Liechtenstein adopts reform of foundation law
20-Aug-2008The Liechtenstein parliament approved, in June 2008, a revision of the law governing foundations to meet international regulatory standards. The new foundation law will enter into force on 1 April 2009.
The move follows the reform of Liechtenstein company structures, associations and cooperative societies and the introduction of the European Company and the European Cooperative Society as new company structures. A revision of trust law is to follow.
Minister of Justice and Economic Affairs Klaus Tschutscher said the revised law would meet international standards without deviating from the Liechtenstein legal traditions on the protection of privacy.
The new foundation law introduces a new systematic structure differentiating private-use from charitable foundations and strengthening the responsibility of the founder. The protection of the foundation assets is subject to new rules, as are the supervision of foundations and foundation governance. The non-transferability of the founders' rights as a further new key feature entails greater legal certainty and clarity.
The "deposited" foundation, which need not be registered in the Public Registry, has been retained. The government justifies the retention, despite international criticism, by saying that it serves to protect the confidentiality of a founder who wants to engage in long-term asset planning in the interest of his family. The exemption from the registration requirement applies only to private-use foundations, and not to commercially operating foundations.
The government asserts that confidentiality in the foundation system is not limited to Liechtenstein and switching to a general registration requirement for all foundations would significantly diminish the attractiveness of the Liechtenstein foundation.
Austrian foundations must be entered in the corporate registry, but since a professional trustee acts on behalf of the founder when establishing the foundation and the name of the foundation may be freely chosen, the beneficial founder can remain in the background.
Swiss family foundations are also exempt from entry in the commercial registry, while in Germany only limited disclosure applies which, as a rule, does not extend to the person of the founder.
The government has said foundations lie at the heart of its "Futuro" project to develop Liechtenstein as a financial centre. Futuro also plans to make Liechtenstein into a location for trusts by harmonising them with Anglo-Saxon trust structures.
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