What is a Foundation Company?

A Foundation company, also known simply as a Foundation, is a legal entity that combines aspects of both a company and a trust. It is commonly used in civil law jurisdictions and serves similar purposes to a trust but with some distinct features:

1. Purpose: Foundations are typically established to achieve specific purposes, which can include charitable, philanthropic, or private wealth management objectives.
2. Structure: Unlike a company, a Foundation does not have shareholders. Instead, it has a founder (or founders) who endows the Foundation with assets. These assets are managed by a Foundation council or board, which acts in accordance with the Foundation’s charter and regulations.
3. Beneficiaries: Foundations may have beneficiaries who benefit from the Foundation’s assets and activities, similar to beneficiaries of a trust. The Foundation’s purpose and beneficiaries are defined in its founding documents.
4. Legal Entity: A Foundation is a separate legal entity from its founders and beneficiaries, which means it can enter into contracts, own property, and conduct business in its own name.
5. Governance: Foundations are governed by their founding documents (charter or statutes) and often have a council or board of directors responsible for managing the Foundation’s affairs. They must also comply with legal requirements and regulations in the jurisdiction where they are established.
6. Taxation: Tax treatment of Foundations varies by jurisdiction. Some jurisdictions offer favorable tax benefits for Foundations, especially those established for charitable or educational purposes.

Foundations are commonly used in jurisdictions such as Liechtenstein, Panama, and various civil law countries in Europe and Latin America. They provide a flexible and stable legal structure for wealth preservation, philanthropy, and other long-term objectives.

For more information, please refer to the Trust & Foundations FAQ & Guides below.