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The St. Kitts Foundation

A comparison between the Private Foundations and the Trust

 

The Foundation is the civil-law equivalent of the trust in anglo-saxon law. Where the trust has a settlor, trust property and trustees, the Foundation has a founder, foundation funds and the councillors; both the trust and Foundation have beneficiaries and guardians.

There are, however, significant differences between the two: the Foundation is, in itself, a legal entity, whereas the trust is not; in a trust there are legal owners and beneficial owners, whereas in a Foundation there is no such split as the Foundation itself is the owner of the Foundation funds.

Despite these differences, both trusts and Foundations are considered among the best vehicles for individuals wishing to arrange the succession of private assets.

The law on Foundations of St. Kitts

 

Although St. Kitts already had a modern trust law, Act No. 8 on Foundations (the Act), passed by the national assembly on September 18th 2003, provided St. Kitts with a civil law alternative to the trust.

 

What is a Foundation?

 

According to the law of St. Kitts, a Foundation is a capital endowment made by one or several individuals or corporations, called Founder, for a specified purpose, such funds becoming thereby autonomous, the administration of which is committed to a governing body, called Councillors, for the purpose of implementing the founder’s intentions or objects of the foundation and for the benefit of one or several individuals or corporations, called beneficiaries, acquiring legal personality upon its registration in the Register of St. Kitts.

 

Basic documents

 

The main documents of a St. Kitts Foundation are the Articles of Foundation, which must be registered for the foundation to become a legal entity and the By-Laws, which set down the rights and identity of the beneficiaries. The By-Laws, usually issued by the Councillors, are strictly private and confidential. (See below for more information).

 

Purpose

 

According to the Act the purpose of a Foundation must be non-commercial and non-profit. A Foundation may not operate as a company, although it may own shares in other companies or invest in the finance industry, provided that any income generated be used exclusively for the specific purpose of the Foundation.

 

Initial Foundation Capital and subsequent changes

 

There is no minimum initial capital required for a foundation. The Foundation funds may be paid in by the Founder or a third party, and no proof that this has been paid is required by the registrar prior to formation. Once the Founder has made the initial endowment, the Foundation Funds become autonomous and legally separate from any other assets owned by the Founder.

 

Councillors

 

The Councillors must contain at least one individual or one company. These may be of any nationality.

 

By-laws or regulations

 

The By-laws or Regulations are the documents which set down the identity and beneficial rights of the Beneficiaries. These are normally drawn up by the Councillors, and remain strictly private and confidential. There is no requirement for the details to be registered with either the Foundations Register or the Registered Agent in St. Kitts, and all administration can be carried out abroad.

 

Beneficiaries

 

The Beneficiaries can be physical persons of any age and/or legal entities of any nationality. They are not the owners of the Foundation, nor are they creditors. It is possible to appoint new beneficiaries at any time after the Foundation has been registered. The rights of the beneficiaries are set down in the Articles of Foundation or the By-Laws, or by resolutions passed by the Councillors.

 

Guardian(s)

 

The Articles of Foundation may stipulate the appointment of optional “guardians” to control or advise over the Foundation. The Act sets down the possible roles of such guardians, and the Founder or Councillors finalise the specific powers in each individual case.

 

Data required to be registered

 

In order for the foundation to be registered and acquire legal personality status the following minimum details must be stated in the charter (as required by the Act): foundation name, initial foundation capital, councillor, domicile of foundation, local representative (registered agent), purpose, method of appointing beneficiaries, rights reserved by founder (if any), and duration of foundation. It is not necessary to register details of the beneficiaries or beneficial rights.

 

Amendments to articles and by-laws

 

Generally, the Councillors have the right to make and register amendments to the charter at any time. The registered agent must file a memorandum of amendment with the Foundations Registrar. It is not necessary to register or make public amendments to the by-laws.

 

Accounting and Auditing requirements

 

The Foundation is not required by law to file accounts in St. Kitts. However, the Councillors are responsible for reporting the financial affairs of the Foundation to the Beneficiaries (or their representatives), and thus a bookkeeping requirement is implied. The Articles or By-Laws may, however, make other provisions.

 

Transfer of Domicile

 

It is possible for St. Kitts Foundations to transfer their domicile abroad, and for foreign foundations to transfer their domicile to St. Kitts. This does not entail loss of corporate status or a change in the obligations to third parties. From the date of transfer, the Foundation becomes subject to the law of the new country of domicile.

 

Registered Agent requirements

 

In accordance with the law, all Foundations must have a local Registered Agent in St. Kitts. The Registered Agent can be either a local lawyer or law firm.

 

Laws governing Confidentiality

 

St. Kitts has a strong tradition of protecting confidentiality and privacy. Both statutes and the penal code strictly govern this matter in the fields of law practice, banking, trusts and foundations etc. Abuse or unauthorised transmission of confidential information by anyone with access to such information may result in prosecution. Banking secrecy will only be over-ruled by court order and in criminal cases.

 

What are St. Kitts Foundations usually used for?

 

The St. Kitts Foundation is an ideal vehicle for the non-commercial holding and administration of assets and for estate planning. The Foundation provides suitable protection and ensures succession in an advantageous tax environment. The flexibility allows for changes in the beneficiaries, amounts of Foundation funds and rights of beneficiaries.

 

 

THE ST. KITTS FOUNDATION - FEE SCHEDULE

 

Compulsory costs

Formation Fee

990 USD

Annual Fees

Registered Agent

790 USD

Annual Tax

200 USD

Total Fee for Formation and First Year Fees

1980 USD

Optional Costs

Councillors - 1 private person

690 USD

Power of Attorney

290 USD

Extract of Public Registry

395 USD

Extract of Public Registry + Apostille

555 USD

Modifications of Articles of Foundation

600 USD

Amendments to By-Laws (Regulations)

500 USD

 
European offices
Offshore company

An offshore company is an enterprise which only carries out economic activities outside the country in which it is registered. So, an offshore company can be any enterprise which doesn't operate "at home". At the same time, according to public opinion, an offshore company is any enterprise which enjoys tax-free or low-tax status in the country of registration. In the USA, the term offshore company is also used as a synonym for any overseas activities. The offshore company existed in ancient Greek times, when Greek merchants offered their wares from nearby islands in order to escape the taxes in Athens. The format of the modern offshore company, however, is undeniably linked to the United Kingdom, and it was the British who developed the offshore company as we know it today. It was English corporate law, adopted in one form or another by just about every British territory, which provided the basis for the establishment of the laws necessary for the incorporation of offshore companies. If we examine the most significant tax havens where it is possible to incorporate offshore companies, then the British legislative roots can be discovered almost everywhere. And here it is not just the everyday transplantation of offshore companies as is the practice in common law which we are talking about, but the legislation itself, based on the English law, specifically allows for the establishment of the offshore company, often through a separate law. For example, numerous jurisdictions have copied one of the most popular laws regarding offshore companies of the last 25 years, the British Virgin Islands IBC Act, which replaced the BC Act, though the rules for the formation of an offshore company hardly changed under the new law. The only real change in the British Virgin Islands is that while it was possible earlier to form an offshore company with bearer shares, this possibility has now been very tightly restricted. It is still possible today for an offshore company in the BVI to issue bearer shares, but such an offshore company will pay a minimum of 1100 USD in annual tax as opposed to 350 USD, and an offshore company formed this way has to deposit the issued shares with a person specifically authorised for the purpose.

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