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20/20
MONEY MATTERS
Jersey
Foundations
by Marcus Stone & Jane Struth,
PARTNER & ASSOCIATE,
– A VEHICLE FOR WEALTH MANAGEMENT
Ozannes Jersey.
On 23 October 2008, Jersey Finance Limited announced the Council who ensures that the Council carries out its
that the law to permit the establishment of foundations in functions. The Council will be accountable to the
Jersey had been approved by the States Assembly of guardian. The regulations of a foundation can give the
Jersey. The new law requires to be approved by the Privy guardian power to approve or disapprove any actions of
Council and if approved, will make Jersey the first British the Council. Unless the regulations of the foundations
Crown Dependency to establish foundations as a vehicle prohibit the same, the guardian can sanction any action
for wealth management. to be taken by the Council that is not permitted by the
charter or regulations of the foundation. Accordingly, the
Foundations have been in existence since medieval times founder of a foundation must carefully consider the extent
and were historically used for charitable and religious of the guardian’s powers.
purposes. However foundations have evolved and are
mainly used for wealth management purposes in civil law The charter of a foundation will be a public document but
jurisdictions such as Liechtenstein and Panama. The the regulations will remain private. It is, therefore, likely
introduction of foundations in Jersey is a positive step in that the majority of the information relating to the
continuing to market Jersey as a jurisdiction with many foundation will be contained in the regulations. In some
options for those looking to manage wealth. cases, for example where a foundation is used by a
charity, both the foundation charter and the regulations
A foundation will be incorporated like a company but the will be public documents.
difference between a foundation and a company is that a
foundation will not have any shareholders. The foundation The charter must contain information as to the object of a
will hold assets for the purposes set out in the foundation foundation, which could be to benefit a specific class of
charter and regulations. Every foundation’s charter and persons, or to carry out a specified purpose, or both. The
regulations will differ as they set out the specific purpose charter must state the names and addresses of the first
of the particular foundation. Council members. The charter must also provide what
happens to assets held by the foundation, on a winding up
The foundation will be governed by a foundation council of the foundation and the term of the foundation. The
(the “Council”). The Council will act in accordance with purposes of a foundation must be lawful and can be
the charter and regulations. The Council requires to have charitable or non charitable. The registrar of companies
at least one member who is qualified. A member will be may refuse to register a foundation if it is not satisfied that
considered qualified if they are a Jersey based finance the proposed objects are lawful. The assets held by a
professional regulated to carry on trust company business foundation can be invested and/or distributed to
by the Financial Services (Jersey) Law 1998. Any beneficiaries or used for a purpose and the foundation
member of a Council must be 18 years old. Members of a charter and regulations will specify what the assets are to
Council are to act in good faith and honesty with a view be used for. It should be noted that a foundation may not
to the best interests of the foundation. They must also directly acquire, hold or dispose of immoveable property in
exercise the care, diligence and skill that reasonably Jersey or engage in commercial trading that is not
prudent persons would exercise in similar circumstances. incidental to the realisation of the objects of the foundation.
Council members cannot be relieved from liability arising
from the fraud of the member, wilful misconduct or gross The regulations of a foundation must establish the Council
negligence. to carry out the objects of the foundation and administer
the assets of the foundation. It must also provide for the
Foundations must also have a guardian as a member of appointment, retirement, removal and remuneration (if
20/20 sixty two
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