KNOWLEDGE|
(1) |
Separate legal personality:
Unlike a trust, a Cayman Foundation is itself a legal person and will transact with third parties in its own right, rather than through the trustee of a trust.
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(2) |
Purposes:
Cayman Foundations may be formed for charitable or non-charitable purposes. Clients from common law jurisdictions frequently use foundation companies to hold higher-risk assets such as shares in family businesses and as part of family office and private trust company (PTC) structures.
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(3) |
Founder:
A foundation company’s constitution can give any rights, powers or duties to its founder. Those rights, powers or duties includes:
(a) Appointing or removing the supervisors; (b) Appointing or removing the directors; (c) Supervision of the management and operations; (d) Adding or removing beneficiaries; (e) Making distributions; (f) Enforcement of duties; (g) Calling of and attendance at the general meetings; (h) Altering the constitution; |
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(4) |
Board of Directors:
The daily management of a foundation company, including the investment of the foundation company’s assets which is conducted by its board of directors.
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(5) |
Supervisor:
A foundation company does not need to have a member or shareholder but it must have a supervisor. The supervisor may also be a director, although this would weaken the structure from an asset protection perspective if there is no separation of roles. Subject to any greater role provided by the constitution, a supervisor’s main function is to supervise the board of directors’ management of the foundation company.
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(6) |
Beneficiaries:
Cayman Foundations may have beneficiaries. Unless otherwise specified the beneficiaries will not have standing against the Cayman Foundation. Duties are owed only to the Foundation Company itself as opposed to beneficiaries, and rights can be enforced against only the company and not the directors.
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(7) |
Flexibility:
the constitution of a Cayman Foundation can be supplemented by “Bylaws” which are not filed with the Registrar of Companies and can therefore remain private, affording the Cayman Foundation a degree of privacy in its operations coupled with further flexibility to set its own rules in relation to its structure and management.
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(8) |
Trust legislation applies:
certain provisions of the Cayman Islands’ Trust Act are extended to apply to Cayman Foundations, including section 48 of the Trusts Act which allows fiduciaries to apply for the directions of the Cayman Court. This is a remedy which can be useful to protect fiduciaries when making significant decisions, for example when making a major distribution or undertaking.
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(1) |
Philanthropic purposes; |
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(2) |
An alternative to a trust for private wealth, charitable and commercial purposes; |
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(3) |
Private Trust Company (PTC); |
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(4) |
General partners of a partnership in an investment fund structure. |
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Disclaimer All information in this article is only for the purpose of information sharing, instead of professional suggestion. Kaizen will not assume any responsibility for loss or damage. |
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