|Draft Foundations Law Lodged In Jersey|
By Jason Gorringe
(This article is from Tax-News.com, and we put it here only for our internal members to study and research. If it violates the author’s copyright, please send e-mail to firstname.lastname@example.org, and we will delete it immediately.)
The Jersey authorities lodged proposals for a draft Foundations Law, designed to introduce to Jersey a new legal entity, the ‘foundation’, which will be used for wealth management and charitable purposes.
Foundations have a long history in continental Europe. In medieval times they were used for charitable or religious purposes. More recently they are commonly used for wealth management purposes in a number of offshore jurisdictions.
Under the proposals put forward on September 9, unlike a company, a foundation will not have shareholders. The role of shareholders in holding the board of directors to account will be taken instead by the guardian, who will not have any direct interest in the foundation.
The foundation, as a body corporate, will hold assets in its own name. It will use these assets in accordance with its constitutional documents, either to benefit specified persons or for a specified purpose. These constitutional documents will be a charter, a public document held by the registrar, and the regulations, which will be a private document.
The charter will set out, at a minimum, certain key piece of information regarding the founder.
It will be permissible for a foundation to include all the relevant information in its charter, and this may be the case, e.g. for charitable foundations which wish to put all information in the public domain. However, it is envisaged by the Jersey authorities that the majority of founders and foundations will wish to preserve confidentiality over certain information and will therefore include these matters in private regulations.
Welcoming the proposal, Minister for Economic Development, Senator Ozouf, observed that:
“This is a major step forward for the Island’s finance industry. The Jersey foundation will be attractive to investors, especially those from countries where trusts are unknown. It will also assist those wishing to establish foundations for charitable purposes. It is an innovative product which will help to maintain Jersey’s position as one of the world’s leading finance centers.”
Countering concerns with regard to the possible use of the new entity for illicit purposes, the States authorities explained that:
"A foundation will be an incorporated legal entity, incorporating some of the best features of companies and trusts. It will be run by a foundation council, similar to a company’s board of directors. However, unlike a board of directors (or the trustees of a trust) a foundation council will be required to have at least one member who is a Jersey financial professional regulated by the Jersey Financial Services Commission."
"The high quality of Jersey’s regulated community will ensure that Jersey foundations are effectively and responsibly run. This will ensure that investors can be confident in relying on Jersey foundations, and also that the Island complies with its international obligations in respect of preventing fiscal crime."
Published on our website on Sept.19, 2008