A Guide to Labuan Protected Cell Companies (PCCs)

1. Single Legal Entity: A Labuan PCC is a single legal entity but can create multiple cells, each operating independently within the overall company.

2. Ring-fencing of Assets and Liabilities: The assets and liabilities of each cell are segregated, ensuring that creditors of one cell cannot claim assets belonging to another.

3. Board of Directors: The PCC operates with one board of directors, regardless of the number of cells created. However, each cell can have different ownership, capital, and assets.

4. No Limit on Cells: There is no limitation to the number of cells that a Labuan PCC can create, offering flexibility in business structuring.

5. Shariah-Compliant Option: Labuan is the only jurisdiction in Asia offering Shariah-compliant PCCs, catering to businesses that prefer or are mandated to follow Islamic principles, such as takaful captives or Islamic mutual funds.

• Cost Efficiency: Labuan PCCs offer a cost-efficient way to structure multiple activities or risks without having to create separate legal entities for each business activity or investment fund.

• Legal Protection: Each cell’s assets are shielded from the liabilities of other cells, ensuring strong asset protection and risk management.

• Flexibility: The PCC structure is highly flexible, making it suitable for various industries including captive insurance, fund management, reinsurance, and Islamic finance.

Captive Insurance:

• Cell Captive Structure: Different captive owners can establish cells under a single Labuan PCC, each managing their own risks independently. These captives can either be owned by one parent company or by various unrelated companies.

• Segregated Risk: Each cell can underwrite the risks of its owner, protecting the assets from the liabilities of other cells.

Fund Management:

• Umbrella Fund Structure: A Labuan PCC is an excellent vehicle for umbrella fund structures, where each cell represents a different investment strategy or portfolio. This allows fund managers to offer diverse investment options while maintaining cost efficiency.

• Multi-Currency Investments: Labuan PCCs can hold funds in various currencies within different cells, enabling better risk control and diversified fund management.

Takaful and Islamic Finance:

• Shariah-Compliant PCCs: Labuan PCCs can be structured to comply with Shariah law, making them ideal for takaful captives or Islamic mutual funds targeting the Middle Eastern and Asian markets.

Establishing a Labuan PCC is straightforward and regulated under the Labuan Companies (Amendment) Act 2022. The PCC can be incorporated as a new Labuan company or an existing Labuan company can be converted into a PCC. The structure is governed by the Labuan Financial Services and Securities (Amendment) Act 2022 and the Labuan Islamic Financial Services and Securities (Amendment) Act 2022 for Shariah-compliant companies. 

Labuan PCCs are subject to annual fees payable to the Labuan Financial Services Authority (Labuan FSA). The fees vary depending on the type of business activity and the number of cells within the PCC:

• General Assets (Core): USD 9,500 for insurance and takaful, USD 1,500 for mutual funds and Islamic mutual funds.

• Each Cell: USD 3,000 for insurance and takaful, USD 600 for mutual funds and Islamic mutual funds.