Although offshore private interest foundations have only recently become widely known, the concept dates back to the days of the Roman Empire.  The Catholic Church was one of the first to utilize the concept that we now refer to as a foundation.  The Church was considered a "divine foundation" with the various organizations within the church having legal control over its "patrimony".  Foundations were initially conceptualized for communal purposes.  They were not utilized for private purposes such as serving the interests of individuals or families.

The concept of the "private interest foundation" did not come about until 1926 when the Principality of Liechtenstein created the "Law of Persons & Companies" (Personen und Gesellschaft Recht - P.G.R.), which first established the concepts of the "Family Foundation" and "Mixed Foundation".  The former being for the benefit of one or more members of a family and the latter enabling the Foundation to add a charitable capacity for other persons or specific charitable purposes.

Wealthy families have incorporated family foundations in Liechtenstein for many years in order to ensure the protection and safe transition of assets to family beneficiaries.  Liechtenstein, being a completely neutral principality for purposes of war (similar to Switzerland) with strict secrecy laws has provided a safe haven for assets for many years.  While the Liechtenstein Family Foundation has served its purpose and proven itself as an asset protection and estate planning tool, it is relatively expensive to establish and administer compared to other options recently made available.

Offshore Foundation Recent History

Panama enacted private interest foundation legislation in 1995 which catapulted the popularity and use of the offshore foundation. The law was clear, concise and not overly regulatory.  The Panama Private Interest Foundation is extremely versatile in its potential uses.This coupled with relatively low fees offered by Panama firms (compared to Liechtenstein) made the Panama Private Interest Foundation a popular entity and brought it to the masses. 

Several jurisdictions, mainly in the Caribbean, have either enacted or are considering enacting similar foundation legislation.  So far though, only Anguilla (although Anguilla has its own negative issues such as being under the jurisdiction of the EU) compares favorably to Panama. The legislation enacted in other jurisdictions has a tendency to be unnecessarily lengthy and overly regulatory in nature.  

Seychelles Foundation

A draft bill is currently working its way through the Government channels in Seychelles that is expected to be enacted sometime in 2009 (perhaps by July/August). The Seychelles Foundation Act will offer many unique characteristics and improve upon existing foundation legislation offered in other jurisdictions including Panama. In particular, the asset protection provisions will be unrivaled.

Keep checking back for updates as Sterling Offshore will post the new Act and accompanying information on the website as soon as it is available. You may also contact us letting us know you are interested in receiving information on the Seychelles Foundation and we will let you know as soon as it is available.