The family foundation is a new solution in the Polish legal order regulated by the Law on Family Foundations of January 26, 2023. The goal of the legislator was that family businesses, as a result of the death of the founder, would not be fragmented in terms of assets and could continue to develop over many generations. Until now, extremely problematic after the death of an entrepreneur was the issue of inheritance proceedings, which very often in practice prevented the company from continuing to operate. The family foundation is intended to help separate business issues from family issues on the one hand, and on the other hand to enable the management of company assets and succession planning, but already in the perspective of the next generations.
Tasks of a family foundation
The main task of the foundation will be to manage the foundation’s assets in order to multiply them and provide resources for the founder’s family and relatives.
Initially, the foundation was to be deprived of the possibility of conducting business activities, but eventually the legislature made some modifications in this regard. The foundation may carry out activities in the form of:
- disposing of property that the foundation owns or holds, provided that the property was not acquired solely for the purpose of further disposal;
- renting, leasing or providing on any other basis property that the foundation owns or possesses;
- joining and participating in commercial companies, investment funds, cooperatives, and entities of a similar nature established in the country or abroad;
- acquiring and disposing of securities, derivatives and rights of a similar nature;
- granting loans to capital companies in which the family foundation holds shares, partnerships in which the family foundation participates as a partner, as well as to beneficiaries;
- trading in foreign currency belonging to the family foundation for the purpose of making payments related to the foundation’s activities;
- the operation of a farm business.
The role of the founder in a family foundation
The founder of a family foundation can be an individual with full legal capacity. A foundation can also be established by more than one founder, but not if the foundation is established in a will. In order to establish a foundation, the founder submits a declaration on the establishment of the foundation before a notary public in either a foundation deed or a will. Already at this point a foundation in organization is established, which can manage in its own name the assets it owns and provide for their protection and also acquire rights, including, for example, ownership of real estate.
The next step is to draw up a statute that will define the foundation’s rules of operation, transfer the assets to the founding fund, establish the organs of the family foundation and register the foundation in the register of family foundations. The foundation acquires legal personality upon registration. The register of the foundation will be kept by the District Court in Piotrków Trybunalski. The foundation may be established for an indefinite period of time or for a limited period of time. A prerequisite for its establishment will be the contribution of assets by the founder as part of a founding fund of at least PLN 100,000.
Organs of the family foundation
The organs of the foundation are the board of directors, the supervisory board and the assembly of beneficiaries. Beneficiaries can be either individuals or NGOs engaged in public benefit activities.
A family foundation is a great solution for entrepreneurs for whom it is important that their company exists for more than one generation and the assets created are properly protected and multiplied.