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(Sep 08, 2008) On August 26, 2008, Liechtenstein promulgated the Act Reforming the Persons and Companies Act, which introduces a new Act on Foundations. The Reform Act (Gesetz über die Abänderung des Personen-und Gesellschaftsrechtes, June 26, 2008, 220 LIECHTENSTEINISCHES LANDESGESETZBLATT (LGBL) (Aug. 26, 2008), available at http://www.llv.li/pdf-llv-rdr-2008220.doc.pdf) will become effective on April 1, 2009. However, many existing foundations will continue to be governed to a considerable extent by the former provisions (Personen- und Gesellschaftsrecht (PRG), Jan. 20, 1926, LGBl 1926/4, as last amended by Gesetz, Dec. 13, 2006, LGBl no. 2006/38, arts. 552 -570).
In Liechtenstein, foundations are one of the company forms that are regulated by the Persons and Companies Act. Liechtenstein foundations are unusual in that they exist not only for charitable purposes but also for family purposes, such as administering an estate, supporting family members, or simply managing private assets (H. Bösch, LIECHTENSTEINISCHES STIFTUNGSRECHT 2 (Bern, 2005)). Before the 2008 reform, foundations were also governed by the legal provisions on trusts (PRG art. 932 a, §§1 – 170). The secrecy afforded by appointing a trustee to hold a foundation in trust for an undisclosed settlor and equally undisclosed beneficiaries made Liechtenstein foundations a popular device for tax avoidance or evasion by foreign investors (see STAFF OF SENATE PERMANENT SUBCOMMITTEE ON INVESTIGATIONS, 110TH Congress, REPORT ON TAX HAVEN BANKS AND U. S. TAX COMPLIANCE (July 17, 2008), available at http://hsgac.senate.gov/public/_files/071708PSIReport.pdf).
The new Act on Foundations (PGR art. 552, §§1-41) that was introduced through the 2008 Reform Act aims at creating a modern law to improve transparency, increase oversight, and forestall abuse (Bericht und Antrag No. 13/2008, at 5, http://www.llv.li/pdf-llv-rfl-justiz-bua_013_2008.pdf (last visited Sept. 5, 2008)). By deleting the formerly existing analogous application of the law of trust and by instead spelling out the relationships between the involved parties, e.g., the information rights of beneficiaries, the Act succeeds in providing more predictability for the parties. The Act also strengthens the oversight over charitable foundations.
Despite these reforms, the Act still protects the privacy of private investors. Now, as before the reform, the Act permits family foundations to avoid the public register by merely depositing with the registrar certain information that is not made public. The required information includes the name and purpose of the foundation and data on its managers and representatives (PGR art. 552 §20). The name of the founder and the names of the beneficiaries need not be deposited, but they must be contained in the articles of incorporation. Moreover, now as before the reform, trustees may appear as the representative of the foundation (PGR art. 552 §16).
It appears to be the policy of Liechtenstein to override the privacy protections of foundations to provide mutual assistance in criminal matters to foreign countries (Auslandskunden, DIE WELT, Aug. 30, 2008, Lexis, News Library, Zeitng File). However, assistance will not be granted for fiscal matters that do not involve an extraditable offense (Gesetz über die internationale Rechtshilfe in Strafsachen, Sept. 15, 2000, 215 LGBL (Nov. 6, 2000), available at http://www.gesetze.li/Seite1.jsp?LGBl=2000215.xml&Searchstring=Rechtshilfe&
showLGBl=true, arts. 51 and 15 ¶2).
- Author: Edith Palmer More by this author
- Topic: Associations More on this topic
- Jurisdiction: Liechtenstein More about this jurisdiction
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Last updated: 09/08/2008