The Federal Registry of Commerce registers currently about 23'000 foundations (proportional to the population one of the highest densities of foundations worldwide). The major number of these foundations have been established as pension funds (17'000).

The Swiss legislator created a very liberal and non extensive regulation in the Art. 80-89bis of the Swiss Civil Code which allowed to create special purpose foundations, originally not meant to exist under these articles, such as corporate foundations. Such foundations are regularly established to pursue commercial aims by controlling an enterprise directly as the owner of its assets or by keeping interests as shareholder or as associate. As examples reference is made to the Kuoni-Hugentobler-Stiftung which controls approximately 25% of the voting rights in Kuoni AG. Also ATAG Ernst & Young Holding AG and Montres Rolex SA are controlled by foundations.

The motivations to establish a corporate foundation in Switzerland are predominantly estate planning, protection of independence of the enterprise (e.g. auditors) and tax planning. The negative aspects of a corporate foundation may be the rigid structure of its administration, governmental supervision and the dependence on capital from outside for financing.

The legal basis of corporate foundations is discussed and controversial, in particular since the law on foundations is currently under review. It is foreseeable that the density of regulations will be increased and that the legislator might try to reduce the scope of applicability of foundations to the originally intended extent, to wit charity purposes. The new regulations will presumably not become effective before the second half of the year 2000.

The content of this article is intended to provide general information on the subject matter and is not a legal advice. An individual matter requires legal advice according to the specific circumstances.

For further information please contact Dr. Markus A. Frey or Dr. Thomas Sprecher.