Jersey's Foundations Law Enters Into Force

by Robert Lee, Tax-News.com, London

21 July 2009

The Foundations (Jersey) Law 2009, entered into force on July 17, 2009. Accordingly, interested parties are now able to establish foundations in Jersey.

In a statement, Alan Binnington, Private Client Director at RBC Wealth Management, noted that whilst Jersey is first and foremost a trust jurisdiction, with many years of experience in the administration of trust structures, there are many countries in which the trust is an unfamiliar concept. Consequently the ability to create a more familiar vehicle such as the Foundation will be of interest to clients from areas of the world where the trust is not well understood, and will likely encourage more HNWIs to do business with Jersey, he noted.

Foundations have a long history in continental Europe. In medieval times they were used for charitable or religious purposes. They are now commonly used for wealth management, and residents of jurisdictions like the Middle and Far East are more familiar with foundations than with trusts, which do not exist in their legal systems.

Commenting on the detail of the new legislation, Binnington said:

“Unlike a trust, which is essentially a relationship between the trustees and the beneficiaries, rather than a legal entity, the Foundation has a separate corporate personality, similar to a company, and this may be more attractive to clients who are uncomfortable with the trust concept. “

Jersey is keen to ensure that its Foundations are subject to the same regulatory regime as trusts, notes Binnington. “The new law accordingly contains a requirement that one of the members of the Council of the Foundation is a regulated person. In addition, whilst beneficiaries will not have any rights to enforce the council’s duties, there is a requirement that each foundation has a guardian, who will hold the council members to account,” he continued.

Commenting on the use of foundations in other jurisdictions, Alan Binnington noted: “The new law enabling the migration of a Foundation from another jurisdiction to Jersey will be of interest to those with existing structures who wish to move their foundation to a jurisdiction that is on the OECD’s ‘white-list’. The new law is an example of Jersey’s commitment to being at the forefront of wealth structuring, whilst at the same time ensuring that any new structures are subject to its full regulatory regime.”

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