Foundation Limited for asset protection

The special feature of a “Foundation Limited” is that it is not owned by another person or company, but belongs to itself, using the legal form of a Private Company Limited by Guarantee either in the UK or Ireland. In this form, there are no shareholders who could be entitled to receive dividends, as is the case with a classic Limited (Private Company Limited by Shares).


How does a Private Company Limited by Guarantee work?

In British and Irish company law, the Private Company Limited by Guarantee (LBG) is an alternative form of corporate entity used primarily by non-commercial, public service organisations that need their own legal personality. An LBG has no subscribed capital (share capital) and no shareholders (associates) but has members who act as guarantors. The guarantors give a commitment to contribute a certain nominal amount (usually quite small) in the event that the company is dissolved.

An LBG can distribute profits to its members if the articles of association allow it. However, for LBGs seeking the tax status of non-profit making, this possibility must be excluded. Normally, an LBG must bear the word “Limited” with its name unless there is a legally defined exception. Such an exception exists in the event that the company cannot distribute profits under its articles of association.


Advantages of a Foundation Limited:

  • The assets of the foundation limit are not attachable
  • It can be used as an operating company
  • It is suitable as a holding company of an operative GmbH
  • It can be used as a limited partner entitled to participate in profits
  • It is not necessary to indicate a legal form suffix (e.g. Ltd.)
  • By the correct design with a foundation limit, GmbH or UG’s can be made unseizable

What do I do with the profits of the Foundation Limited?

According to the articles of association, it is forbidden to pay out the profits to members of the foundation; thus, they may only be used to promote the object of the foundation.

The following solutions:

  • Granting a long-term loan
  • Use of the foundation limit as investment and management company
  • High executive salary – possibly in connection with Ireland’s SARP programme, see under Ireland – tax benefits and subsidies