Episode 24 − Ongoing Obligations
In our twenty-fourth episode, Kath Zagatti, Partner at M/HQ, and Yann Mrazek, Managing Partner M/HQ, discuss the basic but paramount ongoing obligations of a foundation.
Key Takeaways
1. Appointment of Key Parties
At the time of incorporation, the Founder must appoint at least 2 Council Members for the Foundation. The Beneficiaries or Qualified Recipients are usually appointed at the incorporation stage of the Foundation, although there is not legal requirement for such appointment at the onset. A Guardian is also not required to be appointed at the time of incorporation of a Foundation with legacy planning object, unless the Foundation has a specific charitable or non-charitable object.
2. Annual Obligations
A Foundation must be renewed every year with its Registrar, upon the provision of certain documents: i.e. proof of registered office, data protection statement, confirmation statement, and information in case of change of any Key Party. Foundations are also required to maintain annual accounts, which shall be approved by the Council Members within six (6) months after the end of each financial year. The auditing requirement, however, is waived in case the Foundation’s annual turnover is lower than $5,000,000 calculated on a consolidated basis including all the Foundation’s subsidiaries (if any). It is important to note that although a Foundation is required to maintain annual accounts, the Registrar is currently not conditioning the renewal of the Foundation’s license to the submission of the accounting report by the Foundation.
3. Ongoing Ad Hoc
Obligations For the sake of a good corporate governance, it is paramount that any strategic decision being made by the Foundation is properly recorded by means of a Meeting of the Council Members’ meeting. Example of strategic decisions: replacement of Council Members, appointment of a Guardian, addition or exclusion of a Beneficiary, opening of a Bank Account, addition of an Asset. It is also important to note that in case of change in the Key Parties of a Foundation, the Council Members will have to update the Foundation’s By-Laws, and update the Registrar’s records accordingly.
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