|Jersey Foundations: A New Opportunity|
By Kathy Gillen
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A Foundation will be created when one or more persons or legal entities (Founders) formalize a Charter, which is registered with the Registrar at the Jersey Financial Services Commission, through which the founders undertake to make donations (Foundation Assets) for the benefit of Beneficiaries. The foundation assets will be managed by a Council consisting of individuals or a body corporate, but which must include a Qualified person which is a person registered under the Financial services (Jersey) Law 1998 to carry out trust company business that includes the types of business mentioned in Article 2(4) of that law.
Key facts of the new Law are as follows.
âMust be incorporated by a "Qualified Person" on behalf of the founder, and an application for incorporation must be accompanied by the foundation charter.
âAt incorporation, the Qualified Person must certify that a specific Qualified Person will become a member of the foundation council.
âThe name of the foundation must end with the word "Foundation" or its equivalent in a foreign language.
âEntry in the Register is conclusive evidence that on the date set out the foundation was incorporated and the requirements of the Foundations Law were met.
âA foundation cannot engage in commercial trading other than trading, which is incidental to the attainment of its objects.
The Charter must be lodged with the Registrar on incorporation, and must specify:
âThe name of the foundation
âThe objectives for which the foundation was established (which can be charitable or non-charitable or both and can be for the benefit of people or purposes or both)
âThe names and addresses of the first members of the foundation's council
âThe details of any initial endowment
âWhat will happen to foundation assets should the foundation be wound up and dissolved
âIf it is to be wound up and dissolved upon the happening of an event or the expiration of a fixed period of time, details of the event or time
What is a Foundation?
A Foundation is a combination of a trust and a corporation. It has a separate legal personality, is able to hold its own assets, contract with third parties and sue and be sued in its own name and capacity, but does not have shareholders and holds assets for the benefit of beneficiaries.
Purposes of a Foundation
Foundations, elsewhere, do not replace companies, but compliment them and are primarily used for charitable purposes, to serve as the owners of companies (in which capacity the Foundation is generally called a "holding company" or a parent company) and for family and or inheritance purposes.
The purposes for which Foundations have been used are one or a combination of the following:
âTo protect persons at a disadvantage because of minority or incapacity who cannot manage their assets or risk losing them
âTo protect against fragmentation and outsiders gaining control of family businesses which are passed down generations
âTo guarantee payment of sums of money or assets to members of one or more families for their requirements
âTo carry out scientific, humanitarian, philanthropic, religious or charitable activities or to manage funds for the same
âTo manage employee benefits such as pensions and options
âAs a substitute for a will thereby circumventing complicated inheretiance procedures
âAs a substitute to a pre-nuptial agreement
âTo own and or invest in shares, interest and stocks of private companies or other securities
âTo collect royalties and other types of returns
âTo own real estate or other moveable property
âTo insure assets against different adverse situations, such as excessive taxes for those that reside where assets are located, future claims by creditors, forced heirship or political or economic instability in the country where the client resides
âTo manage bank accounts
âFor any specific asset protection
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.
Published on our website on Apr.19, 2010