Foundations

The foundation is the legal form which is used most frequently in the Principality of Liechtenstein.

The possible goals of a foundation are:

• successor ownership regulation,
• the financial securing of family members or other close persons, e.g. through maintenance payments,
• functioning as a holding company to secure the continued existence of a company,
• perpetuation of the the life’s work of the founder (e.g. art collections),
• non-profitmaking purposes.
• A foundation is not permitted to undertake commercial activities as such (trading operations for instance).

The foundation is based on the dedication of assets to a specific cause in favour of certain or identifiable beneficiaries as determined by the founder. The special purpose fund, which is given the status of a legal entity in this way, ceases to be part of the private assets of the founder and forms the assets of the foundation. 

Along with a foundation, which is recorded in the Public Register, the law also allows in some cases the form of the deposited foundation, as it is termed. In a deposited foundation, which is often comprised of pure and mixed family foundations, the statutes and the formation deed but not the bylaw with the names of the beneficiaries - are to be deposited at the Public Register. These documents cannot be accessed by third parties. 

A foundation does not have any members, proprietors or owners. Subsequent to the establishment of the foundation, the founder only enjoys the rights that he has reserved for himself in the statutes and bylaws. The founder often reserves the right to change the statutes and bylaws, especially the rules pertaining to the beneficiaries. 

Those who benefit from foundations are known as the beneficiaries, whereby payments may also be linked to terms or conditions imposed by the founder. The beneficiaries are designated by the founder, usually in a special bylaw. The founder can also name himself as a beneficiary. 

A foundation is administered by a board of trustees which consists of one or more members. The members of the board of trustees represent the foundation individually or collectively. The board of trustees carries out the will of the founder as stated in the statutes and bylaws. It therefore has a serving function rather than a decision-making function. 

The founder can also grant the board of trustees discretionary powers in carrying out the will of the founder, e.g., in making payments to beneficiaries (discretionary foundation). The basis for exercising this absolute discretion is always the will of the founder as recorded in the statutes and bylaws. 

Other bodies such as an advisory board, a curatory body or a protector can be appointed by the founder to assist and support but also supervise the board of trustees in making payments to beneficiaries. 

A foundation is abrogated by law and therefore terminated if its object has become unattainable, particularly if it is no longer able to fulfil its tasks due to a lack of sufficient assets. This is always the case if all the assets of the foundation are paid out to the beneficiaries and therefore exhausted. 

The option for dissolution at any time can also be included in the statutes by the founder. 

The minimum statutory capital for a foundation is CHF 30,000.- 

A foundation is not usually required to keep accounting records but the preparation of an annual list of assets is recommended.