Offshore Foundations

Offshore Foundations | How & Why To Have One

Offshore foundations: What is it, how is it different, benefits, founder, features, how to setup and cost

Offshore foundations: What is a Foundation

Offshore foundations: Through a special act in July 2012 ‘Foundations’came into being in the offshore jurisdiction of Mauritius. This fulfilled a longstanding need of offshore investors.

Foundations have a special significance especially in Mauritius because of its Tax Treaties with many developed economies.

A Foundation can be loosely described as a legal entity with no shareholders yet with its own legal status like a company. The foundation’s ownership of its assets is meant to achieve a certain specific long-term purpose.

A Founder transfers his assets to the Foundation by means of endowment and thus it is formed.

The term ‘Foundation’ in general, is also used for describing a structure or an entity that is legally distinct and formed for a special purpose.

Foundations as legal structures may acquire a diversity of forms depending on the jurisdictions and may thus follow diverse regulations. A Mauritius based Foundation enjoys plenty of flexibility.

A Foundation being legally and economically separate, a special purpose fund is formed as a legal entity by the sole declaration of the Founder. The Founder starts it by allocating the specifically designated Foundation assets, by prescribing the object of the Foundation, and also by stipulating the beneficiaries.

Offshore Foundations | How & Why To Have One

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Offshore foundations: Get a free quote now by filling in the box on the right and discover how and why you should have one

Offshore foundations: How is the Foundation different

A Foundation is not a Trust nor is it a company. A Mauritius Foundation has the good features of both.

A Trust is an arrangement in which the owner – The “Settlor” transfers his assets to another person – The “Trustee” to own and manage them for the benefit of another person – The “Beneficiary”.

Being just an arrangement among these three parties a Trust does not have a legal personality of its own.

Whereas a ‘company’ is a legal entity formed by shareholders to own assets and run a business jointly.

A corporate entity like a company having members (shareholders) puts limitations on the flexibility, tax treatment and continuity of purpose like benefiting successors of owners.

A shareholder’s lifespan puts its own limit on continuity.

A Mauritius Foundation solves this problem. Unlike a company, the Foundation has no members and unlike a Trust, it has its own legal personality.

A Foundation is in some ways similar to a corporate entity and yet brings the protection and continuity of a Trust in itself. Since the Foundation has no shareholders, it can perpetuate itself unhampered.

Yet by way of a council, Foundations can have the benefit of collective supervision that a board of a company provides. It is noteworthy that unlike Trustees the Foundation’s caretakers, the Council, have no title to the assets of the Foundation.

So a Foundation is endowed with a legal personality which fulfills similar functions as those of a trust, but with the administrative flexibility of a company.

Offshore foundations: Get a free quote now by filling in the box on the right and discover how and why you should have one

Offshore foundations: Benefits

By way of a Mauritius Foundation, the Founder enjoys the requisite protection and comfort necessary for long-term wealth management.

The family’s wealth is preserved and nurtured over successive generations with tax efficiency. At the same time succession laws, forced heir-ship rules, probate, and other hurdles can be avoided.

To grow wealth a Mauritius Foundation can engage in business activities like a Mauritius Global Business Company (GBC) 1.

It can also be non-resident for tax purposes if it chooses.

A Foundation set up under the laws of another jurisdiction can migrate and be re-domiciled in Mauritius.

Offshore Foundations | How & Why To Have One

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Offshore foundations: Get a free quote now by filling in the box on the right and discover how and why you should have one

Offshore foundations: Founder

In the Charter, a Founder can specify in detail how the beneficiaries must benefit from a Foundation.

A Founder may also be a beneficiary of the Mauritius foundation and does not need to be resident in Mauritius.

If the Founder is not a citizen of Mauritius and endows property to a Foundation, the transfer of such property cannot be reversed even if the Founder’s domicile country sets aside his right to dispose of the property for any reason.

This is a relief and a significant protection from litigants.

The Mauritius Foundation affords the Founder or beneficiaries legitimate means to protect one’s assets against personal liability, high taxes, exchange controls or risk of confiscation.

It could be the preferred vehicle for even medium net worth individuals looking to propagate their wealth and businesses.

Offshore foundations: Get a free quote now by filling in the box on the right and discover how and why you should have one

Offshore foundations: Features

A Mauritius Foundation exists on its own as a separate legal entity with no shareholders or directors. It comes into being with the following features required by law:

1. Founder

The Founder sets up the Foundation and endows it with initial assets. A person endowing assets after its formation cannot automatically become a Founder unless stipulated by the Charter.

The Founder can be a person or a body corporate.

2. Beneficiaries

The persons who will be benefiting from the Foundation. The Mauritius Foundation laws entitle the beneficiaries the right to ask for all information about the Foundation.

3. Initial Assets

The Foundation must be registered with some assets endowed to it by the Founder. The assets can be real estate, shares, investments, insurance policies, or other assets.

4. Charter and Articles

The Charter is like the constitution of the Foundation. It is needed by law to be in writing and signed by the Founder. Other details required are:

  • Name of the Foundation
  • Registered office
  • Details of the Founder and beneficiaries
  • It’s purposes
  • Objects
  • Duration (if any) of the Foundation
  • The endowment of the initial assets
  • Other details as may be needed by the Act

The Articles stipulate distribution of assets to the beneficiaries.

5. Foundation Council

Like a board of directors of a company, the council governs the Foundation in accordance with the Charter and law to promote the best interests of the Foundation.

The members are appointed by the stipulations in the Charter but at least one must be a Mauritius resident.

6. Secretary

The law requires that a Mauritius resident person or company must be the Secretary.

7. Protector

A Mauritius Foundation may choose to have a Protector. Its powers can be defined by the Charter.

There are no restrictive requirements about having one or who can be a Protector.

Offshore foundations: Get a free quote now by filling in the box on the right and discover how and why you should have one

Offshore foundations: How to set up

A Mauritius Foundation can be set up only through an authorized agent. The process is:

1. Application

2. Provide the Know Your Client (KYC) documents for the Founder, Beneficiary, Protector and Secretary

3. Draft the Charter – The Founder can prescribe the content which can be then drafted in accordance with the Act

4. Filing the Charter and Registering it with the company registrar

5. Registration certificate of the Foundation

Offshore foundations: Cost

These are normally quoted to a client on approaching an agent. They depend on the specific plan, nature of assets, underlying structures and the beneficiaries.

Offshore Foundations | How & Why To Have One

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Offshore foundations: Get a free quote now by filling in the box on the right and discover how and why you should have one

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Offshore Foundations was last modified: June 8th, 2019 by Manu Raj

Manu Raj

Has a positive attitude towards the job, is friendly and a team player.

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