC and carry on its activities in Mauritius. While Protected Cell Companies are able to generate an unlimited number of cells, their creation is subject to the authorisation of the Financial Services Commission (FSC) of Mauritius. Important features of a PCC Distinct name or designation: All PCCs must have the word “PCC” or “Protected Cell Company” at the end of its name. Additionally, each cell must have its own designation or name. It could be the name of that particular cell’s share holder or it could be an alphabet to maintain anonymity. A foreign company can continue to operate as a PCC in Mauritius using the name designated in its article of continuation and ending it with “Protected Cell Company” or “PCC”. Single legal entity: PCCs can have several cells. However, each one must have its own distinct name or designation. Even if each cell is legally independent from others, it is not a legal entity and is created within the larger framework of a PCC. Moreover, the activities of each cell must be consistent with the overall activity of the PCC. Capital requirement: There is no minimum capital requirement for a PCC or for each one of its cells. However, based on the nature of the business of the PCC, for instance, insurance businesses, the FSC is authorised to recommend certain capital requirements. Taxation: Protected Cell Companies are liable to tax as a single legal entity. As a GBC, a PCC is liable to an income tax at the rate of 15%. Nonetheless, certain categories of income, such as dividend from foreign sources and interest from foreign sources, are subject to an 80% exemption rendering the effective tax payable to 3%Moreover, there are no withholding taxes on interests and dividends. As such, PCCs may also claim credits for actual taxes suffered against the nominal tax payable, such as for withholding taxes that are retained in their source countries.
