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LIECHTENSTEIN COMPANY
LIMITED BY SHARES
- LIECHTENSTEIN LIMITED
LIABILITY COMPANY
- LIECHTENSTEIN THE
ESTABLISHMENT (ANSTALT)
- LIECHTENSTEIN THE
FOUNDATION
(STIFTUNG)
- LIECHTENSTEIN
THE TRUST ENTERPRISE
- LIECHTENSTEIN
TRUSTS
Liechtenstein
corporate bodies are formed under the Law on Persons
and Companies 1926, known as the PGR Code. Trust
Enterprises are formed under the Law Concerning
the Trust Enterprise 1928. A wide variety of types
of entity can be formed under the PGR Code, the
most commonly used of which are described below;
other possible forms include the limited partnership
with a share capital, the company limited by quota
shares, the association, the cooperative association
and the company without juridical personality;
but they are not commonly met with in offshore
situations.
All
corporate forms that are allowed under the Code,
and the Trust Enterprise, can additionally be
either 'holding' companies (companies that hold
investments) or 'domiciliary' companies (not having
trading activities inside Liechtenstein). Holding,
domiciliary and non-resident entities are sometimes
known as 'exempt', ie exempt from certain types
of taxation. See see Offshore
Legal and Tax Regimes for further details.
No
permits or licenses are required to do business,
except for financial sector companies and professional
services (see Offshore Business
Sectors). It is a notable feature of the Liechtenstein
PGR Code that there is very great freedom, within
the basic forms it describes, to constitute corporate
and share structures in a flexible way according
to the particular purpose of the entity and its
originators' wishes. Therefore only rather general
statements can be made about the rules governing
the operation of the various forms; the rest will
depend on circumstances.
Corporate
bodies formed under the PGR Code (not Trusts)
share a number of characteristics:
- there
must be written Articles of Association; they
are deposited with the Registrar and are available
on the public file, including details of capitalisation,
share structure, registered office, etc;
- the
corporate body does not come into existence
until its details have been entered into the
public register;
- the
names of the directors, officers and shareholders
are kept at the registered office;
- the
corporate name can be in any language and
must include the name of the type of body
concerned (Limited, Foundation, etc), but
some words are not permitted, mostly those
with national or international territorial
meanings (exemptions may be available).
In
May 2010, the Liechtestein government adopted
tax reform proposals that will usher in a 12.5%
flat rate of corporate tax. See Domestic
Corporate Taxation for more information.
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Liechtenstein Company Limited
by Shares
The Company Limited by Shares is designed to be
used as a public company, although it does not
have to be public. There are founders who are
(can be) distinct from the shareholders.
The
Company Limited by Shares has a minimum capital
of (at the time of writing) SFr 50,000, 20% of
which must be paid up, with a minimum paid up
of SFr 50,000. Bearer shares must be fully paid
up, although the Articles can permit them to be
50% paid up; the minimum is still SFr 50,000.
If
there is to be no public subscription, the company
is formed 'simultaneously', in one legal act,
and the founders are the shareholders. They create
the company by entering into a Deed.
If
there is to be a public subscription, the company
is formed 'successively': first, the founders
declare their intentions in general, then the
subscription process takes places, and in a general
meeting of subscribers (shareholders) the final
details of the company's constitution are ratified.
Shares
can have variable voting rights (eg multiple votes,
or restricted votes), but non-voting shares are
not permitted. The appointment of an auditor,
and the annual submission of audited accounts
to the Registrar, are mandatory for the Company
Limited by Shares.
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Liechtenstein Limited Liability
Company
The Limited Liability Company (Aktiengesellschaft)
is formed by two or more members and has a minimum
capital of SFr 30,000 (at the time of writing).
The minimum subscription amount from any one shareholder
is SFr 50. Further amounts need not be paid up
unless the Articles provide for it; but the joint
liability of the shareholders on liquidation or
withdrawal is the amount of the registered capital.
- Various
types of share can be issued, including preference,
registered, voting, no-par-value and bearer
shares; only registered shares can be issued
at below par value;
- Voting
rights can be allocated or not freely to all
types of shares, and voting rights can be
limited according to defined circumstances
or occasions;
- A
minimum of one director is required, who may
be corporate; secretaries are not required;
an exempt company needs to have a local professional
as an agent;
- Audited
annual accounts have to be filed.
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Liechtenstein
The Establishment (Anstalt)
The Establishment, or Anstalt, is a corporate
form that is peculiar to Liechtenstein. It has
no members or shareholders. It is an autonomous
fund with beneficiaries. It is often used as a
holding company for patents or royalties, or for
estate assets. It has a founder or founders, who
are not necessarily the same as the beneficiaries;
the founders' rights can be transferred, if the
capital is not divided into shares, giving the
current tenants of the founders' rights considerable
powers over the Establishment. In this respect,
the Establishment is similar to the Foundation.
- The
minimum capital, if not divided into shares,
is SFr 30,000 (at the time of writing); and
if higher, at least half (minimum SFr 30,000)
must be paid up;
- the
minimum capital, if divided into shares, is
SFr 50,000 (but this form is never nowadays
used);
- a
minimum of one director is required; it is
normal to delegate substantial powers of management
to the director(s);
- if
the Establishment has commercial objects,
audited annual accounts must be filed; but
note that the management of investments or
other assets is not deemed 'commercial'
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Liechtenstein The Foundation
(Stiftung)
A
foundation exists to give effect to the stated,
non-commercial wishes of its founder, as set out
in a foundation deed and the Articles of Association
(Statutes). In effect, the assets with which the
foundation is endowed become a separate legal
entity. The Foundation has no members or shares;
it is set up by a founder (or founders). Most
often, this is the form that is used for the continuation
of family assets. The Foundation has beneficiaries,
who may be identified in a variety of ways.
- No
public registration is necessary, except that
a copy of the Foundation Deed is lodged with
the authorities. It need contain only very
general statements about the purpose of the
Foundation, while detailed rules are set out
in private bye laws.
- Founder's
rights are transferable, and they normally
include the right to terminate the Foundation
or amend the bye laws.
- Commercial
activities are not permitted except in so
far as they are in pursuit of the Foundation's
non-commercial goals. The minimum assets of
a Foundation are SFr 30,000 (at the time of
writing), which can not be divided into shares;
the assets do not necessarily have to pass
to the Foundation on formation;
- A
Foundation is normally administered by what
amounts to a board of trustees.
In
summer 2008, it emerged that the Liechtenstein
parliament had approved a reform of the jurisdiction's
foundations law, which the government claimed
adhered to international standards while continuing
to protect privacy.
The
new foundation law entered into force on April
1, 2009 and is part of the government's ongoing
modernization of Liechtenstein company structures,
which so far has included revision of the
law governing associations and cooperative
societies, and the introduction of the European
Company and the European Cooperative Society.
As
announced by the government, a revision of
trust law will follow, the cornerstone of
which – as in the case of Liechtenstein
foundations – was laid in 1926 with
the creation of the Law on Persons and Companies.
"Liechtenstein’s
total revision of foundation law is based
on the contemporary demands and needs of the
financial centre's’s clients,"
the government announced.
"The
balanced overall concept of the reform...meets
international standards without deviating
from the Liechtenstein legal tradition, which
has always considered the protection of privacy
to be a valuable good," the government
said.
The
main aim of the reform of foundation law was
to harmonize with international standards,
but the changes were also carried with the
popularity of the foundation and its national
economic significance to the Principality
in mind.
"The
requirements of market participants were taken
into account, as well as the need to create
a legal foundation that can be measured in
accordance with scientific criteria and international
standards, as the government stipulated in
its guideline at the beginning of the reform
process," the government stated.
The
new foundation law is a self-contained body
of law with a new systematic structure differentiating
private-use from charitable foundations and
strengthening the responsibility of the founder.
The protection of the foundation assets is
subject to new rules, as are the supervision
of foundations and foundation governance.
The non-transferability of the founders’
rights as a further new key feature entails
greater legal certainty and clarity.
The
“deposited” foundation, which
need not be registered in the Public Registry
and has thus been an object of criticism,
was retained. The government justified the
retention of this type of foundation by noting
that it serves to protect the confidentiality
of the founder if he wants to engage in long-term
asset planning in the interest of his family.
The exemption from the registration requirement
only applies to private-use foundations, however,
not to commercially operating foundations,
which as a rule are limited to the mere management
of assets.
The
so-called “Futuro” project launched
by the government calls foundations the “heart
of the financial centre's" According
to “Futuro,” family foundations
are increasingly being recognized as autonomized
assets and thereby constitute an instrument
of succession planning that is sought worldwide.
In
the future, the Liechtenstein professional
trustee is no longer envisaged as merely a
broker and administrator of this structure,
but rather – thanks to his internationally
recognized competence – will be seen
as an important advisor in personal contact
with the founders.
“Futuro”
also plans to make Liechtenstein into a location
for trusts, by harmonizing them completely
with Anglo-Saxon trust structures.
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Liechtenstein
The Trust Enterprise
The Trust Enterprise is set up by a Trustor (settlor)
through a Deed of Trust which is equivalent to
Articles of Association, and must specify the
name and purposes of the Enterprise, the identity
of the trustees, the composition of the trust
fund, and (if the purposes are commercial) the
identity of the auditors. As usual, 'commercial'
does not include asset management or holding operations.
The Deed of Trust is filed with the Registrar
of Trusts. The minimum trust fund is SFr 30,000
(at the time of writing). The participants in
a Trust Enterprise are largely shielded from creditors
of the Enterprise, who have access only to its
own assets.
A
Trust Enterprise can be created either without
legal personality, and is then called an 'active
trust' (eigentliche Geschaftstreuhand), or with
legal personality, in which case it is called
a 'non-active trust' (uneigentliche Treuunternehmen).
Only non-active trusts have gained currency in
Liechtenstein, and they are frequently used to
hold investment assets, for instance in merger
situations, and for the distribution of income
from real estate holdings. The legal form of the
Trust Enterprise is close to that of the American
'Massachusetts Trust'.
One
of the trustees must be a resident of Liechtenstein
holding a recognised professional or other qualification.
In the case of a non-commercial (ie unaudited)
Trust Enterprise, this person certifies to the
Registrar that the Trust has kept proper books
and that no commercial activities have been carried
out. This is the only reporting that is required.
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Liechtenstein
Trusts
Liechtenstein is the only civil law jurisdiction
which has adopted largely anglo-saxon trust legislation
(contained in the PGR Code), although, unlike
the common law trust, there is no bar against
accumulation of income, nor against perpetuities.
A
Liechtenstein Trust is set up by a written agreement
(Trust Deed) between the trustor (settlor) and
trustee(s) which does not have to contain the
names of beneficiaries. If the Trust Deed is deposited
with the Registrar of Trusts, it will not be publicly
available, and later instruments (eg naming beneficiaries)
will not have to be revealed; if the Trust Deed
is not deposited within 12 months, details of
the Trust must be placed on the public register.
A registration fee of US$200 (at the time of writing)
is payable on registration.
Some
of the characteristics of Liechtenstein Trusts
are as follows:
-
a trustee (apart from the Liechtenstein professional
mentioned above) can be an individual or a
corporation or association;
- trustees
are liable for breach of trust to the full
extent of their assets; joint trustees are
jointly liable; supervision of the trust is
ultimately under the Court, even if the Trust
Deed specifies alternative supervision;
- the
interests of named beneficiaries can be embodied
in trust certificates, which if registered
are transferable securities;
- being
a civil law jurisdiction, trust assets are
vulnerable to forced heirship provisions,
although there are time limitations on such
claims;
- in
general, there is a limitation of one year
on creditors' claims;
- trust
documents, including the Trust Deed, can be
in any language.
Trusts
may be set up under foreign law, but may not
have more favourable treatment than would apply
under Liechtenstein law. A trust under foreign
law is a Liechtenstein Trust and subject to
local taxation. Liechtenstein law applies to
a foreign trust if the trustee, or more than
half of the trustees, are resident in Liechtenstein,
if the trust property is in Liechtenstein, or
if the Trust Deed says so.
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