Cayman foundation companies (CFCs) are emerging as a structure for families seeking to balance control and asset protection in succession planning, according to one expert.
Angella Williams-Myers, Cayman director and head of private wealth at Suntera, discussed the approach in an article on the company’s website on 20 January.
Introduced in 2017 under the Foundation Companies Law, CFCs combine elements of traditional trusts with the operational characteristics of corporate entities.
Williams-Myers noted that while trusts typically require founders to cede authority to trustees, CFCs allow founders to retain decision-making power.
“Whether your focus is philanthropy, general partners of a partnership in an investment fund structure, or wealth preservation, a CFC can be formed for any lawful purpose and tailored to meet your unique wealth objectives,” Williams-Myers said.
A CFC functions as a separate legal entity that holds assets in its own name rather than through founders, directors or beneficiaries.
The structure provides limited liability protection under the Foundation Companies Law 2017, meaning individuals involved are not personally liable for the foundation’s debts or obligations.
The legal framework also disregards claims of foreign heirship or matrimonial rights made under non-Cayman law.
On the matter of control, Williams-Myers explained that founders can appoint or remove directors, reserve veto or approval rights and modify the foundation’s strategy over time.
Members can also be removed to create what is known as an orphan structure. There is no minimum capital requirement, and the entity can accept additional contributions as wealth objectives evolve.
Governance arrangements within a CFC can be customised to include any number of members, directors or supervisors – or none at all, Williams-Myers said.
Strategic influence may be preserved through reserved powers in the charter, acting as a protector, or issuing letters of wishes.
Private bylaws can supplement the constitution without public filing.
A CFC can exist indefinitely if its constitution does not specify a termination date, Williams-Myers explained.
This allows families to manage wealth across multiple generations without forced dissolution or asset transfers following a founder’s death.
