Private foundations: New options for managing a private assets
The new instrument for managing assets should enable to establish so-called private foundations, through which it will be possible to financially support the family and close relatives as well as other private purposes. The draft amendment is currently undergoing the inter-governmental review process.
On 14 February 2023, the Ministry of Justice of the Slovak Republic submitted to the inter-ministerial procedure for comments a draft law amending the Act No. 34/2002 Coll. on Foundations and on Amendments to the Civil Code, as amended (the "Amendment").
The Amendment should introduce the concept of a foundation for the support of a private purpose into our legal system.
The Amendment responds to the requirements of the application practice and, following the model of the so-called "trusts" or trust funds (which are used, for example, in the Czech Republic), enables the founders, by establishing the form of a private foundation, to effectively manage their assets and distribute resources to the family members as well as to other persons important to the founders.
A private purpose foundation can be set up to achieve a self-defined purpose by the founder. However, the Amendment sets certain restrictions on what can be considered a private purpose. According to the Amendment, a private purpose can be understood as, in particular, securing own needs of the founder, family members, close relatives and confidants, covering the costs of raising, educating, treating, outfitting or supporting such persons, putting the private foundation's property to use, as well as supporting other interests of the founder serving a publicly beneficial purpose. The private purpose must not be contrary to good morals (i.e. the purpose of the private foundation should not encourage or promote anti-social behaviour or circumvention of other laws, such as inheritance law).
The foundation will be a legal entity and will constitute a special purpose vehicle for the pooling of assets.
We will inform you about the development of this legislative process as well as possible application problems in a series of further articles.