¶ 1901
Overview
The subject of the chapter. A Nevis multiform foundation is a legal person with no owner. Its property belongs to it, and its affairs are run by persons who hold office under its constitution and under the Multiform Foundations Ordinance. Multiform Foundations Ordinance, Cap. 7.08(N), § 3(2) (rev. ed. 2017) ("MFO"). This chapter examines those persons and the rules that bind them: the management board, which manages the foundation; the secretary and registered agent, who give it a presence in Nevis; the supervisory board, which the constitution may add to watch the management board; the founder and other subscribers, who may reserve rights; and the beneficiaries, whose entitlements the foundation exists to serve. It also examines the records the foundation must keep, the confidentiality that surrounds them, and the court's powers to supply what the constitution omits and to correct what the officers do wrong.
The Ordinance's own vocabulary. The Ordinance does not use the words "council", "guardian" or "founder" as its operative terms, although it allows a constitution to use them. The managing organ is the "management board", defined as the persons appointed under section 17 "howsoever called or described in the constitution". MFO § 2(1). The supervising organ is the "supervisory board", defined to include "a supervisor, protector, an enforcer, guardian or other such named person". Id. The person who endows the foundation is a "subscriber", a term that includes "a founder, a settler [sic], a guarantor or shareholder or partner". Id. This treatise uses the Ordinance's terms throughout. A reader coming from Liechtenstein, Panama, Jersey or the Cook Islands should translate as follows: the foundation council of those systems is the Nevis management board; the guardian, protector or enforcer is the Nevis supervisory board; and the founder is a Nevis subscriber. The translation is imperfect at the edges, and the differences are noted where they matter (see infra ¶¶ 1950.09, 1970.08).
Why governance carries the weight. In a trust, the trustee holds title and the beneficiaries hold equitable interests, so a court asking who controls the property can look to the law of trusts. In a foundation, nobody holds a proprietary interest in the assets except the foundation itself. The answer to the question "who controls this property?" therefore lies wholly in the constitution: who appoints and removes the management board, who must consent to its decisions, who may amend the by-laws, and who may revoke. A foreign court, a tax authority or a bank compliance officer asks exactly that question. The English High Court answered it for a Panamanian foundation by reading the foundation charter article by article (see infra ¶ 1960.06). The same exercise will be carried out on a Nevis constitution, and the governance provisions are what it reads.
The statutory floor and the constitution. Most governance rules in the Ordinance are defaults. Section 17(3) leaves appointment and removal of the management board to "the provisions of the constitution or otherwise the provisions of this Ordinance". Section 21 makes the supervisory board optional and lets the constitution set its powers. Section 22(4) gives the supervisory board rights to notice and attendance "unless expressly excluded by the constitution". A smaller group of rules cannot be displaced: the qualifications in section 17(5), the requirement of a secretary and a registered agent (sections 18 and 19), the duties in section 26(1), the records duties in sections 30, 44 and 96, the court's powers in sections 17(10), 21(10), 23(4), 101 and 114, and the confidentiality rules in section 113. Section 10(11) adds that nothing in the constitution may override or restrict the Ordinance. Where the constitution is silent, the default by-laws prescribed by the Multiform Foundations Regulations, 2005 apply. Multiform Foundations Regulations, 2005, reg. 6(b) & sch. 4 (Nevis) ("MF Regulations").
Relation to other chapters. The nature of a multiform foundation, its formation and the choice of its stated multiform are examined in chapter 18 (see supra ch. 18). The use of foundations in succession, heirship and creditor planning, and conversion between forms, are examined in chapter 20 (see infra ch. 20). Creditors' claims against the foundation and against subscribers are examined in chapters 21 to 23 (see infra chs. 21–23). Much of this chapter draws on the analysis of trustees, beneficiaries and protectors in chapters 7 to 9, because the Ordinance borrows heavily from trust concepts and, for a trust foundation, applies the trust Ordinance directly (see infra ¶ 1910.04).
Plan of the chapter. Paragraph 1910 sets out the architecture of governance and the effect of the stated multiform. Paragraphs 1920 to 1940 examine the management board: its composition and appointment (¶ 1920), its powers and proceedings (¶ 1930) and its duties and liabilities (¶ 1940). Paragraph 1950 examines the supervisory board. Paragraph 1960 examines the subscriber's reserved rights and the control question, with a full discussion of National Crime Agency v. Baker. Paragraph 1970 examines the beneficiaries. Paragraph 1980 examines records, accounts, confidentiality, regulatory investigation and the court. Paragraph 1990 offers model provisions and a drafting checklist.