The Liechtenstein parliament has approved a reform of the jurisdiction's foundations
law, which the government claims adhere to international standards while continuing
to protect privacy.
The new foundation law will enter into force on 1st April 2009 and is part
of the government's ongoing modernization of Liechtenstein company structures
which so far has included revision of the law governing associations and cooperative
societies, and the introduction of the European Company and the European Cooperative
Society.
As announced by the government, a revision of trust law will follow, the cornerstone
of which – as in the case of Liechtenstein foundations – was laid
in 1926 with the creation of the Law on Persons and Companies.
"Liechtenstein’s total revision of foundation law is based on the
contemporary demands and needs of the financial centre's’s clients,"
the government announced on 30th June.
"The balanced overall concept of the reform...meets international standards
without deviating from the Liechtenstein legal tradition, which has always considered
the protection of privacy to be a valuable good," the government said.
The main aim of the reform of foundation law was to harmonization with international
standards, but the changes were also carried with the popularity of the foundation
and its national economic significance to the Principality in mind.
"The requirements of market participants were taken into account, as well
as the need to create a legal foundation that can be measured in accordance
with scientific criteria and international standards, as the government stipulated
in its guideline at the beginning of the reform process," the government
stated.
The new foundation law is a self-contained body of law with a new systematic
structure differentiating private-use from charitable foundations and strengthening
the responsibility of the founder. The protection of the foundation assets is
subject to new rules, as are the supervision of foundations and foundation governance.
The non-transferability of the founders’ rights as a further new key feature
entails greater legal certainty and clarity.
Minister of Justice and Economic Affairs Klaus Tschütscher believes that
the new system of foundation supervision will serve as a model internationally.
The “deposited” foundation, which need not be registered in the
Public Registry and has thus been an object of criticism, has been retained.
The government justifies the retention of this type of foundation by noting
that it serves to protect the confidentiality of the founder if he wants to
engage in long-term asset planning in the interest of his family. The exemption
from the registration requirement only applies to private-use foundations, however,
not to commercially operating foundations, which as a rule are limited to the
mere management of assets.
The government also asserts that confidentiality in the foundation system is
not peculiar to Liechtenstein peculiarity. In Austria, whose foundation law
is closely based on Liechtenstein law, foundations must be entered in the corporate
registry, but since a professional trustee acts on behalf of the founder when
establishing the foundation and the name of the foundation may be freely chosen,
the beneficial founder can remain in the background.
The government also points out that in Switzerland, with which the old Liechtenstein
foundation law was closely linked, family foundations are exempt from entry
in the commercial registry. Meanwhile, in Germany, only a limited publicity
of foundations applies, which as a rule does not extend to the person of the
founder.
The Principality argues that a switch to a general registration requirement
for all foundations, including private-use foundations without a commercial
purpose, would significantly diminish the attractiveness of the Liechtenstein
foundation in an international comparison.
The so-called “Futuro” project launched by the government calls
foundations the “heart of the financial centre's" According to “Futuro,”
family foundations are increasingly being recognized as autonomized assets and
thereby constitute an instrument of succession planning that is sought worldwide.
In the future, the Liechtenstein professional trustee is no longer envisaged
as merely a broker and administrator of this structure, but rather – thanks
to his internationally recognized competence – will be seen as an important
advisor in personal contact with the founders.
“Futuro” also plans to make Liechtenstein into a location for
trusts, by harmonizing them with Anglo-Saxon trust structures.
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