Liechtenstein Foundation (family Foundation)

Company formation / incorporation / setting up of a Foundation

A Foundation may be formed solely as a family Foundation (for the provision of expenses related to the upbringing, education, equipment and support and similar costs related to raising a child), as a charitable Foundation (for the supporting of and promotion of, for example, charitable, artistic, scientific or social endeavours) or as a church Foundation. The formation of a Foundation solely for maintenance is also possible.

A Foundation is not suited to the carrying on of commercial activities. Commercial activities may only be undertaken when they serve to achieve a Foundation's non-commercial purpose or where the type and scope of the investments being held require such activity to be undertaken.

Only a charitable Foundation, under certain circumstances, may be subject to supervision by the authorities.

Name of a Foundation

The name of a Foundation may be in any language (in Latin or German characters). Made-up names may also be used. The company name is protected (exclusivity of the registered company). The use of domestic and international state and place names in the company name is only permitted with special permission.

Company formation / incorporation / setting up: purpose of a Foundation

A Foundation exists to give effect to the stated, non-commercial wishes of the Foundation's founder as set out in the formation deed and articles of association of a Foundation.

Foundations may only undertake commercial activities insofar as this is necessary for the achievement of their non-commercial purposes.

Company formation/incorporation/setting up: nominal capital (Foundation funds)

The currency of the nominal capital may be specified in the articles of association as Swiss Francs, Euros or US. Dollars. Attention must be paid to the nominal capital required. The nominal capital required may be in the form of a cash or non-cash contribution.

A minimum of 30,000 CHF, or the equivalent sum in any other legal currency, must be contributed to its nominal capital.

Company formation/incorporation/setting up: formation

The founder transfers assets to the Foundation for a specifically defined purpose and determines who will benefit therefrom. The founder of a Foundation may retain certain rights and may do this through his appointments (through a Foundation board, curator or protector) or through so providing in the articles of association, by-laws or regulations of the Foundation.

Company formation/incorporation/setting up: existence

A Foundation which must be registered in the Public Register (Commercial Register) officially comes into existence upon its entry in the said Register. Where a Foundation's founding document(s) is lodged with the competent court, such a Foundation will have officially come into existence when the said document(s) was signed.

Supreme authority

The supreme authority is the Foundation Council which conducts the business of the Foundation in accordance with the articles of association, by-laws and regulations. The founder can restrict the activities of the Foundation Council through other bodies including, for example, allowing the auditors to audit, the giving of the rights to give directions or instructions, to control or to veto to protectors, curators or collators.

Registered Foundations that are carrying on commercial activities must appoint an auditor.

Management organ

At least one member of a Foundation (Foundation Council) must have his law office address in Liechtenstein and must possess certain qualifications. In addition thereto, any natural or legal person domiciled in or outwith Liechtenstein may be made members of the Foundation Council. The administrative body is the executive body of the company.

The appointment of an auditor

A Foundation must appoint an auditor if it is carrying on commercial activities or if its articles of association permit the carrying on of commercial activities. Those permitted to be appointed as auditors are as follows: trustees, trustee companies with the authorisation of the trustees, chartered accountants and auditing firms.

Legal representative of a Foundation

The legal representative is the official addressee and contact person of a Foundation for the authorities including, for example, the tax authority and the Public Register Office.

Beneficiaries of a Foundation

In a Foundation, the founder or a body specified in the articles of association determines who the beneficiaries are who are to be entitled to its income and/or assets. In addition to the provisions on the beneficial interest in the articles of association, the extent of and the conditions attached to the beneficial interest are specified there or in the by-laws of a Foundation. The by­laws, which form an integral part of the articles of association and which frequently take precedence over the articles of association, do not require to be lodged with the Public Register Office. The said by-laws may be revocable or irrevocable and are able to be amended or not able to be amended. In addition to amendments to the by-laws being permitted, it is possible that after a specified event or date (for example, the death of the founder) that the by-laws that were previously able to be amended become irreversible and thus not subject to amendment. In general, the executive bodies must adhere to the founder's wishes. Where no beneficiaries have been specified, it is to be presumed that the founder himself is the beneficiary. If that is the case, the rules of intestate succession apply. Under certain circumstances specified by law or the Trust deed, the beneficial interest may be exempt from attachment by a creditor(s).

Bookkeeping

It is a legal requirement that a Foundation keeps books. The sole exception to this is for Foundations which, instead of being registered in the Public Register, have been lodged with the competent court. The keeping of booksmay be done in any legal currency. Moreover, the said accounts may be recorded in English, French, Italian, Spanish or Portuguese and may be kept in or outwith Liechtenstein. It may be the case that the annual accounts be required to be submitted to Liechtenstein's tax authority; where this is so, the annual accounts must be submitted together with, at least, a German translation thereof.

Declaration

A statement of assets and liabilities must be produced annually by those Foundations registered in the Public Register which are not undertaking commercial activities and whose articles of association do not permit the carrying on of commercial activities, namely by those Foundations formed solely for the investment and management of assets or the holding of assets or other rights. Based on this, the Liechtenstein administrative body shall inform Liechtenstein's Public Register Office that a statement of assets and liabilities is available and that no commercial activities have been undertaken in the past year. The statement of assets and liabilities does not require to be submitted. The exception hereto is for Foundations which, instead of being registered in the Public Register, have been lodged with the competent court.

Time required for the formation/incorporation /setting up of a Foundation

Formation normally takes place within one week.

Powers of attorney

Powers of attorney can be granted if, upon the instruction of the administrative body, transactions are to be handled by third parties. The holder of a power of attorney must report to the administrative body. As a general rule, only time-limited special powers of attorney will be granted due to the liability of the administrative body.

Liquidation of the Foundation

At the earliest, those Foundations which were lodged with the competent court, instead of being registered in the Public Register, may be dissolved six months after the issuing of the third notice to the creditors. Dissolution may only take place following the completion of the liquidation process.

Fees and taxes of a Foundation

For details, please see Taxes.

Company formation/incoporation/setting up: registration or lodgement

All Foundations that are to carry on commercial activities in order to achieve their non-commercial purposes must be registered. For example, this includes youth hostels, old people's homes and professional welfare foundations.

Church Foundations, solely- and mixed family Foundations (e.g maintenance Foundations) and Foundations whose beneficiaries are specificity identified or identifiable must only lodge the founding documents with the Public Register Office. The by-laws or regulations are not required to be lodged therewith. Upon the lodging of the said documents, the existence of a Foundation will not be publicly published in any register and an inspection of the said documents is only possible where a justified interest is demonstrated.

Submission of a balance sheet

The audited annual accounts of registered Foundations must be submitted to Liechtenstein’s tax authority in Vaduz if commercial activities have been undertaken or if the articles of association permit such activities to be undertaken.