Guernsey: Foundations In Guernsey

Last Updated: 17 December 2012
Article by Russell Clark

On 25 July 2012 the States of Deliberation, Guernsey's parliament, approved the projet de loi The Foundations (Guernsey) Law, 2012 (the "Law"). Subject to Privy Council approval, the Law is expected to come into force in late 2012 or early 2013. This note is a brief summary of certain features of the new Law.

1. An analysis of The Foundations (Guernsey) Law, 2012

The Law is intended to reflect accepted civil law characteristics of foundations but is not a replication of the foundation laws of other jurisdictions. The draftsman has considered market needs and has looked to create something bespoke that should be well suited to meet the requirements of the Island's clients.

The Law is separated into three parts; the substantive law itself and two schedules. This was done deliberately to mirror the civil law tradition of having a short law with clarification coming in the form of regulations. The first schedule deals with administrative matters, such as the establishment of foundations and their registration. The second schedule deals with migration of foundations, their revocation, dissolution and termination. The migration provisions are helpful as it is understood that there are a number of existing foreign foundations that would welcome a chance to relocate to somewhere with greater administrative capability and reputation, such as Guernsey.

2. What is a foundation?

Foundations have some characteristics that are similar to those of a company as it has separate legal personality and a management board known as a council. On the other hand it is entirely independent and has no shares and no members nor any concept of share capital. A foundation may also be compared to a trust, as assets are held for the benefit of others or for a specific purpose although trusts, of course, have no separate legal personality. An important legal distinction is that with foundations there is no separation of legal and beneficial title of property whilst in trusts there is such separation. Both foundations and trusts can be used to hold assets in "orphan" structures, legally separated from the original owners of those assets. Although there are similarities a foundation is neither a company nor is it a trust. Furthermore, trusts and companies are not two ends of a spectrum with foundations somewhere in the middle. They are three distinct and different legal structures which have evolved differently to serve different purposes and to work in different environments.

Set out below are the key features of the proposed Guernsey foundation:

  • They are ideally suited for private wealth management, succession planning structures and charitable giving.
  • They are familiar to those from a civil law background.
  • They are more flexible than a company structure in that the Law allows a substantial degree of bespoke adaptation.
  • They have legal personality and may contract or sue, in their own name.
  • There is no segregation of legal and beneficial title, as with a trust.
  • The concept of "disenfranchised beneficiaries" (hereinafter discussed) allows concerned founders to limit the flow of information to certain classes of beneficiaries.
  • They are private structures.
  • They require registration but the information that is publicly available is restricted.

3. The Key features of a Foundation:

  • The Council

    A Guernsey foundation will be managed by a council comprised of at least two councillors unless the constitution permits a single councillor. If one of the councillors or the guardian is a Guernsey licensed fiduciary the foundation will be brought into the ambit of the regulatory regime. If neither of the councillors, nor the guardian, is a Guernsey licensed fiduciary, then the foundation will require a Guernsey resident agent to hold the foundation's records within the jurisdiction
  • The Constitution and Rules

    The core document by which a foundation is established is its constitution. The constitution comprises two parts; the charter and the rules. The charter must contain the name and purpose of the foundation, a description of its initial capital or endowment and, if it is a foundation with a limited duration, that duration must be stated. It may contain anything else that the founder wants to include.

    The rules set out the operative provisions of the foundation. As such the rules detail the functions of the councillors, deal with the procedures for the appointment, retirement and remuneration of councillors and any guardian, and identify the default beneficiary. The rules may also specify other matters such as how the assets of the foundation should be applied and how beneficiaries may be added or excluded. They may also impose obligations on a beneficiary such as a condition of benefitting or contain protective measures to terminate a beneficiaries' interest for example if he becomes insolvent or otherwise.
  • The Register

    Section 4 of the First Schedule of the Law sets out the information which will be publicly available in Part A of the Register. This includes: the name and registered number of the foundation, the name and address of the councillors appointed to act, the name and address of the guardian (if there is one) and the details of the registered office. In addition the registrar shall maintain a non-public Part B of the register which shall include all declarations and other documents filed with the Registrar pursuant to the Law.
  • The Founder

    The founder of a Guernsey foundation may determine the purpose of the foundation, craft the foundation's constitution and endow it with its initial capital. The founder (or his agent) must also subscribe his name, as the founder, to the constitution of the foundation by signing it. It is also the founder's role to appoint the initial councillors and any guardian and to seek to have it registered. The founder can either be a councillor or a guardian (but not both simultaneously) in addition to being a beneficiary.
  • Guardian

    A Guernsey foundation must have a guardian only where there are either disenfranchised beneficiaries or where there is only a purpose but no individual beneficiaries. The guardian's function is to enforce the purposes of the foundation on behalf of disenfranchised beneficiaries or, where there are no beneficiaries in substitution for them. Foundations that have beneficiaries but no disenfranchised beneficiaries are not required to have a guardian. The founder may act as guardian. The guardian will be named in the register and may not serve on the council at the same time. He must maintain accurate accounts and records of his guardianship.
  • Reservation of powers by the Founder

    Consistent with the approach taken on the European continent the founder can only reserve to himself limited powers set out in section 11 of the Law such as the power of amendment or revocation of the constitution or of the purposes of the foundation. Such powers can be reserved only for the duration of the founder's life (if he is a natural person) or for 50 years from the date of establishment in the case of a legal person whereafter the reserved powers will automatically lapse. This does not preclude the council from delegating certain functions to the founder.
  • Registration

    A foundation will come into being upon registration by the Registrar. In order to register a foundation the person seeking to register it must provide the Registrar with: the charter, a declaration signed by the founder (or his agent), the names and addresses of the proposed councillors and their consents to act, the name and address of the proposed guardian (if any) and his consent to act, the address and telephone number of the registered office of the foundation in Guernsey and of course the ubiquitous registration fee (the amount of which has yet to be confirmed). Provided the name is not unlawful or already taken and the purpose is not contrary to the law of Guernsey it will then be registered, given a number and a certificate of registration whereupon it becomes a legal person separate from its founder, the foundation officials (the councillors and any guardian) or beneficiaries. The Registrar has a discretion as to whether or not a foundation will be subject to an annual renewal process (similar to a company's annual validation) and like companies, foundations will be capable of perpetual existence.
  • Legal Personality

    Unlike a trust which is not a legal person, a Guernsey foundation will have a legal personality of its own. It is a person in its own right able to contract and sue in its own name. The assets of a foundation belong neither to the foundation council, the founder or the beneficiaries. They belong to the foundation in the same way that the assets of a company do not belong to the directors or to the shareholders but to the company itself.

    The existence of a separate legal personality underscores a fundamental difference between a foundation and a trust with a number of significant consequences that flow from that. The beneficiaries of a trust, if all of them are adult and competent and there are no unascertained beneficiaries can between them terminate a trust because they are together the owners of the entire beneficial interests in the trust property (this is known as the rule in Saunders –v– Vautier (1868)).

    The beneficiaries under a foundation cannot do so because they have no legal or beneficial interests in the foundation's assets. All they have are the rights given to them under the constitution.
  • Duties owed

    Another consequence flows from the question as to whom the members of a foundation council owe its duties. These duties are owed to the foundation itself in the same way as a director of a company owes the company fiduciary duties to act in the best interests of the company. The foundation council and its members do not owe duties to the beneficiaries of the foundation.

    Pursuant to section 19 of the Law the councillors have a duty to act in good faith and en bon père de famille. The councillors also have a duty not to profit (otherwise than as permitted by the constitution), to preserve the foundation property, to give information to the guardian and enfranchised beneficiaries, to maintain accounting records, to act together with their fellow council members and to be impartial.

    A guardian, however, owes fiduciary duties to the founder and the beneficiaries to enforce the constitution.
  • Types of Beneficiary

    A beneficiary of a foundation is someone who is entitled to benefit from a foundation. Beneficiaries must be identified by name or be ascertainable as a member of a class or by their relationship to another person. The Law provides for enfranchised and disenfranchised beneficiaries. An enfranchised beneficiary is entitled to a copy of the constitution, records and accounts of the foundation and to apply to Court to change the purposes or revoke or dissolve a foundation. Subject to the terms of the constitution disenfranchised beneficiaries are not entitled to any information. This novel feature which is not found in any other jurisdictions may be attractive for family arrangements where the family wish to protect their younger generations from the potentially corrosive effects of the knowledge of substantial wealth. Once the reason for a disenfranchised beneficiary's classification (such as age) falls away they may then become an enfranchised beneficiary.

4. Guernsey

Guernsey is a well regulated, transparent and respected jurisdiction with a wealth of knowledge and globally recognised experience as well as a reputation for excellence in private client matters. Carey Olsen is a leading law firm of the Channel Islands with the largest and most established fiduciary department in the Channel Islands, specialising in such work. Partner Russell Clark has been actively involved in the preparation of the Law, placing Carey Olsen in an ideal position to advise clients in relation to foundations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
24 Oct 2018, Conference, St Peter Port, Guernsey

The Fund Finance Association is a non-profit industry association in the fund finance market that aims to educate members, legislators, regulators and other constituencies about the fund finance market.

13 Nov 2018, Conference, St Peter Port, Guernsey

SuperInvestor is part of the SuperReturn Series - the world's leading private equity events.

6 Dec 2018, Conference, St Peter Port, Guernsey

The definitive funds event of the year will include insights and predictions from over ten industry experts from both the Channel Islands and Europe

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions