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.