[ESTABLISHING A BUSINESS ENTITY IN LIECHTENSTEIN]
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The foundation is established by a founder dedicating assets to a specific purpose in favour of a specific or specifiable beneficiary. Once raised to the status of a legal entity, these assets no longer form part of the private assets of the founder but form the foundation assets. The minimum capital required to establish a foundation is CHF 30,000.00. Depending on the purposes of the foundation, common-benefit foundations are distinguished from private-benefit foundations. Besides the registered foundation which comes into existence upon entry onto the Commercial Register, the so-called ‘deposited foundation’ exists for private-benefit foundations. For the deposited foundation, no foundation documents must be filed with the Commercial Register. Therefore, this legal type offers utmost discretion. The foundation has neither members nor an owner. After the formation, the founder has only those rights which have been reserved in the articles or by-laws. Quite often the founder reserves the right to amend the articles and by-laws, and in particular the beneficiary regulations. The usufructuaries of the foundation are the beneficiaries, whereby the payment of distributions to beneficiaries may also be made subject to conditions or rules. The beneficiaries are named by the founder, usually in separate by-laws, resembling a last will and testament. The founder can appoint himself as a beneficiary. In order to protect the rights of the beneficiaries, the law stipulates wide information rights towards the foundation council. The foundation is administered by the foundation board, made up of at least two members who represent the foundation solely or jointly. The foundation board exercises the
wishes of the founder as recorded in the articles and the by-laws. Therefore, the foundation board does not form any intent but only has a serving function. The founder can vest the foundation board with the authority to execute the founder’s will with free and absolute discretion, e.g., regarding distributions to beneficiaries (so- called discretionary foundation). The basis of this free and absolute discretion is always the founder’s will, determined in the articles and by-laws of the foundation. The founder may make provision in the articles of association for further bodies – such as an advisory board, a board of trustees or a protector – to advise and support the foundation board, e.g., when paying out distributions to beneficiaries. These may also exercise a controlling function. The foundation is dissolved when the objects cannot be achieved anymore, especially when such objects are no longer achievable due to lack of adequate funds or as otherwise provided for in the law. This also applies when all of the foundation’s assets have been distributed to the beneficiaries. Furthermore, the founder can stipulate in the articles that the foundation can be dissolved at any time. As a rule, the foundation is not obliged to appoint an auditor, except in the case of a charitable foundation. Trust Settlement The Principality of Liechtenstein is the only continental European country to have included the common law trust in its legal system. The trust is established by assigning assets to a trustee, subject to the condition that these assets will be administered in accordance with the wishes of the settlor, with any dividends
ILN Corporate Group – Establishing a Business Entity Series
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