Essential corporate news - week ending 10 February 2012

10 February 2012

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European Commission: Proposed Regulation on the Statute for a European Foundation

On 8 February 2012, the European Commission published a proposed Regulation on the Statute for a European Foundation. The European Foundation (Fundatio Europaea) is a new legal entity aimed at foundations across the EU which are established for public benefit. The Statute will allow foundations to carry out activities within the EU and in third countries. The move follows the European Communication on the Single Markets Act, published in October 2010, which highlighted the contribution made by foundations to the financing of innovative initiatives in the public interest and which called for action to remove obstacles that foundations face in operating on a cross-border basis.

Key features of the proposal are as follows:

Formation of a European Foundation

A European Foundation can be set up by one or more persons (natural or legal) or public bodies in a number of ways, including a merger of public benefit purpose entities from one or more Member States, or the conversion of a national public benefit purpose entity.

Requirements for becoming a European Foundation

Each European Foundation will need to meet the following criteria:

  • it should be created for public benefit purposes only and the Statute sets out an exhaustive list of activities such as arts, culture, historical preservation, education, science, humanitarian relief and environmental protection which constitute public benefit purposes;
  • it should undertake activities in at least two Member States, or have the intention, stated in its statutes, of doing so; and
  • it should possess founding assets equivalent to at least €25 000.

Activities of the European Foundation

A European Foundation will have a legal personality and full capacity in all Member States to carry out its activities. It will be permitted to undertake some economic activities, provided that any profit is exclusively used in pursuance of its public benefit purposes. It will also be permitted to carry out some economic activities unrelated to its purpose, but a threshold of ten per cent of the annual net turnover of a European Foundation will be set for permitted unrelated economic activities. To ensure transparency, the results from these unrelated activities will have to be presented separately in accounts. European Foundations will be required to draw up annual accounts and an activity report. The annual accounts will need to be audited and disclosed publicly with the activity report.

The proposal for a Regulation on the Statute for a European Foundation will now pass to the EU Council of Ministers and European Parliament for their consideration.

(European Commission, Proposal for a Regulation on the Statute for a European Foundation (FE), (COM (2012) 35/2, 08.02.12)

(Proposal for a Regulation on the Statute for a European Foundation - Frequently Asked Questions, 08.02.12)

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