MAS Proposes Framework for Protected Cell Companies to Support Alternative Risk Transfer Solutions

Executive Summary

On 7 July 2026, the Monetary Authority of Singapore (“MAS“) issued a Consultation Paper proposing to establish a legislative framework for a new corporate structure – the Protected Cell Company (“PCC“).

The PCC comprises a single corporate vehicle where assets and liabilities are statutorily segregated within the same entity, administered under a common governance. The proposed framework aims to support the growth of alternative risk transfer solutions and insurance use cases, including captive insurance, insurance-linked securities (“ILS“), and sovereign risk pools, and to deepen Singapore’s role as a global risk management hub.

The framework will be introduced through a new PCC Act, and consequential amendments to the Insurance Act 1966 (“IA“). MAS is embarking on a two-phase approach: (i) the current consultation focuses on the policy proposals to be included in the new PCC Act; and (ii) the second consultation will address the proposed draft PCC Act and the policy proposals to be included in the subsidiary legislation under the new PCC Act or the IA. The current consultation closes on 7 August 2026. In this Update, we discuss the key features of the proposed PCC framework.

Key Features of the Proposed PCC Framework

Structure and Legal Personality

A PCC operates as a single legal entity comprising a Core and one or more Cells. Neither the Core nor each Cell has its own legal personality, and transactions take place through the PCC on behalf of the Core and the Cells. The Core’s intended purpose is to administer the PCC and provide centralised governance and oversight, while the Cells carry on insurance business. MAS proposes that a PCC must at all times have at least one Cell to ensure commercial substance. This proposed structure reduces the administrative burden and costs involved, as governance requirements are complied with by the PCC and the costs borne may be shared among the Cells.

Permitted Insurance Use Cases

MAS proposes to introduce the PCC framework for three insurance use cases at the outset:

1. Captive insurance: Corporations can establish dedicated captives or participate in “rent-a-captive” solutions, where a corporation rents a Cell to underwrite insurance risks. To accommodate this, MAS intends to amend the definition of “captive insurer” in the IA to encompass both standalone captive insurers and PCC rent-a-captive insurers.

2. ILS: Insurers can issue ILS through separate Cells within a PCC structure without establishing a new special purpose vehicle for each transaction, enabling faster execution and lowering issuance costs.

3. Sovereign risk pools: PCCs can support insurance facilities that pool risks across multiple countries or participants, with the flexibility to manage diverse portfolios within a single structure.

Segregation of Assets and Liabilities

A defining feature of the PCC framework is the legal segregation of assets and liabilities between each Cell and between the Cells and the Core. MAS proposes to legislate that:

1. All assets held, and liabilities incurred, by the PCC must be recorded as assets or liabilities of either the Core or a Cell.

2. Assets of the Core must not be used to discharge the liabilities of any Cell.

3. Assets of one Cell must not be used to discharge the liabilities of another Cell or of the Core.

4. Any liabilities of the Core or a Cell must be discharged solely out of the assets of the Core or that Cell, respectively.

5. Creditors with claims against the Core or a Cell for liabilities shall only have recourse to the respective Core’s or Cell’s assets.

6. Any charge created over an asset of the Core or a Cell must only be for securing a liability or obligation of the Core or that Cell.

MAS further proposes safeguards against the risk of cross-cell contagion within a PCC, including voiding any contractual provisions that are inconsistent with the segregation principle and implying such principles in a PCC’s constitution.

Disclosure Requirements and Implied Contractual Terms

MAS proposes that a PCC is required to make appropriate disclosures in correspondence and agreements when dealing with third parties, such as: (i) identifying itself as a PCC; (ii) where applicable, specifying and identifying the Cell or the Core on whose behalf it is acting; and (iii) making clear that the Cell’s or Core’s assets and liabilities are segregated.

MAS proposes for the following terms to be implied by statute into contracts entered into between a PCC and a contracting party:

1. The contracting party may only assert its right under the contract against the PCC in respect of the Core or Cell(s) on whose behalf the PCC enters into the contract (“Contracting Core/Cell”).

2. The contracting party waives any right to make a claim against the PCC in respect of any non-Contracting Core/Cell.

3. If the contracting party obtains any assets of a non-Contracting Core/Cell, the contracting party will transfer those assets to the PCC without delay, and until the transfer takes effect, hold these assets on trust for the benefit of the non-Contracting Core/Cell.

Transactions within a PCC

MAS proposes allowing transactions within the same PCC, subject to the following principles being met: (i) the transaction is necessary to facilitate the operations of the PCC or any of its Cells; (ii) the transaction is conducted on an arm’s length basis; and (iii) the segregation principle is upheld.

Funding Mechanisms 

MAS proposes to allow PCCs to issue shares and/or debentures on behalf of the Core or a Cell, with proceeds from the issuance constituting assets of the relevant Core or Cell. Circular shareholding within PCCs (e.g. the PCC on behalf of a Cell holding shares issued by the PCC in respect of the Core or another Cell) would be disallowed to prevent potential contagion and governance issues. Capital reduction and share buybacks would be permitted, and dividend payments would also be permitted subject to certain conditions being met.

Re-domiciliation and Corporate Conversion

MAS proposes to adopt the same requirements as those set out in the Companies Act 1967 (“CA”) for inward re-domiciliation, thereby allowing foreign corporate entities equivalent to a PCC to transfer registration to Singapore, subject to applicable regulatory approvals under the IA.

MAS also proposes a statutory mechanism for the conversion of an existing CA-incorporated company (limited by shares) into a PCC, subject to special resolutions being passed and submitted to the Registrar, creditor notifications, and directors’ declarations confirming that no creditor will be materially prejudiced. Exit mechanisms allowing a PCC or its Cells to convert into a CA-incorporated company are also contemplated. Transfer of an entire Cell from one PCC to another PCC would be subject to the IA’s requirements on the transfer of insurance business.

Corporate Governance, Administration and Insolvency

MAS intends to establish corporate governance standards for PCCs that are aligned with those set out in the CA, including requirements for a minimum number of directors, directors’ duties, and the appointment of at least one Singapore-resident director.

PCCs will also be required to include the words “PCC” or “Protected Cell Company” as part, and at the end, of their names.

An annual audit of the PCC by a registered public accountant is proposed, with financial information of the Core and each Cell to be kept separate. The PCC’s audited financial statements and Register of Members are proposed to be publicly accessible.

The proposed winding-up regime for PCCs will be based on the Insolvency, Restructuring and Dissolution Act 2018. Each Cell may be wound up as if it were a separate legal person, without affecting other parts of the PCC. A PCC may only be dissolved when it ceases to carry on any insurance business. Schemes of arrangement and receivership regimes are also proposed to be adapted for PCCs and their Cells.

Anti-Money Laundering (“AML”) and Countering the Financing of Terrorism (“CFT”) Requirements 

Existing AML/CFT requirements that are applicable to licensed insurers will apply to PCCs. PCCs will be required to maintain updated and accurate beneficial ownership information aligned with the Financial Action Task Force’s standards. As licensed insurers, PCCs will be exempted from the CA’s requirements to maintain a Register of Controllers, Register of Nominee Directors and Register of Nominee Shareholders with the Accounting and Corporate Regulatory Authority.

Tax 

A PCC is treated as a single legal entity for tax purposes and will follow existing tax principles. Goods and Services Tax treatment applies at the Cell level, and each Cell is treated as a separate person for the purposes of stamp duty.

Concluding Words

If you have any queries on the above developments or wish to discuss how the proposed PCC framework may affect your business or structuring arrangements, please reach out to our team set out on this page.

For regional Capital Markets, Corporate & Commercial, and Insurance & Reinsurance matters, please see Regional Capital Markets, Regional Corporate & Commercial Practice, Regional Insurance & Reinsurance Practice, respectively for more information.