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. See see Offshore
Legal and Tax Regimes for further details.
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).
In May
2010, the Liechtestein government adopted tax reform proposals
that will usher in a 12.5% flat rate of corporate tax. See Domestic
Corporate Taxation for more information.
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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.
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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.
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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'
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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 entered 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.
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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.
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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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