I.- INTRODUCTION
On 29th August 2014 the Council of Ministers passed the Draft Bill of the Law on Foundations, which shall substitute the current in force Law on Foundations of 26th December 2002. The aim of this new text is to guarantee a better exercise of the right of foundation and the fulfilment of the obligations derived therefrom.
II.- CONTENTS
The main developments of the draft bill are as follows:
Incorporation: The interested party shall approach the Protectorate and request a report on the aptitude, suitability, adequacy and viability of the proposal, which must be processed within a maximum term of three months. The option to disburse funds in instalments and some of the principles of good governance, which should control the actions of the board of trustees, are regulated. Likewise, the most relevant information on the foundation’s activities must be published on its website, such as annual accounts and the positions of the members of the board of trustees, as well as any grants and public aid received by the foundation.
Fight against fraud: In order to avoid the instrumental use of the foundation for activities which are not related to the purposes that justify its existence, the activities that the foundation carries out in order to fulfil its purpose are differentiated from those activities which may be carried out as a source of financing of the foundation.
System of penalties: The Protectorate may penalise the trustees and the secretary of the foundation if they are found to be individually responsible for committing an infringement. The infringement may be considered to be minor, serious or very serious, and may be penalised with fines of between one thousand and thirty thousand Euro, the loss of the position of trustee or from the governing organ or disqualification from holding a similar post for between five and ten years.
Termination: The non-fulfilment of the obligation to file annual accounts or action plans for three consecutive fiscal years shall constitute a cause for the termination of the foundation, with the intention of reducing the significant percentage of registered foundations which are inactive.
III.- CONCLUSION
The draft bill, which has been criticised by various sectors for being “interventionist”, should now follow the ordinary legal process until it is definitively passed as law.
Vilá Abogados
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22nd September 2014
