The Incorporated Segregated Accounts Companies Act 2019 (ISAC Act) was tabled in the House on 27 September 2019. It is a standalone piece of legislation and a companion statute to the Segregated Accounts Companies Act 2000 (SAC Act).
A key feature of both a segregated accounts company (SAC) and an incorporated segregated accounts company (ISAC) is that the assets of each individual segregated account, or cell, will not be available to the creditors of any other cell. Moreover, it is possible for individual cells to be subject to winding-up proceedings while the SAC or ISAC, as the case may be, and the other cells remain unaffected.
Under the SAC Act, the statutory divisions between accounts do not create separate bodies corporate. The ISAC Act, conversely, is distinguished by the creation of separate bodies corporate. As with segregated accounts of a SAC, it will be possible for ISACs and their incorporated segregated accounts (ISA) to contract with one another and/or the ISAC itself.
Each ISA will have its own board of directors, separate from the board of the ISAC (though there is no prohibition on common directors sitting on both ISAC and ISA boards). In keeping with separate legal company status, an ISA will be able to hold assets, sue and be sued in its own name and otherwise have many of the attributes of a non-cellular company.
ISACs enable corporate group structures to be created, but with lower administration costs than a traditional group of non-cellular companies. Due to the process of creating incorporated cells, ISACs will provide robust segregation of assets and liabilities.
ISACs will be governed by the requirements of the Companies Act 1981 (except where otherwise provided in the ISAC law) and licensed and regulated appropriately as an insurer or a fund.
The introduction of the ISAC Act meets today's demands for flexibility and speciality, serving to strengthen our Bermuda offering and products, including rent-a-captives, life insurance and Insurance Linked Securities (ILS). They are also applicable for family office and fund structures (including ILS funds which often use segregated account structures).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.