Current Issues

UK Non Domiciled clients

This area has been subject to major changes since the last budget. Previously non-domiciled clients obtained significant tax benefits from the use of offshore structures; however the last budget has attempted to reduce some of these. Traditionally “non-domiciled clients” could set up structures prior to entering the UK to hold their non UK Assets, income and Gains. “Non–domiciled clients” can opt to be taxed on the remittance basis which means that apart from their UK source taxable income and gains they would only pay UK tax only on non-UK gains and income remitted to the UK. Non domiciles can also opt to be taxed an arising basis, but this means they are taxed on their worldwide income and gains, irrespective of whether they are remitted to the UK or not. Non-domiciles were also not required to disclose their interest in offshore structures and are shielded from IHT on their Non UK assets, unless the non-domiciled client looses his/her status after 17 years of continuous residency.

The new proposals seem to remove all the allowances previously enjoyed by” Non-domiciles” on their UK earnings if they opt to be taxed on the remittance basis as opposed to an arising basis. To opt for the remittance basis the non-domicile must disclose his/her offshore structure. After living 7 out of the previous 9 years in the UK those non-domiciles who opt to be taxed on a remittance basis will be required to pay a £30k per annum charge (this is per person in the household). Also changes to the anti-avoidance provisions mean that any UK property held through an offshore structure will be taxable and not considered excluded property as previously and foreign interest used to pay a mortgage on such UK property would also be taxed.

Clearly many non-domiciled clients are reviewing their circumstances and are considering leaving the UK. For those with UK business interests relocating to the IOM or another jurisdiction may be viable and in such circumstances we may be able to assist with re-domiciliation services.
It should also be borne in mind that for wealthy clients working under a contract in the UK for less than 7 years (say a sportsperson) the remittance basis is still a very viable tax planning route.

Also it would be beneficial where non-domiciled clients own a number of foreign properties or have sigificant foreign assets for them to use an offshore trust to hold foreign property and take advantage of the remittance basis to avoid income tax and CGT before entering the UK.


If the settlor subsequently acquires a UK domicile:

• The inheritance tax position of the trust remains the same (in other words, provided the property is situated overseas, then the trust property is outside the scope of UK inheritance tax).
  
  
• For capital gains tax, any gains of the trust would become taxed on the settlor as they arise.

The worldwide income of the trust would be taxed on the settlor

With the proposed changes potential non domiciled clients should be even more careful to ensure that they have taken proper legal and tax advice and have proper planning and structures in place before they enter the UK. Indeed those non domiciled clients at the seven year point would benefit from specialist tax advice – in this respect we have good access professional legal and tax advisors to assist our clients with bespoke solutions.

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Trusts

HL Fiduciaries Limited is qualified to offer a broad range of trustee services with particular emphasis on implementing offshore tax planning structures, inheritance planning situations, purpose trusts for business purposes and trusts to deal with family issues.

 Essentially a trust may be described as an arrangement whereby one or more persons (the “trustees”) agree to accept property from another for the benefit of one or more persons (“beneficiaries) who may or may not include the settlor. If created during the settlor’s lifetime, a trust will be established by Deed and will take the form of a declaration by either the settlor or the trustees. The trust deed will contain the terms upon which the trustees are to hold property, the powers the trustees may exercise and details of any protector (being an independent person appointed to monitor the actions of the trustees). A trust may also arise on death and can be incorporated into the provisions of a person’s will.

 Types of Trust

 Discretionary Trust

These trusts are often used for offshore settlements because of the flexibility they can provide from a planning perspective. The settlement set out the discretionary powers available to the trustees, names the settlor, identifies the trust fund (the initial sum settled is usually nominal and the bulk of the assets are added by separate document) and the names of the beneficiaries either individually or as a class. It is usual for the settlor to provide the trustees with a letter of wishes indicating which of the beneficiaries he/she would most like to benefit (and how) during his/her lifetime and following his/her death. This is a purely informal document, not binding on the trustees, that may be altered at any time.

 Interest in Possession Trust

This is also called a “fixed interest” trust whereby a particular beneficiary is entitled to the net income of the trust for a specified period In most cases the entitlement or “interest” will continue for the life of a beneficiary (life interest) and on his/her death the trustees will have a discretion to distribute the trust income amongst a class of beneficiaries or retain it and add it to capital. It is possible to to provide a further life interest in favour of, for example, a beneficiary’s spouse to arise on the death of a beneficiary. A power to advance capital of the trust fund to the person holding the life interest can also be included.

 Protective Trust

Under this type of trust a beneficiary is given a life interest which ceases upon the occurrence of one or more specified events (e.g. bankruptcy of a beneficiary), following which the income is held on a discretionary trust (which could include the beneficiary concerned). Protective trusts are commonly used for children, disabled persons or other persons who might be incapable of handling their own affairs but whom the settlor would wish to support financially.  

Purpose Trusts

The Purpose Trust Act 1996 provided a statutory framework within which a trust could be validly established for a purpose or purposes. These may be particularly useful where a trust is used within a commercial transaction.

Why create trust?

Possible Tax Planning Opportunities

In theory the main tax planning opportunity which a trust creates is that the settler would cease to be the owner of the trust property and therefore not subject to tax on those assets. Instead, it would be the trustees who, in theory, would be liable to pay tax on the trust's income and realized gains. 

If the trust is located in an offshore centre (which will impose either no or low rates of tax) there can be considerable tax saving opportunities available. Of course this is an area that requires detailed tax and legal advice relevant to a client’s specific circumstances and HL Fiduciaries Limited are happy to assist in the introduction of relevant skilled advisors as required.

Family Succession Planning

A trust can be used to enable a settler to make financial provisions for himself, his spouse and his family (or indeed others) during his lifetime and also after his death.  

Provision for Those Who Cannot Manage Their Affairs

A trust can also be used to make provision for those who, through whatever reason or incapacity, are unable to look after their own financial affairs. The individuals concerned would usually be included in the trust deed as beneficiaries but would only receive distributions at the discretion of the trustees.   

Similarly, a trust can be used to protect family funds from spendthrift members of the family. The person concerned would usually be entitled to receive the income from the trust fund but with no entitlement to the capital.

Asset Protection

Under certain circumstances, a trust can also be used to protect property from the claims of forced heirs and in some cases from future creditors; both uses require specialist legal advice.

In addition, a client might own a particular asset which he would like future generations of his family to enjoy or benefit from. Such as asset could be the family home, a valuable work or art or shares in the family business. A trust can be created to hold the asset with restrictions imposed relating to the disposal of the property.

To Avoid Probate Problems

 
A trust can also help solve the probate together with the use of companies in a trust/company structure. Although at this time, the assets should be in the name of the trustees instead of the company.  

To Cover Emergencies

A trust could be used as a contingency planning vehicle to provide cover in the event of an emergency. For example, a client could put in place the paperwork and transfer of assets to create a trust which would only be activated on the happening of a particular event, such as his incapacity or perhaps kidnap!  

Once activated, the client's assets would be managed by the trustees and his family would continue to be provided for.

To Provide Greater Confidentiality

A trust is a confidential arrangement between the settler and the trustees with minimal or, in the majority of cases, no reporting requirements. Indeed, often the beneficiaries will not know of the existence of the Trust under which they have given an interest.  

The Isle of Man and setting up a trust

The Isle of Man is a highly favourable jurisdiction for setting up a trust. Isle of Man law is closely based on that in the UK, with the main difference being that there is no restriction on the period that income may be accumulated in a trust.

 Isle of Man providers are able to maintain the confidentiality of their clients, as there is no requirement to disclose trust details.       

Provided that the no person resident in the Isle of Man is a beneficiary the trust will be exempt from local taxation in respect of income arising outside of the Islands and bank interest arising in the Islands. No withholding tax applies to beneficiaries. In addition, there is no Capital Gains Tax, Inheritance tax or Death duties on the Isle of Man.

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THE NEW MANX VEHICLE

The New Manx Vehicle launched on 1st November 2006 has been established after a detailed review of similar companies in use in other jurisdictions.

It is considered that NMVs are legally robust, yet flexible and easy to administer. Combined with the Island’s zero rate corporate tax regime for substantially all resident companies, the Isle of Man should prove increasingly attractive to international businesses and their advisers. The following are some of the key attributes of the NMV: 

 

 

 

 

 

 

Types of Companies

The Act specifically allows for five different types of corporate vehicles:

 

• companies limited by shares; 

• companies limited by guarantee; 

• companies limited by share and by guarantee; 

• unlimited companies authorised to issue shares; and 

• unlimited companies without shares. A company limited by shares may be formed as or converted into a protected cell company. 

 

Share Capital 

 

Under the Act, there is no longer the concept of authorised share capital. Therefore, shares may be issued with or without par value.                                                                                                              

Dividends, Redemptions and Buy-backs of Shares

 

Subject to compliance with its memorandum and articles of association, the Act allows an NMV to declare and pay a dividend and to purchase, redeem or otherwise acquire its own shares subject only to meeting a statutory solvency test. The ability to provide for the acquisition of shares in this way may be of benefit to open-ended investment companies in particular.                  

Capacity and Powers 

 

A company incorporated under the Act has separate legal personality and perpetual existence. In addition, an NMV has unlimited capacity to carry on or undertake any business or activity; this is so notwithstanding the matter of corporate benefit. The Act specifically states that no corporate act is beyond an NMV’s capacity by reason only of the fact that the relevant NMV has purported to restrict its capacity in any way in its memorandum or articles or otherwise. A person who deals in good faith with an NMV is entitled to assume that the directors of the NMV are acting without limitation. 

 

It is possible for the memorandum of an NMV to contain a statement specifying the purposes for which it is established or the business, activities or transactions for which it is established. However, any such restrictions are subject to the provisions explained in the foregoing paragraph. 

 

Charges

The Act provides that charges may be registered at the Companies Registry of the Isle of Man Financial Supervision Commission (the “Companies Registry”) within one month of the date of the creation of the charge. However, it is not mandatory to register charges with the Companies Registry but failure to do so may affect the priority of the charges created by the NMV and in addition, failure to register shall render the charge void against the liquidator and any creditor of the NMV. If a charge is not registered at Companies Registry within one month of the date of the creation of the charge, an application to register the charge may be made to Companies Registry at any time prior to the commencement of the winding up of the NMV.                                                                                                                                                                                                                        

Other Points

In addition to the foregoing, the following other points should be noted in relation to NMV’s: 

 

• no financial assistance prohibitions 

 

• corporate directors permissible - where administration is provided by a licensed Corporate Service Provider 

 

• single members permissible 

 

• requirement for a registered agent appropriately licensed in the Isle of Man 

 

• no differentiation between public and private companies 

 

• simplified offering document requirements 

 

• ability to adopt pre-incorporation contracts 

 

• reduced compulsory registry filings 

 

• no annual general meeting requirement 

 

• accounting requirements less prescriptive 

 

• relatively simple transfer of domicile procedure 

 

• relatively simple merger and consolidation procedures

 

Over the past few years, there has been an unprecedented growth in Isle of Man companies listing on AIM and other key capital markets (including the Main Market of the London Stock Exchange). 

 

The Benefits of Using an Isle of Man Corporate Vehicle

The reasons why the Isle of Man has become one of the favourite offshore jurisdictions from which to list on the world’s major capital markets include: 

• The Island’s first-class reputation as a well regulated international finance centre (reinforced by Moody's and Standard & Poor's "AAA" rating).

• The ability to list an Isle of Man company without the need for prior regulatory approval. (This is in sharp contrast to some other offshore jurisdictions). 

 

• The Island’s company law is derived from English company law; as such, investment banks, institutional investors and their advisers are comfortable dealing with Isle of Man companies. 

 

• In the few instances where the Island’s company law differs from English company law, it is usually possible to tailor a company’s Articles of Association to give the company a more “English” feel and, thus, meet the expectations of institutional investors. 

 

• An Isle of Man company can be formed within 5 working days and there is no requirement to specify a company’s objects in its Memorandum of Association. 

 

• Most Isle of Man companies are able to take advantage of prospectus exemptions which facilitate the preparation and despatch of the admission document or listing particulars. 

 

• Shares in Isle of Man companies are capable of being held in dematerialised form through CREST without the need to put in place complex depositary arrangements. 

 

• An Isle of Man company can have shares denominated, and can prepare accounts, in any currency. 

 

HL Fiduciaries works Limited works with the leading law firms and tax advisors on the Isle of Man and can assist in facilitating introductions and coordinating solutions for clients in this specialist area.

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VAT PLANNING - Triangulation

 

This is one area where the Isle of Man's reciprocal "membership" of the EU,
through the UK Customs and Excise Agreement, has actually been beneficial to the Isle of Man.

The basis of triangulation concerns the movement of goods
within the EU and the place of supply rules. Goods are considered to be
supplied where they are physically located at the time of sale, so without the
provisions of triangulation an intermediary company would be obliged to
register somewhere in the EU where the supplier or customer "belongs".

So to consider a specific example:

Company A located in Spain
Company B located in IOM
Company C located in Germany

(the companies have to be located in different countries for it to be
triangulation, only three parties can avail themselves of the reliefs for
triangulation - it does not work for a chain of transactions).

Goods are supplied by A to B and from B to C. Invoices follow the same route,
but the goods go directly from A to C. All parties must be registered for VAT
in their own jurisdictions, and the VAT number of the customers must be quoted on the supplier's invoices in each case. No VAT is charged, and effectively C
accounts for VAT under intra community supply in Germany.

  

Company A issues an invoice to B (quoting B's VAT number) and provided the
goods leave Denmark (and A has evidence of this) no Spanish VAT is charged. B in turn issues and invoice to C (again quoting C's VAT number) provided the
invoice also states "VAT: EC article 28 Simplification Invoice" then no IOM
VAT is chargeable. C then account for German VAT in the normal manner,
presumably the reclaiming it such that the VAT is not a cost.

 

The IOM company is required to complete a VAT return, but details of the
triangular transaction are not reported on the VAT return (neither sales or
purchases). Also B is required to complete an EC Sales list which is a
statistical return detailing the VAT registration number of the customer
(including country code) and the value of sales to that customer in the
period.

In terms of enabling B to register, IOM Customs require that books and records be maintained on the Isle of Man, that invoices be issued and received here
and that the main trading bank account is here. Also, there should be someone on the Island with a working knowledge of the business being conducted.
Clearly there are varying degrees of how these conditions are satisfied, but
the registration will only be permitted if the answers seem correct!

Care must be taken as to transfer pricing provisions in this type of
structure, and the direct tax implications of this have not been considered,
both of these areas need specialist advice and we have advisors we would be 
pleased to introduce in this area. 

    

HL Fiduciaries Limited can assist in setting up a structure to facilitate
this, subject of course to compliance with the necessary due diligence
requirements, and our sister company Harding Lewis accounting practice would be happy to help with the VAT registration formalities and any book keeping and
accountancy services required.

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VAT - IOM GRANTED ITS OWN VAT ELECTRONIC PROCESSING UNIT

("E.P.U").

The Isle of Man Treasury Minister recently revealed that the Isle of Man is in the unique position of being chosen to operate the only VAT Electronic Processing Unit or "E.P.U". outside the U.K.

‘We have concluded a number of detailed negotiations flowing from the renegotiation of the revenue sharing arrangements, within the Customs and Excise Agreement. One of these is the creation in the Isle of Man of an Electronic Processing Unit, which will allow traders to file and pay V.A.T. and Customs Duty on imports using electronic means. The U.K. has centralised its administration of taxes on imports to just one location and it is a great achievement for us to have negotiated a second one for the Isle of Man.’

‘If the E.U. moves towards standardising import and export systems comes to fruition then the Island will be able to offer traders the ability to account for all E.U. transactions through our E.P.U. It is also important that we could offer these facilities to Isle of Man businesses".

 

 

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 HL Fiduciaries Limited adds additional jurisidictions to its capabilities

HLF has now completed a deal with an international corporate services firm to enable it to supply companies and structures in the  following jurisdictions:

British Virgin Islands

The Commonwealth of Bahamas

Republic of Seychelles

British Anguilla

Samoa

Hong Kong

Panama (including Panama Foundations)

HLF can offer a range of services to support such structures which may be used as part of an international tax planning solution by clients.

Highlights of the British Virgin Islands

• Excellent corporation law.
• Flexible company law.
• No taxes levied on offshore and banking transactions.
• No exchange control regulations.
• Political and economic stability.
• Excellent hotel accommodation.
• Excellent worldwide communication facilities.
• Skilled personnel.
• No capital gains, income or any other kind of tax.

Uses of British Virgin Islands Business Companies

• Holder of bank accounts, fixed deposits, investment plans and any other financial or commercial title.
• Owner of the shares of other companies or legal entities.
• Owner of apartments, houses, buildings, vessels and any other movable or immovable property or goods.
• Manager and promoter of business transactions.
• Leasing of vehicles, machinery, vessels and others.
• Borrowing or lending money, paying or receiving commissions’, royalties or others.
• Marketing and promotion of products and services.
• Other commercial and financial activities.

HLF's Requirements

• Appropriate character references and other due diligence documents, as required.
• HLF directors and officers could be appointed.

Highlights of The Bahamas

• Excellent corporation law.
• Flexible company law.
• No taxes levied on offshore and banking transactions.
• No exchange control regulations.
• Political and economic stability.
• Serviced by major world airlines.
• Excellent hotel accommodation.
• Excellent worldwide communication facilities.
• Skilled personnel.
• No capital gains, income or any other kind of tax.

Uses of The Bahamas International Business Companies (IBCs)

• Holder of bank accounts, fixed deposits, investment plans and any other financial or commercial title.
• Owner of the shares of other companies or legal entities.
• Owner of apartments, houses, buildings and any other movable or immovable property or goods.
• Manager and promoter of international business transactions.
• International leasing of aircraft, vehicles, machinery and others.
• Borrowing or lending money, paying or receiving commissions, royalties or others.
• Marketing and promotion of products and services.
• Other commercial and financial activities.

HLF's Requirements

• Appropriate character references and other due diligence documents, as required.
• HLF directors and officers could be appointed
  

Highlights of Seychelles

• Excellent corporation law.
• Flexible company law.
• No taxes levied on offshore and banking transactions.
• No exchange control regulations.
• Political and economic stability.
• Serviced by major world airlines.
• Excellent hotel accommodation.
• Excellent worldwide communication facilities.
• Skilled personnel.
• No capital gains, income or any other kind of tax.

Uses of Seychelles International Business Companies (IBCs)

• Holder of bank accounts, fixed deposits, investment plans and any other financial or commercial title.
• Owner of the shares of other companies or legal entities.
• Owner of apartments, houses, buildings, vessels and any other movable or immovable property or goods.
• Manager and promoter of international business transactions.
• International leasing of vehicles, machinery and others.
• Borrowing or lending money, paying or receiving commissions, royalties or others.
• Marketing and promotion of products and services.
• Other commercial and financial activities.

HLF Requirements

• Appropriate character references and other due diligence documents, as required.
• HLF directors and officers could be appointed.

Highlights of British Anguilla

• Excellent corporation law.
• Flexible company law.
• No taxes levied on international and banking transactions.
• No exchange control regulations.
• Political and economic stability.
• Excellent hotel accommodation.
• Excellent worldwide communication facilities.
• Skilled personnel.
• No capital gains, income or any other kind of tax.

Uses of British Anguilla's International Business Companies (IBCs)

• Holder of bank accounts, fixed deposits, investment plans and any other financial or commercial title.
• Owner of the shares of other companies or legal entities.
• Owner of apartments, houses, buildings, vessels and any other movable or immovable property or goods.
• Manager and promoter of international business transactions.
• International leasing of vehicles, machinery, vessels and others.
• Borrowing or lending money, paying or receiving commissions’, royalties or others.
• Marketing and promotion of products and services.
• Other commercial and financial activities.
  

HLF's requirements

• Appropriate character references and other due diligence documents, as required.

Highlights of Samoa

• Excellent corporation law.
• Flexible company law.
• No taxes levied on offshore and banking transactions.
• No exchange control regulations.
• Political and economic stability
• Excellent hotel accommodation.
• Excellent worldwide communication facilities.
• Skilled personnel.
• No capital gains, income or any other kind of tax.

Uses of Samoa International Companies (ICs)

• Holder of bank accounts, fixed deposits, investment plans and any other financial or commercial title.
• Owner of the shares of other companies or legal entities.
• Owner of apartments, houses, buildings, vessels and any other movable or immovable property or goods.
• Manager and promoter of international business transactions.
• International leasing of vehicles, machinery, vessels and others.
• Borrowing or lending money, paying or receiving commissions, royalties or others.
• Marketing and promotion of products and services.
• Other commercial and financial activities.

HLF's Requirements

• Appropriate character references and other due diligence documents, as required.
• HLF directors and officers could be appointed.

Highlights of Hong Kong

• Excellent corporation law.
• Serviced by major world airlines.
• Excellent hotel accommodation.
• Excellent worldwide communication facilities.
• Skilled personnel.
• British territory until 1997, when it became a special administrative region of China with autonomous power.
• Ranks among the top twenty trading economies in the world.
• World's third largest financial centre.
• World's largest container port.
• Major gateway for trade investment and finance into China and the rest of Asia.
• Languages: English and Chinese.
• Long tradition of political and economic stability of the country.

Uses of Hong Kong Corporations

• Holder of bank accounts, fixed deposits, investment plans and any other financial or commercial title.
• Owner of the shares of other companies or legal entities.
• Owner of apartments, houses, buildings, vessels and any other movable or immovable property or goods.
• Manager and promoter of international business transactions.
• International leasing of vehicles, machinery and others.
• Borrowing or lending money, paying or receiving commissions, royalties or others.
• Marketing and promotion of products and services.
• Other commercial and financial activities.

HLF's Requirements (NB services must be provided through our international strategic partner for these companies)

• Appropriate character references and other due diligence documents, as required.
• Our strategic partners Registered Office and Company Secretary in Hong Kong must be appointed.
• Our strategic partners officers must be appointed.
• Non-payment of the annual fees will result in the immediate resignation of the directors or officers, as well as termination of the provision of the Registered Office.
• Appropriate accounting records or statement must be supplied to our Registered Office every year.
• Written instructions and written undertaking to supply records required by the Hong Kong Government.

Panamanian Foundations

I. Highlights

A Private Foundation is a unique form of legal entity, which acts like a Trust and operates like a company. Following are some of the advantages of Private Foundations:

• A Foundation is a sui generis body corporate, in existence only in Panama, Liechtenstein and Austria, but where only Panama and Liechtenstein are "offshore jurisdictions".
• Beneficiaries are not of public record. No requirement to file annual returns or financial statements; full exemption from taxation on any business activity transacte of Panama; simple ongoing administration.
• A Foundation may transact business in whatever currencies it chooses; its founders, members of the foundation council and protectors may be of any nationality and may be residents of any country; the accounting books of the Private Foundation may be kept in Panama or abroad.
• In no case may its assets be used to satisfy the founder's or the beneficiaries’ obligations.
• The law on inheritance regarding the founder's or the beneficiaries' domicile is not opposable to the foundation nor may it affect its validity or prevent the fulfilment of its objectives.
• There are favourable asset protection sections in the Private Foundation Law.

II. Requirements

The Panama Private Foundation is a legal entity established through a private or public instrument, by either one or more private person(s) or corporate entity (ies) (called the Founder(s)) and the allocation or endowment of funds or assets by the Founder is essential to its creation. The Foundation becomes a corporate body (juridical person) by registering a Foundation Charter at the Public Registry, which contains:

• Its name, which must include the word "Foundation" (in any language)
• Its domicile
• The initial capital/estate (expressed in any currency) which can not be less than the equivalent of US$10,000.00
• The name(s) and address(es) of the Member(s) of the Foundation Council which administers the estate (they can be individuals or corporate entity(ies)
• The name and domicile of the Foundation's Resident Agent in Panama (which must be a lawyer or law firm)
• The objectives and goals of the Foundation (these must be possible, reasonable, moral, and legal)
• The manner in which the Beneficiaries (which may include the Founder), are selected
• Reservation of the right to modify the Foundation Charter
• The duration of the Foundation
• The use to be made of the Foundation's assets and the manner in which its estate is to be liquidated in the event of dissolution.

III. Foundation Council

Members of the Foundation Council may be natural or juridical persons of any nationality, and do not need to be residents of the Republic of Panama. Our agents Mossack Fonseca & Co. may provide members of the Foundation Council if so desired. The Foundation Council has the following obligations and duties:

• To manage the assets of the Foundation in accordance with the Foundation Charter or its regulations.
• To carry out those acts, contracts or business as may be expedient or necessary to fulfil the purpose of the foundation and to include in such contracts, agreements and other instruments or obligations, such clauses and conditions as are necessary and expedient, being consistent with the foundation's purposes and not contrary to law, morality, good manners or public order.
• To inform the beneficiaries of the foundation about its economic situation as provided by the Foundation Charter or its regulations.
• To hand over to the beneficiaries of the foundation the assets or resources settled in their favour in the Foundation Charter or its regulations.
• To carry out those acts or contracts which the foundation, according to the Private Foundations Law and other applicable legal or regulatory provisions, may be permitted to carry out.

IV. Beneficiaries

Optional Foundation Regulations (which are not registered at the Public Registry) can also be prepared, and this document could contain details regarding the Foundation Council's attributes, frequency of statements, causes for removal of the Foundation Council, and the manner of distribution of the Beneficiaries' interests. It is not required to appoint beneficiaries in the Foundation Charter.

V. Obligations

As established in the Private Foundations Law, the foundation's assets shall constitute a separate estate from those of the founder's personal assets for all legal purposes. Therefore, same may not be seized, attached, or be the object of any action or preventive measures, save for obligations incurred or damages caused upon fulfillment of the foundation's aims or objectives or due to the legitimate rights of the foundation's beneficiaries. In no case shall they be used to satisfy the founder's or the beneficiaries' obligations. The founder's creditors shall have the right to object to the contribution or transfer of assets of a foundation where same constitutes a fraudulent act against creditors, but the rights and actions of such creditors shall prescribe in three (3) years as from the date of the contribution or transfer of assets to the foundation.

Also, members of the Foundation Council and of the supervisory bodies, if any, as well as public servants or private sector employees who have knowledge of the activities. Breach of this obligation shall be punishable by six-(6) months imprisonment and a B/.50,000.00 fine, without prejudice to the corresponding civil liability.