In 2009 Jersey became the first Crown Dependency to offer Foundations.
Whilst similar in design to Foundations in other jurisdictions, the Jersey structure has mandatory requirements for one member on its council to be licensed as a Qualified Person by the Jersey Financial Services Commission and for the Foundation to have a ‘guardian’, who has a duty to supervise the council’s activities. In addition, the flexibility of the Jersey structure allows it to be tailored to suit a broad range of needs.
Whilst Jersey is first and foremost a trust jurisdiction, with many years of experience in the administration of trust structures, there are many countries in which the trust is an unfamiliar concept. Consequently the ability to create a more familiar vehicle such as the Foundation will be of interest to those from areas of the world where the trust is not well understood, and will likely encourage more HNWIs to do business with Jersey.
Foundations have a long history in continental Europe. In medieval times they were used for charitable or religious purposes. They are now commonly used for wealth management, and residents of jurisdictions like the Middle and Far East are more familiar with foundations than with trusts, which do not exist in their legal systems. Indeed, Mourant du Feu and Jeune, one of Jersey’s leading law firms, says that clients and advisers from many civil law jurisdictions, such as China, Russia and some continental European jurisdictions prefer Foundations because they offer familiarity, transparency and flexibility, the firm says.
In November 2009, Mourant announced that it had completed a Foundations related “hat-trick.” Having advised on the first Jersey Foundation for private beneficiaries and the first Jersey Foundation for charitable purposes, it also advised Royal Bank of Canada on the first continuance of a foreign foundation to be registered in Jersey and to continue its life as a Jersey Foundation.
The continuance came from Liechtenstein and involved a team of Mourant du Feu & Jeune advisers assisting in the flow of information between the Jersey and Liechtenstein registrars.
Giles Corbin, head of Mourant du Feu & Jeune’s Trusts practice, which advises on the structuring and drafting of Foundations, said:
“A Foundation is a new concept for Jersey and has been welcomed as a positive step in affirming the Island as a leading jurisdiction for private wealth management business. Jersey is fast becoming a jurisdiction of choice for the structuring, drafting and administration of Foundations because of its OECD white-list status and the expertise of its advisers and administrators.”
Since Jersey’s Foundations law came into force in July, making it the first Crown Dependency to offer Foundations, Mourant du Feu & Jeune has advised on over half of all Jersey Foundations that have been created.
Alan Binnington, Private Client Director at RBC Wealth Management, noted that whilst Jersey is first and foremost a trust jurisdiction, with many years of experience in the administration of trust structures, there are many countries in which the trust is an unfamiliar concept, the ability to create a more familiar vehicle such as the Foundation will be of interest to clients from areas of the world.
“Unlike a trust, which is essentially a relationship between the trustees and the beneficiaries, rather than a legal entity, the Foundation has a separate corporate personality, similar to a company, and this may be more attractive to clients who are uncomfortable with the trust concept," he said.
Jersey is keen to ensure that its Foundations are subject to the same regulatory regime as trusts, notes Binnington. “The new law accordingly contains a requirement that one of the members of the Council of the Foundation is a regulated person. In addition, whilst beneficiaries will not have any rights to enforce the council’s duties, there is a requirement that each foundation has a guardian, who will hold the council members to account,” he continued.
The text of the Foundations (Jersey) Law 2009 was released for public viewing following the Privy Council’s approval of the text in mid-June 2009. A consultation paper setting out the proposed registration and process fees for foundations was also issued by Jersey’s Financial Services Commission.
Broad agreement from industry has been obtained via the Foundations Working Group that fees for foundations should track, where similarities exist, those currently set for Jersey companies.
In order to be consistent, amendments have been proposed to other Registry Fees Notices, with respect to searches, to bring them into line with the proposed search fees for foundations.
Welcoming the Privy Council’s decision in a prior statement, Economic Development Minister Alan Mclean said: “More than ever, in these difficult times, we need to do what we can to support and diversify the island’s Finance Industry. I am pleased that Jersey is the first of the Crown Dependencies to bring in Foundations, and we hope this kind of innovation will help to protect and develop the industry that pays for more than half of Jersey’s essential services.”
The Foundations (Jersey) Law 2009, entered into force on July 17, 2009.
Guernsey's 10-Year-Old Trusts Law 'Ahead Of Its Time' Friday 23/3/2018Guernsey's trusts law, which came into force 10 years ago, has been described as "ahead of its time" and "a reminder of the jurisdiction's ability to innovate and adapt to changing market conditions" by leading trust and fiduciary lawyer Russell Clark.