Guernsey: Overview: Guernsey Foundations - A New Tool In The Box

Last Updated: 19 December 2014
Article by Matt Litten and Angela Calnan

In this overview, Heath Martorella of Collas Crill Trust and Angela Calnan of Collas Crill, Guernsey, look at the characteristics, potential uses and some practical considerations for Guernsey Foundations


The Foundations (Guernsey) Law, 2012 ('the Law') came into force on 8th January 2013. Foundations offer a new solution for clients wishing to have more directional power over assets, compared to traditional forms of trust structure, which only permit limited forms of control and influence.

Foundations have been established in civil law countries for many years, as the trust concept was not recognised. However in recent years, an increasing number of jurisdictions - including a number of common law international finance centres - have now enacted foundations legislation, enabling fiduciary service providers to broaden their geographic reach of business.

The Guernsey foundation will appeal particularly to clients in regions such as the Middle East, Asia and South America. The foundation concept can have a similar feel to a private family company setup; this compares to the considerable "leap of faith" for some clients to give away personal assets and control to a distant trustee.


Quite simply, the founder will endow property (of any kind) onto the foundation either to benefit beneficiaries, or to support a purpose(s), or both. Like a company, the foundation enjoys separate legal personality and will own assets itself. As such, the beneficiaries will therefore have no rights over the assets; this contrasts with the beneficiaries' property rights over a trust.

Given that it is established with separate legal personality, a Guernsey foundation is also less likely to be subject to any hostile challenge as a "sham" entity.

It should be noted that a foundation itself cannot carry out commercial activities unless these are ancillary or incidental to its purposes (which must not be illegal). An underlying company can instead be incorporated for any separate commercial activities.

The foundation is managed by a council of members, pursuant to the foundation's constitutional documents - the Charter and Rules. There is no ownership of a foundation - no shares are issued - it is a selfcontained "orphan" structure.


Under the Law, foundations are established with the Guernsey Registry. Only a licenced Guernsey fiduciary can register a foundation. The Registrar will need the following items:

  • The Charter (see below)
  • A declaration signed by the founder or resident agent, confirming the details contained in the Charter are correct and are an accurate reflection of the foundation's purposes
  • A declaration if there are, or intended to be, any disenfranchised beneficiaries (see part 6)
  • The names and addresses of the proposed councillors and guardian (if any), along with their written consent to act
  • The name and address of the resident agent (only if no Guernseyregulated fiduciary is acting as a councillor or guardian)
  • The address of the Guernsey registered office
  • The applicable fee - this is currently £100 for 24 hour establishment, or £350 for 2 hour establishment


Only information on "Part A" of the foundations register is publically available. This is limited to:

  • Name and registered number of the foundation
  • Address of the registered office
  • Names and addresses of councillors and any guardian


Similar to the memorandum and articles of a company, a foundation must have a Charter and it will usually have separate Rules (although if all mandatory Rules are listed within the Charter, the foundation can exist simply with its Charter).

The Charter will be filed with the Guernsey Registry upon establishment. The Charter is not disclosed by the Registrar, except in certain circumstances (e.g. where a Court or competent authority has requested it).

The Charter must:

  • Include the name of the foundation - which must include the word "foundation" or the abbreviation "Fdn". (Names including or suggesting royal or government connections e.g. "Imperial", "Royal", "Queen" or "Crown" cannot be used without the written permission of HM Procurer in Guernsey).
  • The purpose of the foundation
  • Describe the initial capital of the foundation, which can comprise any property
  • State the duration of the foundation, if it is to last for a limited period only.
  • Contain a declaration from the founder that s/he wishes the councillors to comply with the terms of the Charter

The Rules are contained in a private document which is not filed with the Registrar. The Rules must:

  • Prescribe the function of the Council
  • Detail the procedures for the appointment, resignation and removal of councillors and any guardian
  • Detail any remuneration provisions for the councillors or guardian - they will not be entitled to be paid unless expressly authorised to do so

Also, the Rules may:

  • Prescribe the manner in which the property of the foundation may be distributed, accumulated or applied
  • Detail whether, and if so how, further property may be endowed upon the foundation
  • Provide for the addition or removal of beneficiaries, or for the exclusion from benefit of one or more beneficiaries, either revocably or irrevocably
  • Detail any person's powers in relation to the foundation (including, but not limited to, the power to appoint or remove a foundation official, to take investment decisions or to approve the use of the foundation's assets)
  • Impose obligations upon beneficiaries as a condition of benefit
  • Make the interest of a beneficiary liable to termination, or subject to certain restrictions
  • Provide details of a default (long-stop) beneficiary in the event of the termination of the foundation (otherwise the assets will go to the Crown)

Importantly, the rules can only be amended if provided for in the Constitution, otherwise it will be necessary to apply to the Royal Court in Guernsey for an amendment. As such, this is an important drafting point to bear in mind at the outset.



The founder can be any person or corporate entity. The founder will endow the initial capital upon the foundation, but will acquire no automatic interest in the foundation simply by virtue of making a contribution of initial and any subsequent property. The founder can be given powers to amend, revoke or vary the Charter, Rules or purpose, or to terminate the foundation. Such powers can only be reserved during the period of the founder's life (if a person), or for up to 50 years from the date of establishment if the founder is a legal person (such as a company). If there are joint or multiple founders, they must exercise powers unanimously, unless the Charter provides otherwise. The founder can act as a councillor.


The Council must ensure that the foundation is administered in accordance with the Charter, Rules and the Law. As with a company, the council owes its duty to the foundation, not the beneficiaries. The Law stipulates that councillors must act in good faith. It is possible for the foundation to have a sole council member, if this is set out in the constitutional documents. Unlike Jersey, there is no requirement for a licensed fiduciary to sit on the council - but if this is the case, a resident agent (see below) must be appointed

Beneficiaries - enfranchised and disenfranchised

Two classes of beneficiaries can exist - those which are enfranchised with rights to information about the foundation, and those which are disenfranchised with no rights. Section 31(5)(c) of the Law envisages promotion and demotion of beneficiaries between these classes. As an example, this will be useful for those founders wishing to distinguish between beneficiaries who may or may not play a role in the running of any family business or wealth that is owned by the foundation.


A guardian will need to be appointed to the foundation if there are any disenfranchised beneficiaries, to represent their interests and hold the councillors to account. A guardian will also be required if the foundation has purposes in respect of which there are no beneficiaries. The role is similar to that of the enforcer of a purpose trust. The guardian must act in good faith ("en bon pere de famille") and owes duties to the founder and the disenfranchised beneficiaries. As such, the role is fiduciary in nature - there is no relief of liability for fraud, wilful misconduct or gross negligence. The position is different to Jersey where a guardian is always required. Importantly, the guardian cannot sit on the council.

Resident agent

A resident agent is only required where there is no Guernsey licensed fiduciary acting either as a councillor or a guardian. The resident agent must be a licenced fiduciary in Guernsey and has the power to inspect foundation documents and information - these must be maintained at the registered office in Guernsey (either originals or copies). The resident agent may request copies of any foundation records and other documentation/information to comply with its duties as a licensed fiduciary. The resident agent can inspect the accounting records of the foundation by giving 2 working days' written notice to the council.


The Law envisages the transfer of foreign foundations to Guernsey, so that clients can take advantage of Guernsey's excellent professional and legal services infrastructure, as well as the high quality of regulation and the island's courts. Schedule 2, Part I of the Law deals with migration in, where the main requirements are summarised as follows:

  • The foreign foundation is permitted under its current law to re-register in Guernsey and has complied with any requirements under that law in order to re-register (in practice the Guernsey licenced fiduciary proposing to accept the foundation will want a legal opinion from the foreign jurisdiction to confirm compliance)
  • The foreign foundation is not currently bankrupt or being wound up, neither is it subject to any court application for the same


Each foundation will have to file an annual validation with the Guernsey Registry, the fee for which will be £500. The form of return has yet to be released at the time of writing, at which time the fee will be levied.


The Guernsey Financial Services Commission (GFSC) has released a Code of Practice for Foundation Service Providers (FSPs), which came into force on 2nd September 2013. The Code is largely modelled on existing GFSC codes for trust and corporate service providers and is intended as guidance for FSPs. Failure to comply with the Code will not render a FSP liable for sanctions or proceedings, but may be taken into account by the GFSC and the Courts in their decision-making.

There is emphasis in the Code on FSPs having good knowledge of the constitutional documentation of foundations, also on the importance of good information flow between the FSP and Council members. The FSP must be aware of the activities and assets of the foundation and any material changes. This is particularly relevant if the FSP acts as resident agent only, and is not a council member. Given the importance of being informed, it is likely that FSPs will usually insist on being a Councillor and will only act as resident agent in special circumstances.


Foundations afford considerable flexibility - potential uses include the following:

Private clients

Those clients, particularly in civil law jurisdictions, seeking an alternative to trusts. The foundation will be more easily recognised in the home jurisdiction of the client, and can be used to hold family wealth and businesses. If desired, the Council of members can mirror the board(s) of family enterprises.

The ability for beneficiaries to have different entitlements will also be very useful for asset protection purposes e.g. should there be competing factions within a family, or as part of 'pre-nup' planning.

Also, the foundation is ideal for holding higher-risk, less diversified assets, since the Council will owe its duty to the foundation, not the beneficiaries (unlike trusts).


The flexibility of foundations makes them ideal for charitable and philanthropic endeavours. The purposes of the foundation can also be hybrid and permit a non-charitable element - this avoids the need to set up a separate structure for this. The foundation has similar characteristics to the Islamic waqf structure.

SPV / corporate

The 'orphan' nature of a foundation, without ownership or beneficial interest constraints, makes it an useful SPV vehicle, also for use in the realm of corporate transactions. The foundation is an ideal vehicle to hold the shares of a private trust company ('PTC'), instead of a noncharitable purpose trust.


Private Trust Foundations

There has been increasing interest in the use of foundations to act in decision-making and governance roles, without holding assets in their own right. An example of this would be a "private trust foundation" ('PTF') which acts as trustee of family trusts in place of a PTC structure.

This avoids complications where (say) a client from a civil law jurisdiction has become comfortable with the concept of a PTC - and then struggles to grasp why a trust is still ultimately needed at the top of the structure to hold the PTC shares.

Where a PTF intends to charge fees to act as a trustee (to cover costs and expenses), this will require an exemption from the Guernsey Financial Services Commission. Following recent enquiries to the GFSC, it is understood their requirements for licensing PTFs will be as follows:

  • That the PTF will only act as trustee of trusts for a specified family (as with a PTC)
  • There will be at least one Guernsey corporate trustee with a full fiduciary licence sitting on the Council, and any individual Guernsey-resident councillors will also need to hold personal fiduciary licenses
  • The foundation's constitutional documents must enshrine the requirement for councillors to comply with their fiduciary duties when acting as trustee

Other governance roles

It is also possible to foresee the use of foundations in governance roles, such as acting as a protector or enforcer. It could also be used to act in a "family advisory" function in certain structures, where the settlor/founder does not want to entrust family members with stewardship or dispositive powers, but instead provide an alternative mechanism to receive their input.

Whilst these types of roles can certainly be considered for new structures, it will be necessary to check the terms of documentation for existing structures. Some documents may require amendment to recognise the use of a foundation entity, as opposed to individuals or corporate entities.


Guernsey foundations will be Guernsey tax-neutral. It is prudent for relevant tax advice to be taken to consider how the foundation might be treated in the founder's and beneficiaries' own country of residence, also if there any taxation matters pertinent to the management and control of the foundation e.g. residency of council members.

It should be noted that HMRC's treatment of foundations for tax purposes is still somewhat unclear, so, for the time being, caution should be exercised for UK-centric clients.

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.

In association with
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
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

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