If you would like to register an offshore foundation, we suggest that you should consider the following jurisdictions: Anguilla, Belize, Nevis, and Panama. A foundation is a legal entity that combines the properties of a company with those of a trust. Similarly to a regular business company, a foundation can make contracts, enter business agreements, have bank accounts, and engage in commercial and investment activities. At the same time, when assets are transferred to a foundation, they become the property of the foundation. Therefore, a foundation can be used for asset protection, which makes it similar to a trust. Below we discuss the key characteristics of offshore foundations.
There are three basic types of foundations:
- A charitable foundation that is created for charity purposes;
- A private foundation can be used as an inheritance planning instrument and as a way to protect property from potential creditors and legal claims.
- A corporate foundation can be used by a corporation to finance and manage social programs (such as pension plans, for example).
Foundations can be used for multiple purposes and below we point out only the most important ones:
- Legal avoidance of some taxes such as the inheritance tax, for example;
- Protection of assets from lawsuits (especially in case of divorce) and general political instability;
- Inheritance planning: in some countries, the law decides who will inherit the property when the person dies, not the person him- or herself. Because the property transferred to the foundation is not legally yours anymore, you can decide who the property will be handed down to after you die, not the law of your country;
- Confidentiality protection: A Last Will is a public document while a Foundation Charter is not. Thus, you don’t have to prematurely reveal the names of your heirs and inheritance conditions;
- Investment activities;
- Charity.
To create a foundation in Anguilla, Belize, Nevis, or Panama, the foundation founder (the person who transfers his/ her personal assets to the foundation) has to register the Foundation Charter with the State Register. You don’t have to transfer the assets to the foundation immediately to make the registration valid.
Roles
Founder:
The natural person or the legal person who transfers assets to the foundation. In most jurisdictions, the foundation founder can simultaneously act as a beneficiary and/ or a member of the foundation Council. The name of the foundation founder is listed in a public Register. Nominee founders can be used in offshore jurisdictions. A foundation can have several founders.
Foundation Council:
The Council is the main managing and executive body of the foundation. The Council bears the moral and legal responsibility for performing the tasks of the foundation and disposing of its assets. The Council can consist of several members and their minimal number depends on the jurisdiction where the foundation is registered. A natural person or a legal entity can act as a member of the Council. In some jurisdictions such as Belize, for example, at least one Council member has to be a local resident.
Beneficiary:
The person or persons who obtain financial profits from the foundation. The Founder can name a concrete person or a class of people beneficiaries of the foundation. An unborn person can also be the foundation’s beneficiary. For example, the Founder can make his/ her grandchildren beneficiaries of the foundation even if they have not been born yet. A beneficiary does not possess the foundation’s assets. Therefore, his/ her creditors cannot lay hands on the assets of the foundation. This makes a foundation similar to a trust. If you would like to learn more about offshore trusts, International Wealth experts will gladly tell you about them and help you create a trust in an offshore jurisdiction.
Foundation Carter/ Declaration/ Memorandum:
This is the key document, a set of rules that regulate the foundation. The document contains the following information:
- Name of the foundation название фонда;
- Names and addresses of the foundation founders;
- Foundation type;
- Name and address of the registration agent;
- The value of the assets transferred to the foundation;
- Names and addresses of the Council members
- Goals and objectives of the foundation;
- Names and addresses of the foundation Secretary and Protector if they have been appointed;
- Life cycle of the foundation;
- Functions of the Council members;
- Information about the beneficiaries.
In addition, the Regulatory Provisions can contain additional information such as the dispute resolution methods that the foundation is going to use, for example.
The Foundation Charter can be amended after the foundation has been registered. The State Registrar keeps a copy of the Charter while the foundation exists. However, third parties are not authorized to see or copy the Foundation Charter without consent on the part of the Council members.
Registration Certificate:
This document confirms that the foundation exists. It carries only the registration date, the foundation name, and the registration number. Sometimes, the Registration Certificate will also carry the name of the registration agent.
Foundation assets:
Assets or contributions are the property that has been transferred to the foundation. It does not necessarily have to be money: it can be pieces of real property, jewelry, art objects, patents, insurance policies, securities, and so on. New assets can be transferred to the foundation at any moment. This can be done by the foundation founder or any other person/ company. The value of the foundation assets in Anguilla, Belize, Nevis, and Panama has to be at least US$ 10,000.
Secretary:
In Anguilla, if none of the Council members is a local resident, a local Secretary has to be appointed by all means. The same requirement is in place in Belize. Any foundation registered in Nevis has to have a Secretary but it does not have to be a local person.
Registration agent and registered address:
Any offshore foundation has to have a registration agent and a registered legal address.
Regulatory provisions:
This is an auxiliary and a private document that describes how the foundation should be managed, what duties the Council members have, how the assets/ profits should be distributed to the beneficiaries, and any other articles that the founder wants to include. This document is for internal use only and it does not have to be submitted to the Registrar.
Protector:
A foundation does not have to have a Protector but it can. The Protector acts as a guard who observes the activities of the Council members and ensures that they are legal and reasonable. The Founder can make him/ herself the foundation Protector thus fully controlling the foundation.
Unlike a trust, a foundation is a legal entity that can make contracts with other legal entities or individuals. It can open bank accounts, perform commercial operations, sue, and be sued. Even though a trust is a more popular instrument of asset protection, foundations are also used for this purpose quite often.
