A Jersey foundation is an entirely new Jersey entity designed to blend attractive features of both Jersey companies and Jersey trusts. In many ways it can be regarded as an incorporated trust. It will have its own legal personality, as evidenced by a registered number with the Jersey Financial Services Commission (JFSC), and will be able to own property and sue and be sued in its own name. Its constitutional documents will consist of a public charter and private regulations.
The charter will be lodged with the registrar of companies in Jersey and contain certain basic items of information as required by the Foundations (Jersey) Law 2009. The privately kept regulations will typically identify those who are to benefit under the foundation, establish the foundation’s council (which is to administer the foundation’s assets and to carry out its objects), and identify the foundation’s guardian (whose duty it will be to ensure that the council carries out its functions). The foundation may, and often does, have infinite duration.
Foundations can be established on a same day “fast track” basis, like Jersey companies.
A key feature of the law is the flexibility it allows as to the precise terms of each foundation. Although the law dictates matters which must be included in the charter and regulations, it leaves it entirely to the founder to decide the precise manner in which such matters are dealt with. By way of example, the law requires that the regulations provide for the appointment, retirement and removal of council members, but does not dictate who is to have powers to appoint and remove members or the manner in which a retirement should take place. The founder may decide these points.
An application for the incorporation of a foundation in Jersey may only be made by a “qualified person”, being a person registered under the Financial Services (Jersey) Law 1998 to conduct financial services business of this type.
The application must be accompanied by a copy of the proposed charter and a certificate signed by the qualified person confirming (among other things):
- that a qualified person will become a member of the council on incorporation;
- that the qualified person making the application is in possession of regulations approved by both the founder and the qualified person;
- the identity of the original member or members of the council; and
- the identity of the guardian.
A foundation does not need to have any initial property to come into existence.
The objective behind the requirements that only a qualified person may incorporate a foundation and that the council members must always include a qualified person, is to ensure that Jersey’s strict regulations to prevent money laundering are observed from the outset and on a continuing basis.
The founder is the person (who may be an individual or a body corporate) who instructs a qualified person to apply for the incorporation of the foundation, regardless of whether that person donates any assets to the foundation.
The founder may be both a member of the council and the guardian, so a direct and high degree of control is possible.
A person who donates assets to the foundation after incorporation will not be regarded as a founder, unless the regulations of the foundation provide otherwise.
The founder may retain rights under the foundation and may assign those rights to any other person at any time or by testamentary instrument.
The identity of the founder does not need to be disclosed on the foundation’s publicly available charter.
The foundation’s objects
The objects of the foundation may be to benefit a person or a class of persons (typically family members with discretionary interests); to carry out specified charitable works; to carry out non-charitable purposes; or all of the above, concurrently or consecutively.
The objects must be specified in the charter, save that in the case of the objects being to benefit a person or class of persons, the charter may simply provide that the person or class of persons may be determined in accordance with the privately kept regulations.
Subject to the charter or regulations being drafted to the contrary, a beneficiary under a foundation:
- has no interest in the foundation’s assets;
- is not owed any fiduciary duty by the foundation or by the council, the guardian or any other person appointed under the regulations of the foundation; and
- has no right to any information about the foundation.
Each foundation will have an executive body (like the board of directors of a company), known as the council, made up of one or more members whose collective role is to administer the
foundation’s assets and to carry out the foundation’s objects.
Total flexibility exists as to the residency of the membership and organization of the council, save that the council must include at least one JFSC-licensed Jersey-qualified member.
It is permissible for the charter or regulations to limit the liability of the council members except in the case of a member’s fraud, wilful misconduct or gross negligence.
A Jersey foundation must have a guardian, whose duty it is to take such steps as are reasonable in all the circumstances to ensure that the council carries out its functions. There are no residency restrictions on the guardian, who can be a natural or legal person or committee of persons; or indeed another foundation! The founder or the qualified person, but no other council member, may be the guardian.
Where an action of the council is not permitted by the charter or regulations, the guardian will have power to sanction or authorize such action of the council unless the regulations provide otherwise.
Giles Corbin is a partner, and head of the Jersey trusts team, at Mourant Ozannes
22 Grenville Street
Jersey JE4 8PX
Tel: +44 1534 676 000
Fax: +44 1534 676 333