Nevis Multiform Foundations are a unique and attractive option for succession and estate planning due to their multi-form nature. Historically, foundations were primarily used for charitable purposes; however, they have evolved to support commercial and estate planning endeavors. In Nevis, foundations are established under the Multiform Foundations Ordinance (the ‘MFO’) and regulated by the Multiform Foundations Regulations, 2005 (the ‘Regulations’).
Establishment
A subscriber is the individual who makes the initial subscription or contribution of assets to the foundation—akin to a founder, settlor, guarantor, or shareholder. The by-laws of the foundation must outline a purpose or object that guides the foundation’s business and activities. While naming a beneficiary or beneficiaries is not required, it is permitted.
To establish a Nevis Multiform Foundation, certain documents must be filed with the Nevis Administration Registrar of Foundations, including:
- FORM 4: Contains basic foundation information such as the name of the foundation and the registered agent’s name and address in Nevis. The applicant must also select the initial form the foundation will take, which can be:
- Ordinary Foundation
- Trust Foundation
- Company Foundation (Limited Company, Unlimited Company, or LLC)
- Partnership Foundation (General Partnership, Limited Partnership, or LLP)
- Memorandum of Establishment
- By-Laws: These are the rules governing the foundation.
The Memorandum of Establishment and By-Laws constitute the foundation’s Constitution. Together, these documents identify the foundation’s name and its purpose—whether charitable, non-charitable, or both. Notably, no information regarding the Founder, Secretary, Members of the Management Board, or any other parties connected to the foundation, other than the foundation’s registered agent (in this case, Southpac Trust Nevis Limited), is disclosed to government authorities. Nevis does not maintain a centralized register of beneficial owners.
The MFO requires a Multiform Foundation to be managed by a Management Board, consisting of one or more individuals. Members of the Management Board must be appointed upon establishment but can be removed and replaced according to the processes outlined in the By-Laws. The Management Board is responsible for administering the foundation’s assets and conducting business in alignment with the foundation’s stated purpose. The members and any specific powers they hold are enumerated in the By-Laws.
Additionally, the MFO mandates that a Multiform Foundation have a Secretary, who may not be the sole member of the Management Board. Though not required by the MFO, the constitution of a Multiform Foundation may establish a Supervisory Board, which oversees compliance and supervises the Management Board’s conduct.
Multiforms
As suggested by its name, the MFO allows Nevis Multiform Foundations to take different forms, providing flexibility to accommodate a wide range of purposes. Upon creation, the foundation may assume the form of an ordinary foundation, a trust, a company, or a partnership; however, it can only have one stated form at a time. The initial form must be reflected in the foundation’s name.
Trust Foundation
When an applicant wishes to establish a Trust Foundation, they must indicate this in the Form 4 application and propose a name that ends with “Trust Foundation” (e.g., XYZ Trust Foundation).
In this case, the Trust Foundation’s by-laws serve as the trust deed, defining various trust-specific roles and concepts. For example:
- The Management Board acts as the trustee of the trust funds.
- The Settlor refers to the Subscriber of the foundation.
- The Supervisory Board functions as the protector or guardian of the Trust Foundation’s funds.
Importantly, the Regulations state that the Trust Foundation enjoys the protections outlined in the Nevis International Exempt Trust Ordinance, Cap. 7.03 (N) (the ‘Trust Ordinance’), provided “Trust Foundation” is its stated multiform.
Benefits of a Trust Foundation include:
- The entity cannot be declared void due to the forced heirship rules of the Settlor’s domicile.
- Foreign judgments against the entity are unenforceable; a new civil action must be raised in Nevis’s court system, proving the transfer was fraudulent beyond a reasonable doubt (a very high legal standard).
- Assets forming a Trust Foundation will not be deemed fraudulently transferred if added more than two years before a creditor’s cause of action arose. If the transfer occurred within two years, a creditor must commence action within one year of the alleged cause of action.
- Trust Foundation details and any court proceedings are kept confidential.
Company Foundation
When establishing a Company Foundation, the Form 4 application allows the applicant to select the Limited Liability Company form. Similar to the requirements for a Trust Foundation, any form of a Company Foundation must include “Company” or “Co.” and “Foundation” in its name (e.g., XYZ Limited Liability Company Foundation).
For a Company Foundation, the applicant must submit a specific LLC Foundation Memorandum of Establishment and Company Foundation By-Laws. These documents are drafted with LLC-specific terms. According to the MFO, the Management Board is referred to as the Manager of an LLC Foundation. The capital contributed to an LLC Foundation consists of the initial or subsequent subscriptions. A member is anyone who holds beneficial entitlement in the Company Foundation as a subscriber or beneficiary and is entitled to a certificate specifying their membership interests.
The proper law for this type of Multiform Foundation, unless otherwise stated in the By-Laws, is the Nevis Limited Liability Company Ordinance, 2017 (the ‘LLC Ordinance’). This means the Company Foundation must operate as a Nevis limited liability company while enjoying the additional benefits of a foundation.
Benefits of a Company Foundation include:
- It is a separate legal entity, distinct from its managers and members, responsible for its assets and liabilities.
- In Nevis, foreign judgments are not recognized; any creditor pursuing claims against a Company Foundation must deposit a bond determined by the Nevis High Court.
- If a judgment creditor applies to the Nevis High Court, the court may charge the member’s interest with the unsatisfied judgment amount. This order allows the creditor to receive any distributions related to that member’s interest but does not permit direct enforcement against the Company Foundation. The charging order is non-renewable and expires three years after being entered.
Nevis also provides a high level of confidentiality, with no public record of Company Foundation managers or members.
Existing Entities Migrating to Nevis under the MFO
In addition to establishing new entities, the MFO permits the continuation, transformation, conversion, consolidation, or merger of an existing entity into a Multiform Foundation. This means, for example, a previously established Trust could be re-domiciled to Nevis and converted into a Nevis Trust Foundation, allowing the new entity to benefit from all the advantages of a Nevis Foundation while retaining the Trust structure.
Conclusion
The Nevis Multiform Foundation presents a versatile and advantageous solution for individuals and entities seeking effective succession and estate planning strategies. By allowing various structural forms—such as Trust Foundations and Company Foundations—under the regulatory framework of the Multiform Foundations Ordinance, these foundations offer significant asset protection, confidentiality, and flexibility in managing and distributing assets. The ability to establish a foundation with tailored by-laws and the option to migrate existing entities into this framework further enhances its appeal. As a result, the Nevis Multiform Foundation stands out as a robust tool for safeguarding wealth and ensuring the seamless transfer of assets across generations, all while adhering to the legal protections afforded by Nevis law.
Disclaimer: the article above is for information purposes only. It is not intended to constitute legal or tax advice. If you are planning to establish or place assets into an offshore structure, please consult beforehand with legal and tax professionals in your jurisdiction(s) of tax residence.
