During our consultations, we often receive inquiries about how to register a Charitable Foundation. We believe that the registration process should be handled by experts who can guide you through everything, from document preparation to obtaining all the necessary registration papers and ensuring compliance with local regulations. However, let's provide a brief overview of the procedure for setting up a Charitable Foundation.
Organizational Considerations
At the outset, it's essential to decide whether you will be organizing the foundation alone or with partners. If there are partners involved, it's crucial to understand that the concept of shares in the charter capital doesn't apply to charitable foundations. Unlike other types of organizations, where one partner may hold 10% of shares and another 70%, in a foundation, all founders have equal standing, and everyone has an equal say in decision-making.
The structure of governance is also significant. You can choose to have a single governing authority, such as a director, head of the foundation, or president. Alternatively, you can opt for a collegial body, like a board or management team. When multiple partners are involved, each may desire a role in managing the foundation. To ensure mutual oversight, you can also create an advisory board. Decisions on the organizational setup should be discussed and agreed upon early in the process.
If you're unsure about the best approach or the unique aspects of each management structure or other aspects of establishing the foundation, seek advice and consultation with specialists from the beginning. This will help you save valuable time during the creation of the Charitable Foundation and ensure a smooth and well-informed establishment process.
Constituent Documents of a Charitable Foundation
The foundational document of a charitable foundation is known as the charter. The charter must meet specific requirements set by the Law of Ukraine "On Charitable Activities and Charitable Organizations," as well as tax legislation. We have provided detailed information about the charter requirements here.
However, there's more to it. To be exempt from income tax, the foundation must be listed in the registry of non-profit organizations, which requires its charter to meet additional requirements specified by tax legislation for non-profit organizations. Interestingly, the charter of a charitable foundation does not necessarily need to be notarized. It can be approved through the minutes of a general meeting of participants or by a decision of the single founder (if the charitable foundation has only one founder).
General Meetings, Minutes/Decisions, and Other Documents for Registering a Charitable Foundation
To establish/register a Charitable Foundation, a general meeting of participants must be held (note: not a founding meeting, as it's sometimes referred to online, but a general meeting). During this meeting, important decisions are made, including:
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Creating the foundation.
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Appointing governing bodies.
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Approving the foundation's charter.
If needed, other matters can also be put to a vote and recorded in the meeting minutes.
The minutes are signed by all participants or their authorized representatives (with a power of attorney) in case they cannot attend the meeting in person. If the foundation has only one founder, a decision is made on the same matters without the need for voting. Instead, it simply documents the founder's decisions. In addition to the minutes, you'll need to provide a depiction of the foundation's ownership structure, complete the registration application following the provided template, and submit all the necessary documents to the registrar (or to a private notary with registration authority).
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A completed registration application.
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The charter approved by the founders.
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The minutes of the general meeting or the decision of the participant.
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The ownership structure.
You might be wondering what to include in the ownership structure and whether to provide copies of passports. Here are two scenarios:
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If we state that the legal entity does not have individuals who meet the criteria of ultimate beneficiaries, then we don't need to submit copies of passports.
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If we identify specific individuals as beneficiaries, then we must submit copies of their passports.
We hope that now you have a clear understanding of the entire process of establishing a Charitable Foundation and what documents you need to prepare. If you still have any questions, don't hesitate to reach out to us! We will not only provide answers but also assist you in quickly and smoothly registering your Charitable Foundation in Ukraine.
