The provisions regarding the foundation are laid down in Art. 522 § 1 bis 41 PGR.
Possible aims of the foundation include:
- asset protection,
- settling the succession,
- securing the economic future of family members or other close individuals in the form of maintenance arrangements, for example,
- functioning as a holding to safeguard a corporate or real estate portfolio,
- perpetuating the life’s work of the founder (e.g. art collections),
- charitable purposes.
In contrast to other legal forms the foundation may not pursue any commercial interests (e.g. trading business).
The foundation is established by a founder dedicating assets to a specific purpose in favour of a specific or specifiable beneficiary. Once raised to the status of a legal entity, these assets no longer form part of the private assets of the founder but form the foundation assets.
The minimum capital required to establish a foundation is CHF 30,000.00.
Depending on the purposes of the foundation common-benefit foundations are distinguished from private-benefit foundations.
Besides the registered foundation which comes into existence by entered in the Public Register the so-called deposited foundation exists for private-benefit foundations. For the deposited foundation no foundation documents have to be deposited with the Public Register. Therefore this legal type offers utmost discretion.
The foundation has neither members nor an owner.
After the formation also the founder has only those rights which have been reserved in the articles or by-laws. Very often the founder reserves the right to amend the articles and by-laws, especially the beneficiary regulations.
The usufructuaries of the foundation are the beneficiaries, whereby the payment of distributions to beneficiaries may also be made subject to conditions or rules. The beneficiaries are named by the founder, usually in separate by-laws, resembling a last will and testament. The founder can appoint himself as a beneficiary. In order to protect the rights of the beneficiaries the law stipulates wide information rights towards the foundation council.
The foundation is administered by the foundation board, made up of at least two members who represent the foundation solely or jointly. The foundation board exercises the wishes of the founder as recorded in the articles and the by-laws. Therefore the foundation board does not form any intent but only has a serving function.
The founder can vest the foundation board with the authority to execute the founder’s will with free and absolute discretion, e.g. regarding distributions to beneficiaries (so-called discretionary foundation). The basis of this free and absolute discretion is always the founder’s will, determined in the articles and by-laws of the foundation.
The founder may make provision in the articles of association for further bodies – such as an advisory board, a board of trustees or a protector – to advise and support the foundation board, e.g. when paying out distributions to beneficiaries. These may also exercise a controlling function.
The foundation is cancelled by law, when the objects can not be achieved anymore, especially when such objects are no longer realisable due to lack of adequate funds. This also applies when all of the foundation’s assets have been distributed to the beneficiaries.
Furthermore the founder can stipulate in the articles that the foundation can be dissolved at any time.
As a rule, the foundation is not obliged to appoint an auditor.