Asset protection and wealth preservation are the key aspects when it comes to transferring your wealth for future generations. Many people across the world choose offshore jurisdictions to protect their wealth from creditors and unwarranted seizures. Among all the locations across the world, Seychelles is a top-notch jurisdiction with a robust legal framework for asset protection. Among the strategies available for safeguarding assets as a non-resident, Seychelles foundations top the list.
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What is a Seychelles Foundation?
A Seychelles foundation is a legal structure established for a particular purpose for a definite period. It can be set up indefinitely if the foundation charter allows it. A foundation comprises four key components: the founder, the council, the protector, and the beneficiary. Moreover, the foundation charter outlines the purpose, rules and regulations, and asset transfer protocol of the foundation.
In Seychelles, a foundation is governed by the Seychelles Foundation Act of 2009. The Act outlines the key details for setting up a foundation, as well as the assets a foundation can hold. Recently, the jurisdiction has also amended its foundation-related legal framework to accommodate international regulatory requirements such as beneficial owner disclosure.
How Does a Seychelles Foundation Help Maintain Your Wealth?
The Seychelles Foundation Act prescribes certain features to the structure that make it bulletproof against your home country’s laws and creditors’ lawsuits. Here are a few more reasons that a Seychelles foundation is an ideal way to preserve your wealth.
Anti-Forced Heirship
Section 72(1) of the Seychelles Foundation Act clearly states that a Seychelles-based foundation is not subject to foreign court judgments. Moreover, the Act also protects beneficiaries from any liability or right deprivation arising from the judgments passed in another court. Thus, if you set up a foundation in the Seychelles, your assets remain safe from lawsuits outside the jurisdiction.
Can Hold Multiple Assets
There are no restrictions on what assets a Seychelles foundation can hold. As per Section 11(1) of the Act, a foundation in the Seychelles can hold:
- Any interest in another foundation
- Any shares, debentures, or interests in a company registered under the International Business Company Act, Companies (Special Licenses) Act, Protected Cell Companies Act
- Any interest in a partnership registered under the Limited Partnership Act
- Any interest or entitlement in a trust registered under the International Trusts Act
- Any company, trust or other entity licensed as a mutual fund under the Mutual Fund and Hedge Fund Act
- Any funds in the account with a bank licensed under the Financial Institutions Act
Indefinite Lifetime
A Seychelles foundation can be registered for either a definite or an indefinite period. The law does not mandate a fixed number of years for a foundation’s lifetime. Thus, you can set up a foundation for any number of years, as long as it suits your purposes.
Separate Legal Personality
A foundation, by law, maintains a separate legal personality. That means it is separate from its owners and can operate independently. Moreover, it can also hold assets in its own name, open a bank account, and enter into contracts with others. This feature provides a clear legal demarcation between founders and assets, ensuring top-notch asset protection.
Flexibility & Reserved Founder
Unlike traditional trusts, where settlors must forfeit control to avoid allegations, a Seychelles Foundation allows the founder to retain significant powers, such as appointing or removing council members and protectors, amending the foundation charter or regulations, adding or removing beneficiaries, and making investment-related decisions.
Key Things to Consider Before Setting Up a Foundation
The following are the key things that you must consider when setting up a trust and foundation:
- Must appoint a licensed registered agent
- Draft a foundation charter signed by at least one founder
- Certificate of Registration issued by the registrar
- Time period for which the foundation is established
- Must attach an English translation if the documents are in another language
Whether you are moving ahead with Seychelles offshore company formation or Seychelles foundation formation, you must appoint a licensed registered agent to begin the formalities. Moreover, you must align with the jurisdiction’s legal framework and structure your foundation accordingly to ensure maximum protection.
Additionally, you must analyze the assets and beneficiaries to add to the foundation. Moreover, you must take care with the time period and assign a purpose to the foundation’s formation accordingly.
