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Offshore Company
Formation Liechtenstein:
Professional offshore incorporations
and offshore banking services
Offshore Company
Formation Liechtenstein
Liechtenstein corporate bodies are formed under the Law on Persons and
Companies 1926, known as the PGR Code. Trust Enterprises are formed
under the Law Concerning the Trust Enterprise 1928. A wide variety of
types of entity can be formed under the PGR Code, the most commonly used
of which are described below; other possible forms include the limited
partnership with a share capital, the company limited by quota shares,
the association, the cooperative association and the company without
juridical personality; but they are not commonly met with in offshore
situations.
All corporate forms that
are allowed under the Code, and the Trust Enterprise, can additionally
be either 'holding' companies (companies that hold investments) or 'domiciliary'
companies (not having trading activities inside Liechtenstein). Holding,
domiciliary and non-resident entities are sometimes known as 'exempt',
ie exempt from certain types of taxation.
No permits or licenses
are required to do business, except for financial sector companies and
professional services. It is a notable feature of the Liechtenstein PGR
Code that there is very great freedom, within the basic forms it
describes, to constitute corporate and share structures in a flexible
way according to the particular purpose of the entity and its
originators' wishes. Therefore only rather general statements can be
made about the rules governing the operation of the various forms; the
rest will depend on circumstances.
Corporate bodies formed under the PGR
Code (not Trusts) share a number of characteristics:
- there must be written
Articles of Association; they are deposited with the Registrar
and are available on the public file, including details of
capitalisation, share structure, registered office, etc;
- the corporate body does not
come into existence until its details have been entered into the
public register;
- the names of the directors,
officers and shareholders are kept at the registered office;
- the corporate name can be in
any language and must include the name of the type of body
concerned (Limited, Foundation, etc), but some words are not
permitted, mostly those with national or international
territorial meanings (exemptions may be available);
Liechtenstein Company Limited by
Shares
The Company Limited by
Shares is designed to be used as a public company, although it does not
have to be public. There are founders who are (can be) distinct from the
shareholders.
The Company Limited by
Shares has a minimum capital of (at the time of writing) SFr 50,000, 20%
of which must be paid up, with a minimum paid up of SFr 50,000. Bearer
shares must be fully paid up, although the Articles can permit them to
be 50% paid up; the minimum is still SFr 50,000.
If there is to be no
public subscription, the company is formed 'simultaneously', in one
legal act, and the founders are the shareholders. They create the
company by entering into a Deed.
If there is to be a
public subscription, the company is formed 'successively': first, the
founders declare their intentions in general, then the subscription
process takes places, and in a general meeting of subscribers (shareholders)
the final details of the company's constitution are ratified.
Shares can have variable
voting rights (eg multiple votes, or restricted votes), but non-voting
shares are not permitted. The appointment of an auditor, and the annual
submission of audited accounts to the Registrar, are mandatory for the
Company Limited by Shares.
Liechtenstein Limited Liability
Company
The Limited Liability
Company (Aktiengesellschaft) is formed by two or more members and has a
minimum capital of SFr 30,000 (at the time of writing). The minimum
subscription amount from any one shareholder is SFr 50. Further amounts
need not be paid up unless the Articles provide for it; but the joint
liability of the shareholders on liquidation or withdrawal is the amount
of the registered capital.
- Various types of share can be
issued, including preference, registered, voting, no-par-value
and bearer shares; only registered shares can be issued at below
par value;
- voting rights can be
allocated or not freely to all types of shares, and voting
rights can be limited according to defined circumstances or
occasions;
- a minimum of one director is
required, who may be corporate; secretaries are not required; an
exempt company needs to have a local professional as an agent;
- audited annual accounts have
to be filed.
Liechtenstein The Establishment (Anstalt)
The Establishment, or
Anstalt, is a corporate form that is peculiar to Liechtenstein. It has
no members or shareholders. It is an autonomous fund with beneficiaries.
It is often used as a holding company for patents or royalties, or for
estate assets. It has a founder or founders, who are not necessarily the
same as the beneficiaries; the founders' rights can be transferred, if
the capital is not divided into shares, giving the current tenants of
the founders' rights considerable powers over the Establishment. In this
respect, the Establishment is similar to the Foundation.
- The minimum capital, if not
divided into shares, is SFr 30,000 (at the time of writing); and
if higher, at least half (minimum SFr 30,000) must be paid up;
- the minimum capital, if
divided into shares, is SFr 50,000 (but this form is never
nowadays used);
- a minimum of one director is
required; it is normal to delegate substantial powers of
management to the director(s);
- if the Establishment has
commercial objects, audited annual accounts must be filed; but
note that the management of investments or other assets is not
deemed 'commercial'
Liechtenstein The
Foundation (Stiftung)
A foundation exists to
give effect to the stated, non-commercial wishes of its founder, as set
out in a foundation deed and the Articles of Association (Statutes). In
effect, the assets with which the foundation is endowed become a
separate legal entity. The Foundation has no members or shares; it is
set up by a founder (or founders). Most often, this is the form that is
used for the continuation of family assets. The Foundation has
beneficiaries, who may be identified in a variety of ways.
- No public registration is
necessary, except that a copy of the Foundation Deed is lodged
with the authorities. It need contain only very general
statements about the purpose of the Foundation, while detailed
rules are set out in private bye laws.
- Founder's rights are
transferable, and they normally include the right to terminate
the Foundation or amend the bye laws.
- Commercial activities are not
permitted except in so far as they are in pursuit of the
Foundation's non-commercial goals. The minimum assets of a
Foundation are SFr 30,000 (at the time of writing), which can
not be divided into shares; the assets do not necessarily have
to pass to the Foundation on formation;
- A Foundation is normally
administered by what amounts to a board of trustees.
In summer 2008,
it emerged that the Liechtenstein parliament had approved a
reform of the jurisdiction's foundations law, which the
government claimed adhered to international standards while
continuing to protect privacy.
The new
foundation law is scheduled to enter into force on April 1, 2009
and is part of the government's ongoing modernization of
Liechtenstein company structures, which so far has included
revision of 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, the
cornerstone of which – as in the case of Liechtenstein
foundations – was laid in 1926 with the creation of the Law on
Persons and Companies.
"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.
"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 main aim of
the reform of foundation law was to harmonize with international
standards, but the changes were also carried with the popularity
of the foundation and its national economic significance to the
Principality in mind.
"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, was retained. The
government justified 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 so-called “Futuro”
project launched by the government calls foundations the “heart
of the financial centre's" According to “Futuro,” family
foundations are increasingly being recognized as autonomized
assets and thereby constitute an instrument of succession
planning that is sought worldwide.
In the future,
the Liechtenstein professional trustee is no longer envisaged as
merely a broker and administrator of this structure, but rather
– thanks to his internationally recognized competence – will be
seen as an important advisor in personal contact with the
founders.
“Futuro” also plans to make Liechtenstein
into a location for trusts, by harmonizing them completely with
Anglo-Saxon trust structures.
Liechtenstein The Trust Enterprise
The Trust Enterprise is
set up by a Trustor (settlor) through a Deed of Trust which is
equivalent to Articles of Association, and must specify the name and
purposes of the Enterprise, the identity of the trustees, the
composition of the trust fund, and (if the purposes are commercial) the
identity of the auditors. As usual, 'commercial' does not include asset
management or holding operations. The Deed of Trust is filed with the
Registrar of Trusts. The minimum trust fund is SFr 30,000 (at the time
of writing). The participants in a Trust Enterprise are largely shielded
from creditors of the Enterprise, who have access only to its own assets.
A Trust Enterprise can be
created either without legal personality, and is then called an 'active
trust' (eigentliche Geschaftstreuhand), or with legal personality, in
which case it is called a 'non-active trust' (uneigentliche
Treuunternehmen). Only non-active trusts have gained currency in
Liechtenstein, and they are frequently used to hold investment assets,
for instance in merger situations, and for the distribution of income
from real estate holdings. The legal form of the Trust Enterprise is
close to that of the American 'Massachusetts Trust'.
One of the trustees must
be a resident of Liechtenstein holding a recognised professional or
other qualification. In the case of a non-commercial (ie unaudited)
Trust Enterprise, this person certifies to the Registrar that the Trust
has kept proper books and that no commercial activities have been
carried out. This is the only reporting that is required.
Liechtenstein Trusts
Liechtenstein is the only
civil law jurisdiction which has adopted largely anglo-saxon trust
legislation (contained in the PGR Code), although, unlike the common law
trust, there is no bar against accumulation of income, nor against
perpetuities.
A Liechtenstein Trust is
set up by a written agreement (Trust Deed) between the trustor (settlor)
and trustee(s) which does not have to contain the names of beneficiaries.
If the Trust Deed is deposited with the Registrar of Trusts, it will not
be publicly available, and later instruments (eg naming beneficiaries)
will not have to be revealed; if the Trust Deed is not deposited within
12 months, details of the Trust must be placed on the public register. A
registration fee of US$200 (at the time of writing) is payable on
registration.
Some of the
characteristics of Liechtenstein Trusts are as follows:
- a trustee (apart from the
Liechtenstein professional mentioned above) can be an individual
or a corporation or association;
- trustees are liable for
breach of trust to the full extent of their assets; joint
trustees are jointly liable; supervision of the trust is
ultimately under the Court, even if the Trust Deed specifies
alternative supervision;
- the interests of named
beneficiaries can be embodied in trust certificates, which if
registered are transferable securities;
- being a civil law
jurisdiction, trust assets are vulnerable to forced heirship
provisions, although there are time limitations on such claims;
- in general, there is a
limitation of one year on creditors' claims;
- trust documents, including
the Trust Deed, can be in any language.
Trusts may be set up under foreign
law, but may not have more favourable treatment than would apply
under Liechtenstein law. A trust under foreign law is a
Liechtenstein Trust and subject to local taxation. Liechtenstein law
applies to a foreign trust if the trustee, or more than half of the
trustees, are resident in Liechtenstein, if the trust property is in
Liechtenstein, or if the Trust Deed says so.
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