What are Jersey Foundations?
Jersey foundations have some of the features of both corporations and of trusts. They have their own legal personality, hold assets in their name, enter into contracts with third parties and can sue and be sued in their own names. They do not have any shareholders and they hold assets for the benefit of the beneficiaries.
The Foundation was a civil law concept and historically only existed in jurisdictions where the concept of equity was alien. However, following the introduction of The Foundations (Jersey) Law 2009 foundations can now be established in Jersey – the only OECD white-listed international finance centre to offer foundations. Foundations established in certain foreign jurisdictions are also able to migrate to Jersey.
How are Jersey Foundations Established?
Incorporation of a Jersey Foundation requires a Charter and it will also normally have separate Regulations. The Charter is a Public document and is submitted to the Jersey authorities by a Qualified Person (who must be appropriately registered under the Financial Services (Jersey) Law 1998 to carry out services of this nature); the Regulations are private. As a minimum, the Charter details the name and objects of the Foundation and what will happen to any assets of the Foundation if it is wound up; the objects may be to carry out a specific purpose or to benefit a person or class of persons to be determined by the Regulations and it is sufficient to record that the assets will be disposed as specified in the Regulations. The Regulations will set out how the assets are to be administered and how the objects set out in the Charter are to be achieved. The Regulations must also contain provisions for the appointment of the Council and provide for the appointment of a Guardian. The Council is responsible for the management of the assets of the Foundation and must include a Qualified Person (as detailed above). The Guardian carries out a monitoring function to ensure that the Council properly carries out its functions, and the Qualified Person or the Founder of the Foundation may also act as the Guardian. Except as specifically stated in the Charter or Regulations, the Beneficiaries have no right to information concerning the Foundation.
Unlike a trust, a Foundation can be incorporated without an endowment (or initial settled funds) but (like a trust) can have an unlimited period of existence. Jersey foundations can hold property in any location, with the exception of Jersey real estate, and a Jersey foundation cannot directly carry on trading activities which is not incidental to the attainment of its objects (although it can hold shares in an underlying trading company).