A foundation is a nonprofit organization which is managed by the council members for a specific purpose and/or for the benefit of its beneficiaries. They are hybrid in nature, containing features of the corporation (legal personality) and the trust (created for a purpose or benefit).

Unlike a company, foundations have no shareholders, though they may have a board, an assembly, and voting members. Unlike a Trust, a Foundation has a legal personality on its own.

A foundation may hold assets in its own name for the purposes set out in its constitutive documents, and its administration and operation are carried out by the Council Members in accordance with the Foundation statutes or articles of association rather than fiduciary principles.

The Seychelles Foundations Act expressly provides for the Founder to reserve certain functions and rights to himself or another person such as directing investments, appointment and removal of protectors, councillors or beneficiaries and more. As a separate legal entity, this would not expose the Foundation to a “sham” argument or debate over “certainty” as it may with similar reserved powers to the settlor of a trust.

A Seychelles Foundation must have a minimum of $1 initial assets. Assets may originate from any lawful source (from the Founder or any third party) and consist of present or future assets of any nature.

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The Bahamas is one of the industry veterans when it comes to offshore financial services. Since the 30s and 40s, the jurisdiction has been attracting foreign wealth due to its absence of taxation and its confidentiality policies. Although it lost popularity after its independence from Great Britain back in 1973, in favor of Cayman, BVI or Bermuda, it is still one of the go-to jurisdictions in terms of offshore corporate, trust and banking services.

Last December 2018, the Bahamas implemented several legislative changes to comply with requirements set by the EU and the OECD, by enacting the Removal of Preferential Exemptions Act; Commercial Entities (Substance Requirements) Act; the Register of Beneficial Ownership Act; and the Multinational Entities Financial Reporting Act

The Removal of Preferential Exemptions Act abolishes ring-fencing features provided by the International Business Companies Act; the Exempted Limited Partnership Act; the Investment Condominium Act, 2014; and the Executive Entities Act, 2011 - which provided companies incorporated by non-residents to enjoy certain exemptions if they were operated completely outside of the Bahamas.

Because the Bahamas doesn’t levy corporate taxes the main impact for IBCs or Limited Partnerships doing business outside of the Bahamas is that now they will be required to obtain a business license and pay a certain annual fee, as well as stamp duty on certain instruments. Limited duration companies under the International Business Act have been abolished.

Companies incorporated on or before December 31, 2018, are grandfathered for three years, until December 31, 2021.

Furthermore, international banking, insurance, and securities/capital markets sectors will be able to offer services to residents in the Bahamas and in local currency once certain regulatory approvals are in place. On the other hand, local commercial banks will be able to provide services to international clients.

Bahamian International Business Companies are commonly used as holding companies, to hold bank accounts, financial and commercial titles, international trading, own movable and immovable properties, asset protection and estate and inheritance security, among others.

Learn more about incorporating in the Bahamas:

• Bahamas IBC Legal & Tax Report

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Nevis foundations are formed under the Multiform Foundation Ordinance.

At the time of registering the Multiform foundation one can elect how the foundation shall be treated from a legal perspective - as a company, as an LLC, as a trust, or as an ordinary foundation. The status of the Foundation can be changed during its lifetime. Generally, most foundations are established as ordinary foundations.

Ordinary Foundations are orphan vehicles - a hybrid between a Trust and a Company.

Like a trust, an ordinary foundation is generally established to reflect the wishes of the Founder (like the Settlor of a Trust) via an endowment of assets, which are managed by the council or management board (like a Trustee of a Trust) for a specific purpose and/or for the benefit of its beneficiaries.

Like a company, a foundation is a legal entity with legal personality (as opposed to a Trust which is a deed and legal arrangement between the settlor and the trustee, but it is not a legal entity, and it does not have legal personality). Unlike a company, foundations have no shareholders or owners.

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Foundations are hybrid in nature, containing features of the corporation (legal personality) and the trust (created for a purpose or benefit). Unlike a company, foundations have no shareholders, though they have legal personality and have a board (council members). Unlike a Trust, a Foundation has a legal personality on its own.

A foundation may hold assets in its own name for the purposes set out in its constitutive documents, and its administration and operation are carried out by the Council Members in accordance with the Foundation charter or regulations of association rather than fiduciary principles.

To summarize, a private interest foundation is an orphan entity with the following characteristics

• No owners/shareholders
• It has legal personality
• It can be solely established to carry out a purpose and not for the benefit of persons.
• Provides for a perpetuity of purpose.

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Foundation companies are legal entities formed under the Foundation Companies Act, 2017, and may be incorporated with or without share capital.

Generally, foundation companies are formed without share capital and limited by guarantee (without issuing shares).

A limited by guarantee foundation company may have members (who agree to guarantee the debts of the company at the time of liquidation up to a certain amount, generally USD 1). However, there is no obligation to have members (if at least one supervisor is appointed). The members shall not have any rights to dividends or profits of the foundation but shall have a vote in the general meeting of the foundation. Details of the members, if any, are not shown in any public register.

The management of the Foundation rests in the board of directors, whose details are available in the public register upon payment of a fee ($60)

The management of the Foundation is supervised by the Board of Supervisors, who also have voting rights in the general meetings of the Foundation. The Foundation shall have at least one supervisor or one member. Details of the supervisors are not shown in the public register.

The Foundation Companies Act, 2017 of the Cayman Islands as well as provisions of the Companies Act of the Cayman Islands applicable to Foundation companies provide that a Foundation Company must be managed by a board of directors, who may be individuals or corporate bodies.

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