March 23, 2021 / Law /

As we indicated in the previous post, the government is to present a bill on a family foundation in the coming weeks. It is a completely new legal vehicle under Polish law, but in many countries it is the basic element of planning family succession of assets.

Continuing the previous entry, according to the assumptions, the family foundation will be equipped with its own assets, contributed as part of the founding fund (of a cash nature) as well as further donations made by both the founder (including in particular shares in capital companies) and third parties. Importantly, this property will be the sole property of the foundation.

The rules of functioning of the family foundation will be defined by the founder himself in the following corporate documentation:

1) statute – will be the basic document necessary to establish a foundation, and at the same time the only one available to third parties (analogous to the registration files of commercial companies);

2) regulations – they will also be binding on the governing bodies of the foundation, but they will not be open. They will regulate issues important for the functioning of the foundation, e.g. indicate beneficiaries as well as their rights, define the investment policy and development plans of operating companies;

3) letters of intent – they will not have binding force, e.g. they may refer to applications for payment of benefits to beneficiaries.

The family foundation will be managed and represented by the following bodies:

  1. a) foundation council – is an obligatory and collegial body of the foundation, handling its affairs, similarly to the management board in capital companies;
  2. b) a board of protectors – the founder will also have the power to establish a controlling body (performing an analogous function to the supervisory board in capital companies), in the form of a protector or a collective board of protectors, at the choice of the founder himself.

The circle of beneficiaries of the family foundation and the scope of their rights should be determined by the founder. Several alternative scenarios are drawn here: the beneficiary could be only a natural person related to the founder, or the beneficiary could be any natural person, related or not to the founder, or the beneficiary could be any natural person or organizational unit. It cannot be ruled out that the founder could also be the beneficiary. One of the important legal issues related to the status of beneficiaries is that he or she does not have full legal capacity (e.g. a minor child or incapacitated person). Therefore, it will be necessary to define the rules of representation of such beneficiaries towards the family foundation in the final shape of the provisions on the family foundation.