THE PRIVATE FOUNDATION
A vehicle for asset protection
A regular foundation under the laws of Curaçao and St. Maarten may only make distributions for charitable (philanthropic) or social purposes and may not make distributions to the incorporator/founder or members of its board. The Stichting Particulier Fonds (SPF), or Private Foundation, is a legal entity and in particular a special form of foundation, which is not subject to this so-called legal ban on certain distributions.
The Private Foundation is frequently used in the context of asset protection as well as for tax and inheritance planning. A common construction is one in which the instigator/principal lives abroad and the SPF is managed by a professional party, being a trust office. The principal and the trust office can make more or less far-reaching agreements on the way in which the trust office will give substance to its management task.
So called ‘founder’s rights’ (‘oprichtersrechten’), a.k.a. ‘founder’s authorities’, are powers formulated in the articles of association of a Private Foundation that, as a rule, accrue to the incorporator. The instigator (‘insteller’; sometimes also referred to as founder) is the person on whose instructions and for whose benefit a Private Foundation is created by a trust office, and from whom the (initial) assets of the Private Foundation originate. In relation to the trust office, he is the principal.
In practice, a trust office usually acts as the actual incorporator (and director) and acquires the founder’s rights, which are then transferred or granted to the principal of the trust office. Because these rights are granted to the founder of the Private Foundation (that is, the party named as founder in the deed of incorporation, and that is usually the trust office) on the occasion of incorporation, they have come to be called ‘founder’s rights’, even though it is (usually) established from the outset that these rights will be transferred to the principal shortly after the Private Foundation is incorporated.
Founder’s rights are not regulated by law but are created in (notarial) practice. Founder’s rights can include far-reaching and less-reaching powers, depending on the choice made by the person who determines how the articles of association will read. Possible powers include (i) appointment and dismissal of the Private Foundation’s directors; (ii) establishment of an Advisory Board (Council) or Supervisory Board, and appointment and dismissal of its members; (iii) approval or non-approval of specifically described proposed decisions of the board (decisions regarding cash distributions; transfer of assets; conversion; dissolution, etc.); and (iv) amendment (or cause amendment) of the articles of association (or by-laws) or approval or non-approval of an amendment.
Karel Frielink
(attorney / legal scholar)
(15 September 2025)
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