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In 2004, the Nevis Multiform Foundation Ordinance passed. The term “multiform” is key, as such foundations may take the form of a standard charitable foundation, a trust, a private interest foundation, a partnership or a company, and it is possible to change the form of the foundation at a later date. This provision and the overall hybrid structure allow for great flexibility. Think of it as the chameleon of offshore asset protection plans.
It is also possible for an existing entity to transform or merge into a Nevis Multiform Foundation. The ordinance created the ability to guard foundation assets against certain conditions, including bankruptcy or insolvency, along with creditor claims against beneficiaries.
Nevis Multiform Foundations serve as excellent vehicles for estate planning, charitable purposes and financing, and are also suitable as holding arrangements for special financing. Privacy is guaranteed Under the St Kitts and Nevis Confidentiality Act of 1985. The founder of a Foundation can, however, choose to have some or all of its information included in the public record, if so desired. Thus, a Foundation can determine the balance it wants to keep between privacy and transparency.
To enhance privacy, St Kitts and Nevis Confidentiality Act of 1985 provides severe penalties for any individual with possession or having any type of control of a Nevis Multiform Foundation who violates confidentiality. Moreover, there is no statute of limitations for such a violation. Penalties may include six months in jail, a fine or $50,000, or both.
The minimum endowment necessary for establishing a Nevis Multiform Foundation is US$10,000, in either assets or property. Any type of property, including real estate, art, jewelry and gold, may be placed in a foundation.
Under the Nevis Multiform Foundation ordinance, the following forms are permissible:
In addition, entities formed in other jurisdictions can become Nevis foundations. What this also means is that, for example, a trust in the Isle of Man or Belize can become a Nevis foundation. An LLC in the US State of California can become a Nevis foundation; as can a limited company in the UK. On the other hand, it can move to another jurisdiction outside of Nevis.
Moreover, two foundations can merge into two. Conversely, one can split into two separate foundations.
Nevis, located in the Caribbean, is the smaller of the two islands making up the Federation of St. Kitts and Nevis. It is important to note that Nevis has its own financial services sector, separate from St. Kitts, and has the ability to pass separate ordinances. Although Nevis remains part of the British Commonwealth, St. Kitts and Nevis gained independence in 1983 from the United Kingdom. Its government takes the form of a parliamentary democracy under federal constitutional monarchy. Nevis enjoys great political stability, and its jurisdiction is one of strictest in the world in terms of statutory asset protection.
Administratively, one can run a multiform foundation as a trust, LLC, partnership or company. However, the word “Foundation” or FDN must appear at the end of the entity’s registered name. The Registrar of Companies approves Foundation names. Only one filing is necessary to determine under what form the foundation functions. Such foundations may choose whether it is completely or partly governed by foreign law.
Foundations do not have owners, per se, although they do have founders. The founder is either an individual or corporate board. Founders may be members and beneficiaries, and there is no limit on the number of founders, members or beneficiaries permitted.
Management consists of a supervisory board, which must have a minimum of one member. Every member has a specific number of votes. The foundational charter states the number of votes each one obtains. If the charter does not refer to how it weighs votes, then each member has one vote.
Secretaries are necessary for any Nevis Multiform Foundation, and this individual is either a member of the supervisory board or foundational management. The secretary’s duties include responding to any requests made by the Registrar and accepting the service of process. It is the secretary’s job to prepare the annual meeting minutes.
Nevis Multiform Foundations do not require naming of beneficiaries. Unlike many jurisdictions, especially those in South America, there is no forced heirship. So, the founder can determine who shall inherit the assets of the foundation. That is, the ordinance states that Nevis laws govern such foundations and they are not subject to the laws of foreign jurisdictions.
A foundation must maintain accounting records. These records are available to its board at any time, but not for public information.
The subscriber or registered agent acting on the subscriber’s behalf must give the Registrar the Foundation’s original copy of the memorandum. In addition, in must provide the agent a copy of the by-laws, if they are applicable. The memorandum must include the information regarding the subscriber, the registered agent’s particulars and the name of the foundation. Plus, it must specify its endowment valuation, whether the foundation is revocable or irrevocable, and whether it is of definite or indefinite duration. The founder may include any suitable clauses in the memorandum.
It should delineate the form the foundation takes. Keep in mind, a foundation may have only have one form at any time. The default form is always a Nevis Multiform Foundation. It is possible to not classify a foundation as per form, but then the memorandum must include by-laws.
If the memorandum does include by-laws, these must contain how it appoints and dismisses officers as well as the duties and rights of such officers. It must spell out their remuneration as well as how the foundation appoints the supervisory board. Finally, the memorandum must state the conditions under which the by-laws are changed and how the original endowment is increased. If the foundation is unclassified, the by-laws should include provisions regarding the governance of the foundation under various types of entities. If using a trust format for the foundation, the by-laws are equivalent to a trust deed.
Also included is a statement, available in a specific Nevis format, signed by the subscriber in conformance with Nevis laws. An alternative is a statement the registered agent signs on behalf of the subscriber, which requires proper witnessing. The statutes mandate the use of English in all documents. Necessary fees must accompany the registration papers.
Once the documents are received and the Registrar determines all requirements have been satisfied, a Certificate of Establishment is then issued. This certificate confirms the foundational name and registration date, and includes the registration number. Once the Certificate of Establishment is issued, the foundation becomes an independent, legal entity.
By default, Nevis Multiform Foundations are exempt from all local duties and taxes, but it is possible to become a Nevis tax resident. Upon becoming a tax resident, the foundation is taxed at a maximum one percent rate. The advantage of becoming a tax resident is that the Nevis offshore foundation may qualify for treaty benefits.
However, under an ordinance passed in 2018, tax exemption for limited liability companies cease as of June 30, 2021. Foundations operating as LLCs should change their form in advance of that date.
The registered agent is responsible for collecting annual renewals that the foundation pays to maintain the foundation. Annual returns also require filing, but these returns do not deal with financial matters. Instead, the annual filings focus on any changes in the foundational memorandum. If the foundation does not make the renewals in a timely manner, expect penalty fees. This currently consists of fines of US$50.00 or EC$135 for each day in respect of which the offense continues. If the registered agent fails to make the renewal, the foundation is terminated.
By law, Nevis Multiform Foundations must hold an annual meeting, but this meeting does not have to take place in Nevis. So, principles can hold it in any location. The regulations allow for video and telephonic annual meetings.
Formerly, a Nevis Multiform Foundation could not own offshore real estate and open bank accounts, and could not purchase property in Nevis or own Nevis assets. Founders and beneficiaries could not have Nevis residency, and failure to comply with these laws would negate the foundation.
However, under an amendment passed in 2018, no corporation shall be considered to be carrying on business in Nevis solely because it engages in one or more of the following activities:
(a) maintaining Nevis bank accounts
(b) holding meetings of directors or shareholders in Nevis;
(c) maintaining corporate or financial books and records in Nevis;
(d) maintaining an administrative office in Nevis with respect to assets, business or activities done outside of Nevis;
(e) maintaining a registered agent in Nevis;
(f) investing in shares of a Nevis company, international business corporations, or investing in the interest of Nevis limited liability companies, acting as a partner of a partnership registered under the Partnership Act or the Limited Partnership Act, or as a beneficiary of an international trust or a qualified foreign trust; or
(g) acquires real property in a local, industrial or tourist facility provided always that such property shall be situated in a project or development.
Nevis Multiform Foundations must have the proper licensing to conduct any financial or business activity.
On must file any legal actions brought against a multiform foundation with Nevis courts. The courts hold all proceedings, with the exception of any criminal complaints, in private. There is a one-year statute of limitations for any claims of fraudulent conveyance.
Any judicial actions, with the except of criminal proceedings, are held without members of the public permitted when relating to Nevis Multiform Foundations. Details of such proceedings are not publishable without court approval.
In conclusion, the Nevis multiform foundation provides great flexibility. It can take the form of a foundation or trust, a company or partnership. We believe that the use of the Nevis foundation will grow as more people realize the tremendous benefits of this valuable vehicle. If you would like to form a Nevis foundation, please utilize the phone numbers on this page or complete the free consultation form.