As an incorporated body, foundations are able to transact, sue, and be sued in their own name. They are primarily used for private wealth management, succession planning structures, and charitable giving.
Unlike trusts, however, they cannot engage in commercial activities and there is no segregation of legal and beneficial titles.
Tracing their origins to Liechtenstein in the 1920s, foundations have been available in other offshore jurisdictions for many years. Their use was relatively limited until 1995 when Panama authorised their establishment.
Levelling the playing field
Paul Astengo, senior executive at Gibraltar Finance explained to International Adviser, that the introduction of private foundations is about “levelling the playing field with other offshore jurisdictions”.
The push to include foundations into Gibraltar’s financial services offering came from private practitioners, according to Astengo.
The Gibraltar foundation will be based on the Jersey foundation, which was established in 2009.
The prospect of increased competition, however, does not faze Geoff Cook, chief executive of Jersey Finance, who said: “Jersey Foundations have been a consistent success since the legislation was introduced six years ago, despite competition from other Crown Dependencies and locations, so further competition is not of concern.
“More than 260 foundations have been established (as of September 2015) in Jersey, which is more than double the total number of equivalent foundations in the other Crown Dependencies, an illustration of the attractiveness of the Jersey structure, which is playing an important role in Jersey’s overall wealth management armoury.”
The public consultation closes on 30 November.