Part VI, Chapter 60, Associations Law as amended for the establishment of Private Foundations
The Private Foundation is non-resident entity modelled on the Austrian “Stiftung”, as provided for in the modern Austrian Private Foundation Law of 1993. The Private Foundation has a separate legal existence and may be used for various reasons such as charitable, public or personal purposes, but there is a prohibition against using the Private Foundation for commercial purposes.
Established by way of a Memorandum of Endowment, the Foundation can hold assets which are irrevocably transferred to it by one or more donors for the purpose of managing assets. An irrevocable transfer of assets means that once assets are placed in a Foundation, they cannot be withdrawn at will by the donor. In order for the Foundation to function, the assets need to have been endowed or gifted and placed at the disposal of the Foundation and its officers. The donor receives no payment in return. The Foundation becomes the owner of the assets and is considered a separate legal entity. A Private Foundation may also be established by means of a duly executed will, in which case the donor will be the testator.
The purpose of the Foundation must be specified in the Memorandum and may include all activities related to the management of assets but specifically excludes any commercial activities and activities related to banking and the financial services industry. However, the buying and selling of assets (real estate, shares in trading companies, investments etc.) is not considered a trading activity. A Private Foundation may, however, in the course of the management of its assets, do such activities as are necessary for their proper administration. A Private Foundation can act as a shareholder but not a director or officer, in a trading entity like a Liberian corporation.