Foundations

“A foundation is an organisation constituting of a universality of things constituted in writing, including by means of a will, by a founder or founders whereby assets are destined either for the fulfilment of a specified purpose or for the benefit of a named person or class of persons, and are entrusted to the administration of a designated person or persons. The patrimony, namely assets and liabilities, of the foundation is kept distinct from that of its founder, administrators or any beneficiaries.”

Trusts and Foundations are similar. A fundamental difference between the two is that a foundation has legal personality. A foundation is established by deed. The deed of a private foundation contains an endowment of money or property. The foundation deed must include detailed provisions containing the powers, form of resolutions and signing authority of the administrators and the foundation.

Once a foundation is established, a new legal person is created. Therefore, the foundation itself becomes the owner of the foundation property. However the beneficiaries have enforcement rights against the administrators. The benefit under a foundation is personal to the beneficiary, as in the case of a trust. The foundation envisages a founder which sets up the donation of assets with administrators who manage the foundation. A supervisory council may be set to monitor the acts of the administrators.

A foundation may allow for segregated cells to be created within the foundation. They allow assets and liabilities in one cell to be hived off and insulated from other assets and liabilities in other cells. Segregated cells would not be vested with legal personality and do not constitute distinct persons at law.