Protected Cell Companies in the UAE: DIFC vs RAK ICC in Practice

Protected Cell Companies (PCCs), sometimes referred to as segregated cell companies, allow a single legal entity to create multiple cells or portfolios, each with its own assets and liabilities. The core advantage of this structure is that the assets of one cell are protected from the liabilities of another. In the UAE, two primary frameworks are commonly used for PCCs: the Dubai International Financial Centre (DIFC), under the oversight of the Dubai Financial Services Authority (DFSA), and the Ras Al Khaimah International Corporate Centre (RAK ICC).

The DIFC and DFSA Regime

The DIFC has introduced a formal PCC regime that is closely tied to the DFSA’s Collective Investment framework and the Companies Regulations. Within this environment, PCCs are most often established as umbrella or sub-fund structures. Each sub-fund is treated as legally segregated, ensuring that liabilities are ring-fenced to that cell alone.

Because the DFSA is a conduct and prudential regulator, the use of PCCs within the DIFC is purpose-driven and subject to clear oversight. If a PCC is used for regulated fund activity, both the vehicle itself and its fund manager must comply with licensing requirements, governance standards, and disclosure obligations. As a result, PCCs in the DIFC are commonly chosen for open-ended umbrella funds, where investors expect strong regulatory protections, transparent reporting, and adherence to international standards.

The RAK ICC Regime

In contrast, RAK ICC provides a Segregated Portfolio Company (SPC), which serves as the offshore counterpart to a PCC. An SPC allows a company to establish separate portfolios whose assets and liabilities are insulated from one another and from the general assets of the company.

The RAK ICC framework is designed to be flexible and cost-efficient, with a focus on international corporate and asset-holding activities. It is often used for captive insurance structures, special purpose vehicles, or asset segregation arrangements that do not require DFSA supervision. The appeal lies in its administrative simplicity, tax neutrality, and confidentiality. However, sponsors should be mindful of cross-border recognition of cell segregation and the willingness of banks or counterparties in other jurisdictions to accept SPC structures.

Key Differences in Practice

While both DIFC/DFSA PCCs and RAK ICC SPCs provide ring-fencing of assets and liabilities, they serve very different purposes. DIFC structures are highly regulated and better suited for fund management and investor-facing activity, where confidence in regulatory oversight is essential. RAK ICC SPCs are more flexible and lightly regulated, making them attractive for private asset-holding, internal capital management, and captive insurance.

The choice between the two will often depend on the nature of the activity. If the entity intends to offer units to the public or operate as part of a regulated fund platform, the DIFC is the natural fit. If the aim is to achieve asset segregation for internal or private purposes with minimal regulatory involvement, the RAK ICC route may be more practical.

Conclusion

Both the DIFC/DFSA and RAK ICC regimes provide useful vehicles for segregation of assets and liabilities within a single entity, but they are targeted at different markets. The DIFC’s PCC structure is designed for regulated, investor-facing activity and benefits from international recognition. The RAK ICC SPC offers flexibility, speed, and cost efficiency, making it well suited for private arrangements where regulatory intensity is not required. Ultimately, the decision depends on the purpose of the vehicle, the expectations of investors or counterparties, and the level of cross-border acceptance needed.