We are experienced in the formation of Foundation Companies, a new type of Cayman Islands corporate vehicle for structuring private and commercial wealth. Foundation companies (introduced under the Foundation Companies Law (2017 Revision) function like a civil law foundation, but within the ambit of Cayman Islands company law, which makes them a flexible and innovative, yet familiar structure for multiple applications.
Characteristics of foundation companies include: Body corporate with limited liability and separate legal personality which can sue and hold assets in its own name (rather than through a trustee); unlike other corporate vehicles, there is no need for a foundation company to have members – instead, a supervisor may be appointed to attend and vote at general meetings; unlike a trust, officers’ duties are owed to the foundation company and not to beneficiaries and rights can only be enforced against the company and not its directors or officers; the default position is that beneficiaries have no rights save for those provided for in the constitution; not subject to any corporate, income, withholding or capital gains taxes within the Cayman Islands; considerable flexibility regarding the objects, management, officers, ownership and dispositive arrangements; the constitution can be “entrenched” meaning that the founder has the power to curtail future amendments to the constitution; in comparison to a trust, certainty regarding the validity and existence of the entity and due to the corporate structure, decreased risk of recognition in foreign courts.
Possible applications of foundation companies include:
• As a private wealth solution in place of a trust.
• Holding shares of private trust companies or in STAR trust structures.
• Use in blockchain structures (including on initial coin offerings).
• Conduct of family business for business succession planning or asset protection.
• Funding of philanthropic projects or non-profit making enterprises.
• Holding high-risk assets or less diversified portfolios.