The foundation is a tool frequently used in civil law jurisdictions until the 1990s were a shift moved beyond Europe and jurisdictions like Bahamas and Nevis adopted their own foundation framework. Nevis established the Multiform Foundations Ordinance “MFO” in 2004. In the MFO Ordinance the multiform foundation is defined as a foundation established:

            1) A subscriber or promoter, or a registered agent acting on behalf of the subscriber or promoter, may on delivering to the Registrar the documents referred to in section 4 and on payment of the prescribed fee apply in the manner provided for in that section to have a foundation registered in accordance with the provisions of this Ordinance as a multiform foundation.

 (2) Upon the registration of a foundation as a multiform foundation, the foundation shall be a separate and independent legal entity, capable of suing and being sued in its own name and resident and domiciled in Nevis.

(3) The memorandum of establishment and the by-laws (if any) of the foundation delivered to the Registrar shall be in the English language and shall be in such form and contain such particulars as are set out in section 7.

(4) The establishment of a foundation under this Ordinance as a separate and legal entity shall not be effective until (a) the memorandum of establishment and by-laws (if any) are registered in accordance with the provisions of this Ordinance; and (b) a certificate of establishment is issued in accordance with section 5(2)(b).

To establish a Multiform Foundation, a ‘subscriber’ the person who owns the assets must transfer the ownership to the foundation. The transfer of assets is known as a ‘subscription’, and such action will be irrevocable unless otherwise stated in the bylaws. There is no minimum amount required for the initial or future subscriptions. The Ordinance has a unique feature that allows a Multiform Foundation to be established by a person’s Last Will and Testament and provides that the Testator will be deemed the subscriber.

The main requirement to establish a multiform foundation is:

1.  The foundation must have a Nevis based registered agent. The subscriber must attain the services of a financial services provider licensed by the Government of Nevis to act as Registered Agent of the structure.
2. The Multiform Foundation will only acquire legal personality when a Certificate of Establishment and a registration number have been issued.
3.  It must have a Nevis registered office
4. It must have an acceptable name
5. It must have a management board and secretary and
6. It must have a memorandum of establishment and filed before the Registry that will be maintained in private.

MFO Ordinance Article (4) a-j

Advantages of the Nevis Multiform Foundation

1.Flexibility

• The foundation can change its legal structure during its lifetime — e.g., between a trust foundation, a company foundation, a partnership, or a more “standard” foundation.
• Existing legal entities such as (companies, trusts) can be redomiciled, converted, or merged into a Nevis Multiform Foundation via transformation.

  Asset Protection

• The foundation is a separate legal entity: assets contributed to it are legally separate from the founder’s personal assets and thus they can be sued or sue as a separate entity from the founders.

  Confidentiality and Privacy

• Founders, beneficiaries, and protectors are not publicly disclosed in public registries in Nevis and thus all information remains away from the public record.
• The by-laws (which govern how the foundation operates) remain private.

Tax Treatment

• The Multiform Foundation, and any associated persons including beneficiaries are exempt from payment of taxes, however, the multiform foundation may advise the Registrar that it intends to become tax-resident and will pay taxes at a maximum rate of one per cent. Upon the issuance of a tax-residency certificate, a tax return must be filed annually and the multiform foundation will make payments based on the entity’s stated net retained earnings.

 Governance and Succession Planning

• Because the form is flexible, you can tailor how distributions are made, how decisions are taken, and how succession works (e.g., for passing wealth to heirs).

 Mobility / Legal Portability

• Entities from other jurisdictions can convert (transform) into a Nevis Multiform Foundation.
• Conversely, the foundation itself can re-domicile out of Nevis (via “discontinuance”), giving more flexibility.
• Any amounts contributed to a Multiform Foundation will not be considered fraudulent if the addition occurred either before or 1 year after the creditor’s cause of action arose. If the subscription occurred before the expiration of 1 year before the creditor’s cause of action accrued and the creditor failed to bring the action before the expiration of 6 months since the subscription took place, the subscription will also not be considered fraudulent.

Conclusion

The legal entity created under the Ordinance is a valuable tool in the field of estate administration, tax planning and commercial transactions as it has a wide range of benefits previously mentioned. The structure can be used to ensure corporate stability, maintain family control of a business or provide security for a lender. In drafting its foundation legislation, Nevis combines the principles found in common law with concepts originating to civil law jurisdictions. The Ordinance provides a shield for international clients concerned with maintaining some privacy against the invasive attacks in the face of the pressure which has been placed on offshore financial structures in recent years. In addition, The Multiform Foundations Ordinance of Nevis is a significant tool for individuals and institutions as it creates existing vibrant financial services legislation with a new structural product that is malleable and adaptive to many situations.