Monaco: Types of Company
A Foundation has been described as the civil law equivalent of the common law trust. The administrators (like the trustees of a trust) run a Foundation and once founded the Foundation has a separate legal personality to its founder and administrators. The creation of a Foundation is often preferable to the creation of a Law 214 trust.
A Foundation created in Monaco has the following key characteristics:
- A Foundation can be created in perpetuity or for a fixed period;
- A foundation can be created for any purpose which does not offend public policy and which it is seen to be in the public interest;
- Foundations can be created by will, unlike a Law 214 trust; a foundation created inter vivos must be made by notarial deed;
- Foundations are subject to a much stricter regulatory regime than trusts;
- Unlike a trust a Foundation must obtain the approval of the sovereign under Monaco law. Approval may take many months and is only granted if the Foundation has sufficient assets to achieve its purposes. This cumbersome requirement means that there are very few Foundations in Monaco;
- Unlike trusts Foundations cannot be used by foreign nationals to avoid the forced heirship rules of civil law jurisdictions;
- The administrators of a Foundation must be Monaco citizens or have resided there for at least one year;
- All foundations are subject to supervision by a local commission which has powers to inspect and copy all documents relating to administration or accounting and which can dismiss the administrators in certain circumstances.