Author: Fabrizio Speranza - WH Partners
When it comes to wealth structuring and asset protection, trusts are often the first instrument that comes to mind. This is understandable: they are well known, versatile and, in many cases, perfectly suited to the purpose. However, those who regularly deal with families, entrepreneurs and complex assets sometimes need to consider other solutions and institutions that are better suited to the specific situation. It is precisely this awareness, gained through experience, that makes it worthwhile to consider another institution that has shown great potential in recent years, namely the Maltese private foundation.
We are talking about a tool that is often less well known but which can offer a particularly effective combination of stability, governance and operational flexibility, especially when the objective is to organise, protect and manage diversified assets over time, such as shareholdings, real estate, financial investments, intangible assets, and perhaps even assets distributed across multiple jurisdictions. The rules governing this institution are contained in the Second Schedule to the Civil Code (Chapter 16 of the Laws of Malta), which provides a clear and pragmatic framework with structures that must be both solid and adaptable.
The first, very concrete advantage is that the foundation has its own legal personality. In simple terms, it is not just a set of rules, but a legal entity in its own right, with separate assets. This feature makes it a particularly suitable container for diversified assets and, in particular, a flexible and effective centre of governance.
Maltese private foundations are frequently used as “stable” holding companies for strategic shareholdings. They can also be used as a control structure in family business contexts or as a coordination structure where entities with different roles, family branches or assets with different needs and risks must – and can – coexist.
Governance is also tailor-made, without compromising rigour. There are four pillars: the Founder, who establishes the structure and sets the rules for its management, including who should benefit from it; the Administrators, who manage the assets in accordance with the established rules; the Beneficiaries, identified in the document called the ‘Beneficiary Statement’; and a Guardian or Supervisory Council, which may be composed of several people and may perform control and oversight functions.
The key point is not merely the presence of these actors, but the ability to define with precision roles, decision-making processes, distribution rules and oversight safeguards. This is where the foundation often proves particularly effective: when a structure that is not only protective but also governable, credible and sustainable over the long term.
In this context, one of the most sensitive and important issues for those setting up a structure emerges: the so-called “founder comfort”. Thanks to advanced and structured legislation, the Maltese foundation allows for the inclusion of mechanisms in its statutes that protect the vision and stability of the structure: confidential matters, criteria for appointment and dismissal, distribution rules, criteria for the admission or exclusion of beneficiaries, and an effective role for supervisory bodies in the most sensitive decisions.
Another distinctive advantage, and often a decisive factor in the choice, is the possibility of establishing segregated cells. Here, the benefit is immediately apparent: the foundation can become a sort of platform, within which autonomous asset compartments are created, with effective separation of assets and liabilities between cells.
In practice, in more complex structures, this means, for example, being able to separate investment lines, isolate risks, distinguish between projects, protect the core assets from more dynamic or experimental initiatives, and manage different family branches while maintaining unified control, but with effective risk separation. It often also reduces complexity: instead of multiplying legal vehicles and levels of governance, everything is compartmentalised in an orderly manner within the same structure.
The Maltese foundation is also designed to live and last over time, without becoming rigid. The legislation allows for the design of rules for adaptation and modification according to pre-established logic and, where applicable, for the evaluation of portability/continuation options in cross-border scenarios, when a family or group changes geography, priorities or organisational structure. This is a recurring theme in reality: asset and corporate structures are not static, and being able to evolve them without “starting from scratch” is a significant advantage.
From a governance perspective, it remains essential that the role of administrator be performed by persons authorised by the Malta Financial Services Authority (MFSA) for the administration of foundations, in accordance with the Trusts and Trustees Act (Cap. 331) and applicable regulations. If you decide to have more than one administrator and therefore to set up a “board”, it is also possible to appoint non-resident administrators, provided that specific conditions are met. In practical terms, this is a regulatory safeguard that enhances the transparency of the structure and supports operations in contexts where compliance and governance are not ancillary elements but central requirements.
Looking again at day-to-day management, this structure can be easily integrated with family office or “family office style” asset management models, representing a particularly effective pillar of governance: a stable legal framework that centralises rules, decision-making processes and control mechanisms, easily coordinating the holding of various assets, such as shareholdings, real estate, financial investments and intangible assets.
Furthermore, the planned use, when desired, of supervisory bodies (Guardian or Supervisory Council) can facilitate the formalisation of roles and responsibilities between the family, independent figures and advisors, reducing the risk of conflict and making management more efficient in the long term.
From a tax perspective, the foundation can offer flexibility, but the issue must always be carefully assessed on a case-by-case basis, depending on the nature of the income, the structure of the beneficiaries and the jurisdictions involved. For this very reason, in international operations, the foundation is rarely “taken on its own”: more often than not, it is part of a broader plan, where holding companies, operating companies, real estate assets and family and/or corporate governance structures must communicate coherently.
In summary, the Maltese foundation is not a fad, nor is it a simple or “cosmetic” alternative. It is a solid and pragmatic tool, appropriately chosen in certain contexts because it combines legal personality, asset segregation, flexible governance, advanced management tools and a clear and structured regulatory framework that ensures the presence and intervention of authorised and supervised entities.
For those who need stability and order, but also flexibility and the ability to evolve, it can represent, now more than ever, one of the most interesting solutions available in Europe and beyond.