The Liechtenstein Establishment (Anstalt)
Legal structure of the Liechtenstein Establishment
Under Liechtenstein legislation, the establishment is a business structure with its own legal personality under civil law. There are several options available regarding the design of the establishment’s structure. These options range from establishments that are similar in nature to a foundation (functioning as separate assets which are endowed for specific purposes) to establishments that are similar in nature to a corporation, having the capital divided into shares.
The Liechtenstein establishment is formed based on a formation document that needs to be signed and notarized and it includes the formation deed and articles. The establishment does not require a separate legal entity until it is entered in the Public Register.
The establishment can be formed be either natural persons or legal entities from Liechtenstein or from abroad. Only one founder is required for this legal structure.
Any person can obtain an extract from the Liechtenstein Public Register by request. The extract contains the following information about the establishment: the register number, date of entry into the register, corporate name, date of formation, registered office, capital, object, board members and establishment directors, authorized representatives and signatories, legal representative and method used for official announcements made by the establishment.
Additional details that are not published in the Public Register are the name of the founder or the name of the current holder of the founder’s rights (if applicable).
The establishment can be used in Liechtenstein to pursue commercial and non-commercial objects. It can be used to conduct trading and financial transaction, as well as for holding participations or asset management. However, the object clause included in the articles must state in each case whether the establishment is permitted to conduct commercial transactions or not.
Minimum required capital for an establishment
The minimum required capital for an establishment is CHF 30,000. If it is divided into shares the minimum required capital is CHF 50,000. The capital can be deposited in cash or it is possible to make contributions in kind. When the establishment is formed, it is required to provide proof that the minimum capital has been paid up. Additional funds can be added to the establishment after it has been formed.
Liability for commitments
In case of liability, only the assets of the establishment are liable to creditors. The founders of the establishment or the governing bodies are not personally liable. Neither of them have statutory obligations to make any additional contributions.
Under Liechtenstein legislation, the founder is allowed to specify in the articles how the establishment is organized and what form of cooperation is used between the individual governing bodies.
– Supreme governing body
The supreme governing body of the establishment is represented by the holder or holders of the founder’s rights, unless it is specified otherwise in the articles. Using this organizational form, the holder of the founder’s right possesses powers similar to those of a general meeting of shareholders in the case of a company limited by shares. However, the said powers are not based on any pecuniary rights. This is the reason why this type of establishment is described as being similar in nature to a corporation. In the case of an establishment without any founder’s right, the organizational form is similar in nature to a foundation.
– Imperative executive body (board of directors)
The board of directors is responsible for the management of the establishment and external representation of the establishment in all matters that are stipulated by law. The board of directors exercises the imperative function as an executive body, even if this function has not been assigned by the supreme governing body.
It is required that at least one member of the board of directors authorized as a representative of the establishment and that manages its business must hold an appropriate license or to obtain special approval from the government.
The establishment must appoint auditors that are licensed to practice in Liechtenstein if it pursues a commercial object or if it is permitted to do so under the articles. Establishments that do not pursue a commercial object are not required to appoint auditors.
– Additional governing bodies (optional)
Additional governing bodies can be provided for and their composition can be specified in the articles.
– Legal representative
The legal representative is not a governing body; however it is authorized by law to accept service of any kind of documents from government authorities and courts. This function is occupied by an authorize person to accept service for the establishment in Liechtenstein. There is also the option for the founder of for the governing bodies of the establishment to grant additional powers to the legal representative to represent and act for the establishment.
Beneficiaries are entitled to economic benefits in the form of pecuniary rights to the establishment. Beneficiariesas well as any prospective beneficiaries are usually appointed by the establishment founder or by the supreme governing body of the establishment. The appointing governing bodies or persons also define the scope and type of the beneficial interest in by-laws. In the case that no beneficiaries are appointed, the holder of the founder’s rights is the beneficiary of the establishment as presumed by law.
It may be specified in the articles that the rights of the beneficiaries cannot be withdrawn from them by creditors by bankruptcy proceedings or by way of levy of execution.
Bookkeeping and preparation of the annual accounts
Establishments that have a commercial object or those whose object clause permits them to conduct commercial activities have the obligation to keep a proper set of accounts. Annual accounts must be audited by appointed auditors who are licensed to practice in Liechtenstein. These accounts must be submitted to the competent tax authorities in Liechtenstein within six months after the close of the business year.
Statement of assets
Establishments that do not conduct any type of commercial business and whose object clause in the articles does not permit commercial activities to be conducted are subject of simplified regulations. These types of establishments must prepare an annual statement of assets and liabilities (schedule of assets). Under these provisions, the only declaration that must be given to the Public Register within six months after the close of the business year is that the said schedule of assets is available and that no business of commercial nature has been pursued. It is not mandatory to submit the schedule of assets to the Public Register.
The supreme governing body is responsible for resolving to dissolve the establishment, unless it is otherwise specified in the formation deed or in the articles. Following this resolution, the assets of the establishment will be liquidated and any liquidation surplus will be distributed to the beneficiaries of the establishment after the blocked period of six months (starting with the date of the third call for claims in the official publication, as provided in the articles). After this period, the establishment can be deleted from the Public Register.
Advantages of the Liechtenstein Establishment
- It offers extensive flexibility in the individual design of the business structure;
- It provides the option to create a legal structure similar in nature to a foundation, but with the possibility of pursuing a commercial object;
- It is an appropriate instrument for succession planning over several generations;
- It can be used for asset protection;
- It provides protection of privacy.