Foundations Are Easily Understood By Clients From Civil Law Countries

• Published date: 25 November 2022
• Subject Matter: Corporate/Commercial Law, Litigation, Mediation & Arbitration, Corporate and Company Law, Directors and Officers, Civil Law, Shareholders
• Law Firm: Appleby
• Author: Mr Timothy Faries and Jason Green

Despite the disruption and uncertainty caused by the COVID-19 pandemic, Appleby continues to advise on cross-border solutions to meet the ever-changing needs of our corporate and ultra-high net worth clients who use global financial centres like Bermuda to structure their affairs.

The island's enviable reputation is undeniable, and we continue to lead in the formation, management and administration of innovative solutions for our commercial and long-term insurance sectors, cross-border commercial transactions, fund administration, asset management, private equity, private wealth management and, most recently, the digital asset business sector.

From our regulated platforms in Bermuda, legal advisers and licensed service providers establish various structures that include exempted companies, segregated accounts companies, partnerships, trusts and private trust companies that are used for a variety of purposes and are also offered by many of our competing financial centres.

Despite Bermuda not having a foundation law, our Bermuda-based team within Appleby Global Services continues to advise, manage client relationships, assist with the establishment and daily administration of foundations ' and foundation companies ' using our network of international offices in the Cayman Islands, Isle of Man, Jersey, Seychelles and Mauritius.

A foundation is a hybrid of a trust and a company. Like a company, it is incorporated and becomes an entity with its own separate legal personality, capable of exercising all the functions of a body corporate. However, in contrast to a company, a foundation does not have directors, shareholders or shares but instead acts through a foundation council that will administer the assets of the foundation and carry out its objects.

Once assets are settled into a foundation by a founder, the assets belong to the foundation and are used to further the objects of the foundation which may be a specific purpose(s), for the benefit of a person or a class of named beneficiaries, in perpetuity. In contrast with a trust, where a trust's assets are legally owned by a trustee, all of a foundation's assets belong to the foundation.

Foundations have a variety of key features.

Charter: a charter is similar to a company's memorandum of association as it must contain certain basic information about the foundation including the name of the foundation, its lawful objects and information regarding the dissolution, winding-up and term of the foundation.

Regulati...