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Foundations are generally seen as the ‘corporate’ alternative to the trust. The law on foundations adopts principles from corporate law, however it is largely based on Italian and French civil code provisions. It is possible to set up a private or public foundation in Malta.
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Foundations

Private Foundations

A private foundation is set up by the founder for the private benefit of one or more persons, or a defined class of persons in which the beneficiaries must be identified. Unlike a charitable foundation, a private foundation does not solicit funds from the public.

Public Foundations

On the other hand, a public foundation or a “purpose foundation” may be set up for charitable, philanthropic or other social purposes or as a non-profit organisation or for any other lawful purpose.

How to set up a Foundation

A foundation may only be constituted by virtue of a public deed inter vivos or by a public or secret will. The deed of foundation must also be registered with the Office of the Registrar of Legal Persons, which is an ad hoc office set up for the specific purpose of undertaking the registration of legal persons in general. The foundation deed must include detailed provisions containing the powers, form of resolutions and signing authority of the foundation.

Once a foundation is established, a new legal person is created. Therefore, the foundation itself becomes the owner of the foundation property. This is a significant variation from the trust concept as a trust does not constitute a separate legal person.

The foundation board of administrators has powers of administration and representation and is accountable for the management of the foundation. However, the founder may have a considerable amount of discretion in the administration of its foundation, since the law allows for it to be an administrator itself.

Uses of a Foundation

Foundations provide a useful device for individuals and organisations in various structures and transactions. A case in point is the use of foundations by high-net worth individuals to plan their financial affairs and provide for future generations in a flexible, efficient and practical manner.

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