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Foundations

In November 2011 new legislation was passed on the Isle of Man known as the Foundations Act. The Act came into force on 1st January 2012.

A foundation is an incorporated entity which may be described as a self-owning legal person. It is capable of holding assets and property; it can sue and be sued.

Being an incorporated entity, a foundation can enter transactions in its own name. It has no "owner" so the person who establishes the foundation cannot be liable for its debts.

A foundation is often described as a combination of a trust and a company, and it does indeed have many of the characteristics of both.

A foundation is similar to a company in that it has limited liability.

A trust is a legal relationship between a settlor, a trustee and a beneficiary. A foundation is a separate legal person and has the facility to own and manage assets in its name and arrange funding.

Unlike trusts, foundations can exist in perpetuity.

A primary difference between a foundation and a limited company is that a foundation may not enter into commercial trading that is not identical to the foundation's objects. By holding a trading subsidiary it is possible to circumvent this.

DCTS can provide the following services to persons wishing to establish an Isle of Man Foundation:

• Registered Agent: Act as the Registered Agent in establishing the foundation

• Council Members: Provide members of the foundation's council

• Structuring: Provide a tax efficient structure tailored the client's needs

• Enforcer: Act as an enforcer, when not required to be a council member

• Other Services: Provide full administration services, bookkeeping, financial statements, tax returns and maintain bank accounts

Related Reading:

Isle of Man Foundations
(124.7kb PDF)