Type and Duration
FFF-Förderprojekt, March 2024 until February 2025Coordinator
Company, Foundation & Trust LawMain Research
Business LawDescription
Since the initial statutory standardization of foundation and trust law in the Law of Persons and Companies (PGR) in 1926, these two legal institutions have significantly contributed to Liechtenstein's success as a location for wealth planning and structuring. Dogmatically, the two legal institutions differ significantly from each other. Nonetheless, in a functional sense, civil law foundations and common law trusts both serve as vehicles for wealth and succession planning, as well as philanthropic purposes, allowing the will of the founder/settlor to be perpetuated unalterably.In 1926, Liechtenstein became the first continental European jurisdiction to implement a common law trust into their domestic companies act. Ever since, the legal framework remained unchanged. With the end of 2023, the government released a consultation report proposing substantial changes to the Liechtenstein trust law. The intended changes particularly concern the area of trust governance. The main emphasis lies in the introduction of a mandatory information beneficiary (enforcer) as well as amendments to the provisions on judicial supervision, the catalog of supervisory measures, the right to file an application and party status in supervisory proceedings as well as the subordination of charitable trusts to the supervision of the Liechtenstein Foundation Supervisory Authority.
The introduction of an enforcer in the form of an information beneficiary is particularly questionable, as it would undermine the beneficiary principle, one of the fundamental traits of common law trusts. As a result, every trust would by law require an enforcer to secure its enforceability, even if the trust has beneficiaries. Hence, the enforcer would be in possession of the same rights as the beneficiaries (as seen in traditional Common Law trusts).
Similarly, the foundation was first standardized in the PGR in 1926. However, in 2008, a total revision of foundation law took place, largely resulting in a newly reformed foundation law focusing on the governance of charitable as well as private foundations. Recently, the government released plans to conduct “special
improvements” to the current foundation law. The consultation draft for the amendments of the foundation law implies that changes will mainly concentrate on beneficiaries' rights of inspection and information, supervision and the prevention of legal disputes between foundation stakeholders.
Bearing in mind what has been stressed so far, it can be said that the foundation as well as the trust are facing legislative adjustments. In both cases, the changes are specific and targeted novelties. In each case they relate to governance, which is an essential component of the respective legal entity.
A number of questions therefore arise in the context of the respective governance systems of the two legal forms, as well as further questions regarding the future private and non-profit structure, so that their control and supervision can continue to be ensured in a closed and selfregulating system. Given all this, the research project aims to examine the planned legislative changes and identify potential areas of tension.
