Maltese law allows for the establishment of various types of foundations, whether for a social or private purpose or for the benefit of named beneficiaries or a class thereof.
DEFINITION OF FOUNDATION
A foundation is an organisation consisting of a universality of things constituted in writing, including by means of a will, by a founder or founders whereby assets are destined either:
- (a) for the fulfillment of a specified purpose; and/or
- (b) for the benefit of a named person or class of persons,
and which are entrusted to the administration of a designated person or persons.
TYPES OF FOUNDATIONS
- 1. Purpose foundations
- (a) Public benefit foundations
A public benefit foundation exclusively promotes a social or public purpose on a non-profit making basis. This excludes any private benefit other than permissible forms of private benefit.
- (b) Non-public benefit foundation
This is a social purpose foundation which is not set up for a public purpose.
- 2. Private foundations
A private foundation promotes any lawful purpose, whether for a private benefit or not, other than those of a public benefit foundation.
- 3. Beneficiary foundations
- (a) Public interest beneficiary foundation
A public interest beneficiary foundation is a social purpose foundation exclusively set up for the benefit of public interest beneficiaries.
- (b) Private beneficiary foundation
A private beneficiary foundation is a private foundation established for the benefit of a person or class of persons who can be ascertained, through the designation of named persons, whether they are members, shareholders or holders of other interests or rights, or are otherwise ascertainable.
- a) The administrator is responsible for the management of the foundation. Such person may be a legal person, provided the entity has three directors.
- b) The founder is the natural or legal person that establishes the foundation. Such person may also be the administrator of the foundation.
- c) The beneficiary, if any, is the designated recipient of the funds or other property by virtue of the foundation.
SETTING UP A FOUNDATION
A foundation can be constituted either by a public deed or a will. If established by a public deed, such deed would have to be published by a notary and subsequently registered in the Public Registry.
The minimum endowment of funds to set up the foundation is €1,164.69 or property having a minimum value equivalent to such amount. However, if the foundation is established exclusively for a social purpose, the minimum endowment required is €232.94.
ADVANTAGES OF A MALTESE FOUNDATION
(a) Assets and liabilities are distinct from those of the founders, administrators and beneficiaries;
(b) Public benefit foundations may be set up for an unlimited period and private foundations for a maximum of 125 years;
(c) The founder, administrator and beneficiary can be an individual or a legal person;
(d) The founder can be the administrator and also a beneficiary;
(e) Administrators are subject to fiduciary obligations;
(f) A protector and supervisory council may be appointed to supervise the administrator;
(g) Official registration with a public authority;
(h) Private foundations are free to engage in trade; and
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.