LIECHTENSTEIN: enterprise foundations in Liechtenstein

The most popular Liechtenstein legal form is the Liechtenstein foundation. There are several reasons why a Liechtenstein foundation is an attractive legal vehicle. Above all, mainly because of its asset protection qualities and its flexibility. The “beating heart” of every foundation is its purpose. The Liechtenstein legislator foresees only two purpose types: private or charitable. Despite the wide range of flexibility for a Liechtenstein foundation, it is controversial amongst legal scholars whether a pure enterprise (holding) foundation is permissible under Liechtenstein law.

A pure holding foundation is not a foundation for its own ends. This is because every company is economically active and economic activity is, by definition, an activity directed outwards. This means that third parties benefit from companies. Employees, suppliers, customers, consultants and contractual partners benefit directly (or indirectly) from the company. The purpose of a pure holding foundation is therefore also directed outwards and satisfies the requirements of Art. 552 § 1 Para. 1 PGR. Legal policy considerations also support this. Liechtenstein has always been considered a liberal but established location for foundations. A key reason for this was and is the freedom of founders. It goes further than in other legal systems. With the complete revision of Liechtenstein foundation law in 2009, the legislator did not want to restrict the freedom of founders or affect the advantages of the Liechtenstein foundation.  Rather, the complete revision was intended to make a “…significant and future-oriented contribution to strengthening and securing its importance for the Liechtenstein financial center…”.  The advantages of the pure holding foundation are far-reaching in economic and business terms. On the one hand, the break-up or fragmentation of companies can be prevented across generations and at the same time the longevity of companies and company values can be ensured. De lege ferenda it would be a blessing for the Liechtenstein financial industry if the legislature were to eliminate the legal uncertainty surrounding the pure holding foundation and explicitly anchor its legal admissibility in the law