An Introduction To Jersey Foundations | Parslows Trust And Foundation Lawyers Jersey
A Jersey foundation (like a company but unlike a trust) comes into existence following the completion of an incorporation process, and an entry made by the Jersey Companies Registrar in Jersey’s register of foundations. This a matter of public record and conclusive evidence that a foundation has been incorporated and that the requirements of the Foundations (Jersey) Law 2009 in that regard have been complied with.
A Jersey Foundation has its own separate legal personality and is therefore able to hold assets, contract with third parties and sue and be sued in its own name and capacity. However, unlike a company it has no shareholders. It is therefore an orphan vehicle.
A Jersey Foundation can have an infinite duration. It is not subject to the ultra vires doctrine and so has unlimited capacity and is therefore able to carry out all the functions a corporate body could, save that it cannot directly acquire, hold or dispose of immovable property in Jersey nor can it directly engage in commercial trading other than that which is incidental to the attainment of its objects.
A foundation has a council, which is similar to the board of directors of a company. The council must have a qualified member (a person licensed by Jersey’s financial services regulator). The function of the council is to administer the foundation’s assets and to carry out its objects. The identity of the council members, other than the qualified member, is not a matter of public record.
The founder is the person who instructs the qualified person to apply for the incorporation of a foundation. The Foundations (Jersey) Law 2009 provides that the endowment of a foundation by a person will not make that person a founder or confer founder’s rights upon that person, unless the regulations of the foundation in question provide otherwise.
The founder can be given such rights (if any) as are provided by the charter and regulations and, if permitted by the charter or regulations, those rights can be assigned to other persons. Where the current holder of such rights (including the founder) dies or ceases to exist, the rights will vest in the guardian unless the charter or regulations provide otherwise. There are no restrictions on the rights a founder can be given and if required these could be assigned to a committee that would act like a supervisory board.
All Jersey foundations are required to have a guardian. The guardian cannot be a member of the council unless also a founder or the qualified member of the council. The guardian’s duty is to take such steps as are reasonable in all the circumstances to ensure that the council carries out its functions. The guardian could comprise one or more persons or could be a corporate body. The identity of the guardian is not a matter of public record.
A foundation may, but need not, have beneficiaries and may be established solely for a particular purpose or particular purposes. For example, a Jersey Foundation could be set up purely to hold the shares in a holding company. The objects of the foundation can be charitable or non-charitable or both. Moreover, the objects can be to benefit a person or class of persons or to carry out any specified purpose, or a combination.
Where there are beneficiaries of the foundation, they have no interest in the assets of the foundation and are not owed any fiduciary or analogous duty by the foundation or by the members of the council, the guardian or any other person appointed under the regulations.
However, if a beneficiary becomes entitled to receive a benefit from the foundation but does not receive the same, the beneficiary can apply to the Royal Court of Jersey for the foundation to be ordered to provide the benefit.
Unless required by the charter or regulations, a foundation is not obliged to provide any beneficiary with information relating to the administration, assets or the carrying out of the objects of the foundation.
The constitutional documents of a foundation comprise its charter and regulations (every foundation must have regulations, unless all of its governing provisions are contained in its charter). The Regulations are a private document and do not have to be filed with the Jersey Companies Registrar.
The Foundations (Jersey) Law 2009 vests power in the Royal Court to amend the charter and regulations and to give directions regarding the foundation (e.g. as to interpretation of its charter and regulations, the functions of its council, and the manner in which the council is required to carry out the foundation’s objects).
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The information and opinion expressed in this briefing does not purport to be definitive or comprehensive and are not intended to provide professional advice. For specific advice, please contact Parslows, We are not responsible for, and do not accept any responsibility or liability in connection with, the content of this document or any reliance upon it