In 2008, Liechtenstein's parliament approved reform of the jurisdiction's foundations law which, the government claims, adhere to international standards while continuing to protect privacy.
The new foundation law was due to enter into force on April 1, 2009. The reform is part of the government's ongoing modernization of Liechtenstein company structures which has included revisions to the law governing associations and cooperative societies, and the introduction of the European Company and the European Cooperative Society. As announced by the government, a revision of trust law will follow.
"Liechtenstein’s total revision of foundation law is based on the contemporary demands and needs of the financial centre's’s clients," the government announced in mid-2008.
"The balanced overall concept of the reform...meets international standards without deviating from the Liechtenstein legal tradition, which has always considered the protection of privacy to be a valuable good," the government said.
"The requirements of market participants were taken into account, as well as the need to create a legal foundation that can be measured in accordance with scientific criteria and international standards, as the government stipulated in its guideline at the beginning of the reform process," the government stated.
The new foundation law is a self-contained body of law with a new systematic structure differentiating private-use from charitable foundations and strengthening the responsibility of the founder. The protection of the foundation assets is subject to new rules, as are the supervision of foundations and foundation governance. The non-transferability of the founders’ rights as a further new key feature entails greater legal certainty and clarity.
The “deposited” foundation, which need not be registered in the Public Registry and has thus been an object of criticism, has been retained. The government justifies the retention of this type of foundation by noting that it serves to protect the confidentiality of the founder if he wants to engage in long-term asset planning in the interest of his family. The exemption from the registration requirement only applies to private-use foundations, however, not to commercially operating foundations, which as a rule are limited to the mere management of assets.
The government also asserts that confidentiality in the foundation system is not peculiar to Liechtenstein. In Austria, where foundation law is closely based on Liechtenstein law, foundations must be entered in the corporate registry, but since a professional trustee acts on behalf of the founder when establishing the foundation and the name of the foundation may be freely chosen, the beneficial founder can remain in the background.
The government also points out that in Switzerland, with which the old Liechtenstein foundation law had close links, family foundations are exempt from entry in the commercial registry. Meanwhile, in Germany, only a limited publicity of foundations applies, which as a rule does not extend to the person of the founder.
The Principality argues that a switch to a general registration requirement for all foundations, including private-use foundations without a commercial purpose, would significantly diminish the attractiveness of the Liechtenstein foundation in an international comparison.
The government's so-called 'Futuro' project, which sets out the future vision of Liechtenstein's economy, calls foundations the “heart of the financial centre." The government believes that the new system of foundation supervision will serve as a model internationally. The 'Futuro' project also harbours plans to make Liechtenstein into a location for trusts, by harmonizing them with Anglo-Saxon trust structures.
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