Main principles

Based on Corporate Law but without shareholders


The Luxembourg Private Foundation has similarities with a number of institutions in neighboring countries, but should not be assimilated to them. Thus, if the provisions governing the new corporation are to a large extent based on the law of 10 August 1915 on commercial companies, especially those applicable to share companies (Société Anonyme or S.A.), the fundamental difference is that the Foundation is an orphan structure, which has no shareholders, partners or members.


Absence of General Assembly


The absence of a general assembly has an impact on the operation of the Private Foundation. For example, rules relating to the changing of the constituting documents, to the approval of accounts or the discharge of directors, which normally fall under the general assembly, cannot be taken from the law of 10 August 1915 on commercial companies. This fundamental distinction between the Private Foundation and corporate structures also affects estate transmission: while stocks or shares of a company remain in the patrimony upon death, capital grants of a Private Foundation are considered as having left the patrimony during the lifetime of the founder.


Private Foundation vs. Non-Profit Organisation


The Luxembourg Private Foundation also distinguishes itself from foundations governed by the law of 21 April 1928 on associations and non-profit foundations. On the one hand, by their intent, these pursue philanthropic, social, religious, scientific, artistic, educational, sports and tourism goals. On the other hand, regarding their operations, a certain control is applied by the Minister of Justice.


The Luxembourg Private Foundation, on the contrary, is a tool for estate structuring and planning.


Autonomy of the will of the founder and protection of the beneficiaries


The Law seeks to reconcile two principles, namely on the one hand, the autonomy of the will of the founder and on the other hand, the protection of the patrimony of the Private Foundation and, ultimately, of the beneficiaries.


The latter is particularly important given the orphan nature of the Private Foundation. Thus, if in principle the founder has a large amount of freedom to draft the constitution acts and extra-statutory regulations, the Law however, imposes certain restrictions designed to protect beneficiaries. These restrictions are in particular made through provisions regarding the liability of the administrators and liquidators, through the information which must be available at the headquarters of the Private Foundation and by limiting the changes which can be made to the constitution acts.

The Luxembourg government issued a draft law on such private foundation in the summer of 2013. But these provisions have not come into effect since the bill has yet to be voted.