An offshore foundation is a valuable tool for protecting one’s assets. Offshore foundation formation is facilitated by a registered licensed agent or lawyer that specializes in offering offshore foundation services, which may be provided along with other services such as offshore bank introduction, legal follow up advice, structural amendments, offshore trust and international business company formation and virtual office.
Offshore foundations comprise of five (5) essential elements. These include the Founder, Foundation Council or Board, Protector, Beneficiaries, Foundation Charter, also known as the Letter of Instructions and the Foundation By-Laws depending on the jurisdiction. Jurisdictions such as St. Kitts require a Foundation secretary when forming an offshore foundation.
The procedure for registering an offshore foundation is practically the same in almost every jurisdiction; and this includes the structure that the offshore foundation takes as well. The Founder of a Foundation, for example, is the person or legal entity that establishes the Foundation. An offshore foundation may be constituted to become effective at the time of constitution or after the death of its founder, by the execution of a private document by the founder whose signature must be certified by a notary public at the place of constitution or directly before a notary public at the place of constitution. All offshore foundations are constituted at a Public or Companies Registry. For persons and corporations seeking complete privacy, the registered offshore agent chosen for its offshore foundation formation services is generally appointed as the Founder of the Foundation. Persons forming an offshore foundation are not required to travel to the jurisdiction since all registration procedures are taken care of by the agent, who is responsible for dealing with the jurisdiction’s Registry on behalf of the client.
The role of an offshore foundation council or board is similar to that of the directors of a company. The names and addresses of the members of a foundation’s council are recorded at the Registrar’s office. Due to this a nominee foundation council can be provided by the registered agent to serve as the council of the foundation as a means of ensuring a greater degree of confidentiality and privacy for the members of the foundation. The nominee council does not have the power to control the council or its assets. The foundation charter is required to lay out the powers and responsibilities of the council. A few of the council’s responsibilities include administering the assets of the foundation and informing the beneficiaries of the financial status of the Foundation.
Most jurisdictions also make provisions for the appointment of a foundation protector a basic requirement for offshore foundation formation. The Protector is the person or legal entity with full control of the Foundation and its assets. The Foundation Council appoints the Protector upon the formation of the Foundation. Once appointed, the Protector is able to change the members of the council at any time that he or she pleases and does not need the approval or authorization of anyone to do so. The protector’s identity remains confidential and is not made public.
The assets of the foundation are ‘inherited’ by or distributed to a beneficiary. One or more beneficiary can be named by the foundation’s founder. The beneficiaries of a foundation can be a natural person or legal entity. The protector and the beneficiary of a foundation may or may not be the same person or corporation. Whereas the Protector has control over the way in which the foundation is governed, the beneficiary “inherits” the foundation’s assets. Thus, should the Protector and the Beneficiary be the same person, then he or she both controls and inherits the offshore foundation, whereas if the Protector is not a beneficiary, then he or she only controls the foundation and plays the role of a Trustee in a Trust.
The Foundation Charter is absolutely essential in offshore foundation formation because it is the document used for regulating the offshore foundation’s functions and operations. The Foundation Charter is often referred to as the Letter of Wishes. Upon its formation, a Foundation that does not have a Charter registered at the Registry or operates contrary to the clauses of the Charter can be revoked and made inexistent under the Foundation Laws of the given jurisdiction.
In setting up a Panama Foundation, a document containing the By-Laws of the Foundation can be prepared as a means of formality. However, this is not entirely necessary since the relevant laws of the Foundation and the wishes of the Protector are already stipulated in the Foundation Charter.