PRIVATE FOUNDATIONS UNDER THE LAWS OF THE NETHERLANDS ANTILLES
The ultimate vehicle for tax- and estate-planning
Introduction
The Netherlands Antilles Private Foundation has been introduced in the Netherlands Antilles Law through the National Ordinance Regarding Foundations as published on October 31, 1998. Since March 1st, 2004, these rules are laid down in Book 2 of the Civil Code.
The Private Foundation possesses corporate personality but does not have a share capital. The Private Foundation is incorporated by deed executed before a Netherlands Antilles civil law notary and is registered in the Register of Foundations at the Chamber of Commerce.
The Private Foundation is exempt (objective) from local profit tax provided however that the Private Foundation does not conduct a real business. It is always recommendable to consult a tax advisor in case there are some doubts if a Private Foundation conduct a real business or not.
Formation of a Private Foundation
A Private Foundation is formed by a notarial instrument executed by a Netherlands Antilles civil law notary and registered in the Register of Foundations at the Chamber of Commerce. The articles of incorporation of the Private Foundation include the name of the Private Foundation and the word Private Foundation (or a translation thereof) as part of the name, the object(s) of the Private Foundation, the manner of appointment and dismissal of board members, the Island territory where it has its seat and the allocation of any liquidation surplus in the case of a dissolution.
The Private Foundation must have a local board member or a local representative e.g. a trust office. This may be a natural person or legal person. The local board member shall have to obtain a director’s license.
The objects of a Private Foundation shall be mentioned in the articles and may include a wide range of activities. However, the objects may not include the conduct of a business. The following will not be deemed a ‘business’ in that respect:
(i) any activity relating to the investment of its capital, regardless the nature of such investments;
(ii) the holding of an interest in another legal person;
(iii) the participation as limited partner in a limited partnership.
In addition, the object(s) of the Private Foundation may include in general or specific terms the making of distributions to the founder(s) and/or others. The making of distributions is the board’s prerogative. The beneficiaries indicated in the articles therefore cannot derive any claim against the Private Foundation in that regard.
If so desired, the articles of incorporation may provide that the authority of the board to make distributions is subject to the consent of the founder, a Supervisory Board or another body established within the Private Foundation e.g. an Advisory Board. It should be noted that a corporate body that is not being indicated as a Supervisory Board but does have the characteristics of a Supervisory Board, may qualify as such under Netherlands Antilles law. If this will be the case, the following consequences apply:
(i) only natural persons may be appointed as members of a Supervisory Board;
(ii) the regulations regarding the liability of supervisory directors as laid down in the Netherlands Antilles Civil Code is applicable;
(iii) under the draft Commercial Registers Ordinance (‘ontwerp Handelsregistersverordening’), the members of a Supervisory Board of foundations, including the Private Foundation, shall have to be registered and therefore shall not be able to be anonymous members.
An Advisory Board or other named body within the Private Foundation shall in any event qualify as a Supervisory Board if it supervises the board of the Private Foundation.
Karel Frielink
Attorney (Lawyer) / Partner
