Jersey officials have been given a “strong indication” that that their new foundations law will go before the Privy Council in London on 10 June.
If it does, the first foundations on the island could be up and running by the middle of July, according to Alan Dart, a partner with Bedell Group, the offshore legal specialist which has offices in Jersey.
Dart made his comments on Wednesday during a Jersey Finance conference in London, during which he outlined the appeal of foundations relative to trusts, and how the two entities compare structurally.
After being sanctioned by the Privy Council, the draft foundations law would be registered at the Royal Court of Jersey – normally within one to two weeks – where it would cease to be considered a draft. This particular law contains a clause stating that it would come into effect 28 days after it is registered.
As reported in the May issue of International Adviser, some Jersey law firms have confirmed instructions to set up foundations the moment the law is approved.
Broad appeal
Jersey is introducing foundations in order to broaden the range of legal structures it offers to the financial services sector.
Foundations are seen as appealing to investors from countries with a civil law tradition who are often unfamiliar with trusts and in particular their concept of the separation of legal and beneficial ownership. Foundations are also understood to appeal to Middle Eastern investors.
In format foundations are more similar to a company than a trust. However, unlike a company, foundations have no shareholders, and their powers are exercised by a council.
At present, neither Guernsey nor the Isle of Man has a provision for foundations, although they are known to be considering them, as is the Cayman Islands. Among the countries that do have them, in addition to Liechtenstein, are Panama, the Bahamas, the Netherlands Antilles and St Kitts & Nevis.
