Social Enterprise Law Surveys |
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Liechtenstein |
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| (Europe) Firm Marxer & Partner | |
| What jurisdiction(s) do you practice in? | Liechtenstein |
| What are the most commonly used types of for-profit corporate organizational forms in your jurisdiction (e.g., corporation, limited liability company, benefit corporation, social purpose corporation, etc.) used by Enterprises operating a trade ... | The most common for-profit organizational forms utilized in Liechtenstein are the Aktiengesellschaft (“Company Limited by Shares") and the Anstalt (“Establishment”). Whereas corporations are subject to harmonized European financial reporting and publication standards, Establishments may benefit from various exemptions. However, whereas corporations are suitable both for multiple and few owners, Establishments we would discourage multiple owners to employ Establishments. In addition, Liechtenstein law provides the following corporate organizational forms for for-profit Enterprises:
a. Enterprises that seek financing from investors and will have multiple owners tend to form Companies Limited by Shares. It is certainly possible to work with Limited Liability Companies that have many members and investor backing, but it is less standard. b. Other than the specific organizational forms discussed below under Question 4, the most common for-profit organizational forms utilized in Liechtenstein by Social Enterprises are the Company Limited by Shares, the Establishment and the Co-operative Society. In particular, public service enterprises as governed by Articles 571 et seq of the Liechtenstein Act on Persons and Entities (“Personen- und Gesellschaftsrecht” – “PGR”) Company” are frequently organized as Companies Limited by Shares or Establishments. |
| Do any of your jurisdiction’s traditional organizational forms require or permit the board or managers to consider, balance or prioritize interests other than shareholder value in decision making? What other interests, if any, are they required... | The articles of incorporation of most corporate Liechtenstein entities may provide for the issuance of shares to employees or for employee benefit plans (Articles 214 et seq, Articles 272 et seq, Article 453 PGR). Persons permanently contributing work or assets to a Co-operative Society may participate to a certain extent as provided for by the articles of incorporation or by virtue of a resolution of the members (Article 450 PGR). Otherwise, the corporate organizational forms for for-profit Enterprises hitherto discussed do not require interests other than shareholder value to be considered. Other considerations permitted only to the extent they do not detract from shareholder value, however, with the proviso that shareholder interest may be seen in long-term perspective rather than short-term only. |
| Does your jurisdiction have organizational forms specifically designed for Social Enterprises? If so:a. What type(s) of organizational forms are they?b. How do they materially differ from the most closely analogous traditional organizational ... | In addition to the corporate organizational forms mentioned above under Question 2 in the context of for-profit Enterprises, which may also be employed for Nonprofit Enterprises, Liechtenstein law knows further organizational forms that are available either exclusively for Nonprofit Enterprises [such as the Verein (“Association”)] or available for both Nonprofit and for-profit Enterprises. Although not all of them are specifically designed for Social Enterprises, they are generally available for Social Enterprises with the exception that for-profit Social Enterprises cannot be organized in a form reserved for Nonprofit Enterprises. Liechtenstein law provides the following organizational forms generally available for Social Enterprises (in addition to the forms mentioned above under Question 2):
Verein (“Association”): b. Reserved for Nonprofit Enterprises; corporate structure with members; one man, one vote; Materially differs from forms mentioned above under Question 2 in the context of for-profit Enterprises because management must consider specified mission (environmental, social, etc.) only. The special mission must be identified in the organizational documents agreed upon by the members. Simplified financial reporting standards apply, audit mandatory only if certain conditions, in particular regarding size, are met, otherwise audit is optional. Any amendment of the agreed special mission must be approved by at least 3/4 of the members. c. Main benefit is that management must consider specified mission (environmental, social, etc.) only. d. Nonprofit only, unless government grants a license under Art 259 PGR. e. May even be formed faster and at less cost than traditional Enterprise. f. The Verein has been around for more than a century. Stiftung inklusive stiftungsähnlicher Anstalten (“Foundation and Establishments organized similarly to a Foundation”) b. The Stiftung is a legal entity without members. It is a fund endowed for a specific purpose which becomes autonomous from the founder or founders and acquires the status of a legal entity. A foundation may either pursue exclusively or predominantly private purposes or predominantly or exclusively charitable purposes. The specific purpose needs to be stated in its formation document. Accounting and audit requirements depend from what type of foundation is formed. As the case may be, founder might have discretion to design degree of accounting and audit requirements. c. The main benefit is designing flexibility for founder and that management must consider specified mission only. d. The Stiftung does not have members or stakeholders, but only beneficiaries, who do normally not have any voting powers. The beneficiaries can be private or public. (Predominantly) public benefit foundations are subject to the supervision of the Liechtenstein Foundation Surveillance Authority to safeguard the jurisdiction's reputation as a philanthropic and social enterprise center. e. There are no material differences in timing or costs for using this Enterprise form. f. The Stiftung has been available in Liechtenstein for almost a century. Trust: b. The Trust is not a legal entity, but a segregated part of the trustee's property which he is bound to apply for the benefit of the beneficiaries or a specific purpose. The settlor has significant discretion in respect of accounting and audit requirements. c. The main benefit is designing flexibility for settlor and that the trustee must consider only the interest of the beneficiaries/the specific purpose. d. The Trust does not have members or stakeholders, but only beneficiaries, who do normally not have any voting powers. The beneficiaries can be private or public. (Predominantly) public benefit trusts are not subject to the supervision of the Liechtenstein Foundation Surveillance Authority. e. May even be formed faster and at less cost than traditional Enterprise. f. The Trust has been available in Liechtenstein for almost a century. |
| Are Social Enterprises permitted to be formed and operated as Nonprofits? If so: a. Are Nonprofits that are Social Enterprises treated differently under the law as compared to Nonprofits that are not Social Enterprises, whether from a corporat... | All legal forms discussed above are generally available for Social Enterprises with the exception that for-profit Social Enterprises cannot be organized in a form reserved for Nonprofit Enterprises. Social Enterprises are permitted to be formed and operated as Nonprofits if their promotors so wish; however, apart from tax matters as set out below (i) they are not given any special treatment by virtue of being a Nonprofit and (ii) not every type of business venture may be eligible to form as a Nonprofit. Thus, as a practical matter, not all Social Enterprises may form as Nonprofits. Tax exemption is available for i.) Nonprofit public benefit enterprises owned or controlled by the Liechtenstein government or its subdivisions [Art 4(1)(b) Tax Act], ii.) legal entities or trusts that exclusively and irrevocably pursue charitable or public benefit purposes [Art 4(2) Tax Act], Nonprofit Associations [Art 45(2) Tax Act], and corporate entities that exclusively pursue charitable or public benefit purposes, where certain profit caps and bans apply as against investors and management, respectively, and whereupon liquidation all capital other than the original capital is to be applied for similar charitable or public benefit purposes, in particular, all donations received [Art 45.(1) Tax Act]. For trusts and entities falling under groups ii.) or iii.), an annual maximum revenue allowance of CHF300k applies. |
| Does your jurisdiction allow for worker-owned Enterprises, such as cooperatives? If so, please describe any material benefits of, and/or restrictions on, using such forms. | Yes, see discussion of the Genossenschaft above. Forming as a worker-owned Cooperative allows for worker control and management as well as alignment of worker and investor interests. Outside investors are not incentivized to make large investments since the level of financial investment does not determine control. |
| Are there unique reporting requirements for Social Enterprises? If there are, please describe them. Please also discuss what government bodies Social Enterprises are required to report to. | The reporting requirements for Social Enterprise do not differ from the reporting requirements of non-Social Enterprises. |
| In your jurisdiction, has case law and jurisprudence evolved to address Social Enterprises? If there is meaningful jurisprudence around Social Enterprises, please provide some brief examples. | We are not aware of any specific case law and jurisprudence in Liechtenstein in respect of Social Enterprises. |
| Does your jurisdiction have any ESG requirements for Enterprises generally? If it does, please describe. | Apart from the usual corporate governance and anti-money-laundering standards: No. |
| Does your jurisdiction have any ESG requirements specifically for Social Enterprises? If it does, please describe. | Apart from the usual corporate governance and anti-money-laundering standards: No. |
| Does your jurisdiction have any ESG requirements for investors? If it does, please describe. | Apart from the usual corporate governance and anti-money-laundering standards: No. |
| Are any major investor classes (e.g., pension funds, mutual funds, etc.) required to look at ESG issues when making investment decisions in your jurisdiction? a. If they are, please describe the requirements.b. If they are not, are they permi... | No major investor classes are required to look at ESG issues. While investors may be permitted to consider such factors, the state of play is in flux. Many are pushing for increased focus on factors other than the profit motive. That said, there are a number of private funds and large institutional investors that do consider ESG issues when making their investment decisions, and there has been a rise in impact funds that use ESG factors as part of an investment assessment process. |
| What kinds of philanthropic funding do Social Enterprises in your jurisdiction commonly receive (e.g., grants, charitable investment, traditional investment)? | Social Enterprises receive grants, charitable investments, and traditional investments. The type of funding typically varies based on the Enterprise form that the Social Enterprise chooses. For example, Social Enterprises formed as Non-profits receive more grants and charitable investments, while Social Enterprises formed as for-profit corporations received more traditional investments. |
| How prevalent, if at all, are new for-profit impact investments in your jurisdiction (e.g. traditional instruments with impact terms, new investment instruments, aggregation with philanthropic capital, community based funding, etc.)? | For-profit impact investments have been increasing in Liechtenstein and parties are becoming more familiar with them. |
| What are the types of government funding and support available to Social Enterprises, if any, available in your jurisdiction (e.g., grants, investments, bonds, and guarantees)? a. How difficult is it for Social Enterprises to obtain government... | There is no special government funding specifically available to Social Enterprises as such. |
| Are there any companies that are formed as a Social Enterprise listed on your jurisdiction’s leading securities exchange(s)? | No, there is no securities exchange in Liechtenstein. |
| To what extent are publicly traded Enterprises required to disclose ESG related factors in annual reports/public filings in your jurisdiction. | They are not required to disclose ESG factors, though some choose to do so for marketing reasons. |
| How prevalent, if at all, are impact bonds in your jurisdiction? | Impact bonds are not very prevalent in Liechtenstein. |
| In your jurisdiction, are there any restrictions on foreign investments or donations that are unique to Social Enterprises (whether incorporated as for profit entities or as Nonprofits)? | No. |
| Is “crowdfunding” legal in your jurisdiction? Are there rules under applicable securities laws that make it easier for smaller businesses or Social Enterprises to take money from investors that are not sophisticated/accredited/qualified under a... | Crowdfunding is legal, provided all licenses required in the case at hand have been obtained. The financial industry in Liechtenstein and the neighboring countries is densely regulated and it needs to be assessed on a case-by-case approach which licensing is required. |
| Are there any tax exemptions that are uniquely available for Social Enterprises? a. Please describe any tax exemptions that are available and whether they are partial or full.b. Are they dependent on the Social Enterprise utilized using a spe... | There are tax exemptions available for Nonprofits and the like in general, but there are no tax exemptions that are uniquely available for Social Enterprises structured using a for-profit organizational form. See above under Item 1(5). Nonprofits and the like (whether or not Social Enterprise) have two key tax exemption provisions, one being that they do not have to pay income tax themselves, and the other being that donors may take deductions on their reported income. |
| Are individuals or other organizations able to provide tax deductible donations to for-profit Social Enterprises? If they are, please describe any restrictions applicable to tax deductible donations? | No. |
| Are there any other tax benefits uniquely available for Social Enterprises? (e.g. deferrals, favorable tax rates, business deductions, etc.) | No. |
| Does your jurisdiction provide for reciprocal recognition of tax-exempt status that has been granted under the law of any other jurisdictions? | No. |
| Does your jurisdiction have Regulatory Sandboxes or similar policy frameworks for Social Enterprises? If it does, please describe. | No. |
| What government operational support, resources, training or services, are available for small businesses or Social Enterprises? | The Ministry of Economy provides advice and support for small businesses and Social Enterprises on the formation and thereafter. |
| Are there different compliance requirements for different types of Social Enterprises than for traditional Enterprises? Please provide examples if there are. | No, reporting and compliance requirements do not depend on whether or not the Enterprise qualifies as a Social Enterprise as defined in this survey but depend on other parameters such as organizational form and tax status. |
| Is there a dedicated government agency or department that oversees Social Enterprises? If there is, please describe its mandate and effectiveness. | No. |
| Is there a different bankruptcy system available for Social Enterprises? | No. |
| What are the average time and filing fees to form an Enterprise in your jurisdiction? | Depending on the current processing times, it can take a couple of days to form a legal entity in Liechtenstein. The process to become a tax exempt Nonprofit typically takes between 1 -2 weeks. |
| What government or third-party certifications or accreditations, if any, are available for Social Enterprises that allow for access to benefits e.g. funding, beneficial tax status, etc.? Please provide examples and briefly describe them as well... | N/A |
| Please describe whether, in your opinion, startups and other entrepreneurial Enterprises generally can easily form and flourish in your jurisdiction. | Yes, startups can easily form and flourish in Liechtenstein. They have a number of Enterprise forms available to choose from, there are relatively few reporting requirements for private for-profit businesses and incorporation processes are fast, cheap and simple. |
| Please describe whether, in your opinion, Social Enterprises, in particular, can easily form and flourish in your jurisdiction. | Social Enterprises can form relatively in Liechtenstein. |
| Please describe whether in your opinion there are any laws that are obstructive to the formation of Social Enterprises (i.e. that actively disfavor or penalize, or otherwise discourage their formation) in your jurisdiction (for example, are Soc... | We are not aware of any laws in Liechtenstein that are obstructive to the formation of Social Enterprises in Liechenstein or disfavor Social Enterprises in any way. |
| In your jurisdiction, are there any major fraud concerns or defects due to corruption or fraud that should be addressed? If there are, please briefly discuss the concerns or defects. | No. |
| What changes to the law do you think would be most beneficial to enabling Social Enterprises to flourish in your jurisdiction? | 1. Providing tax benefits to Social Enterprises utilizing for-profit Enterprise forms. 2. Making crowdfunding easier, cheaper and more accessible to broaden public investment in Social Enterprises. |
| What changes to the law do you think would be most beneficial to enhancing the social and environmental responsibility of Enterprises generally (whether or not Social Enterprises)? | N/A |
| Is there anything else you would like to add or guidance you would like to provide? Are there any questions we should have asked but did not? | N/A |
Social Enterprise Law Surveys
Liechtenstein
The most common for-profit organizational forms utilized in Liechtenstein are the Aktiengesellschaft (“Company Limited by Shares") and the Anstalt (“Establishment”).
Whereas corporations are subject to harmonized European financial reporting and publication standards, Establishments may benefit from various exemptions. However, whereas corporations are suitable both for multiple and few owners, Establishments we would discourage multiple owners to employ Establishments.
In addition, Liechtenstein law provides the following corporate organizational forms for for-profit Enterprises:
- Kommanditaktiengesellschaft (“Partnership Limited by Shares”);
- Anteilsgesellschaft (“Company Limited by Participation”)
- Gesellschaft mit beschränkter Haftung (“Limited Liability Company”)
- Genossenschaft (“Co-operative Society”)
- Societas Europaea (“SE”)
- Societas Cooperativa Europaea (“SCE”)
- Treuunternehmen (“Registered Trust Enterprise”).
a. Enterprises that seek financing from investors and will have multiple owners tend to form Companies Limited by Shares. It is certainly possible to work with Limited Liability Companies that have many members and investor backing, but it is less standard.
b. Other than the specific organizational forms discussed below under Question 4, the most common for-profit organizational forms utilized in Liechtenstein by Social Enterprises are the Company Limited by Shares, the Establishment and the Co-operative Society. In particular, public service enterprises as governed by Articles 571 et seq of the Liechtenstein Act on Persons and Entities (“Personen- und Gesellschaftsrecht” – “PGR”) Company” are frequently organized as Companies Limited by Shares or Establishments.
The articles of incorporation of most corporate Liechtenstein entities may provide for the issuance of shares to employees or for employee benefit plans (Articles 214 et seq, Articles 272 et seq, Article 453 PGR).
Persons permanently contributing work or assets to a Co-operative Society may participate to a certain extent as provided for by the articles of incorporation or by virtue of a resolution of the members (Article 450 PGR).
Otherwise, the corporate organizational forms for for-profit Enterprises hitherto discussed do not require interests other than shareholder value to be considered. Other considerations permitted only to the extent they do not detract from shareholder value, however, with the proviso that shareholder interest may be seen in long-term perspective rather than short-term only.
In addition to the corporate organizational forms mentioned above under Question 2 in the context of for-profit Enterprises, which may also be employed for Nonprofit Enterprises, Liechtenstein law knows further organizational forms that are available either exclusively for Nonprofit Enterprises [such as the Verein (“Association”)] or available for both Nonprofit and for-profit Enterprises. Although not all of them are specifically designed for Social Enterprises, they are generally available for Social Enterprises with the exception that for-profit Social Enterprises cannot be organized in a form reserved for Nonprofit Enterprises.
Liechtenstein law provides the following organizational forms generally available for Social Enterprises (in addition to the forms mentioned above under Question 2):
- Verein (“Association”)
- Stiftung inklusive stiftungsähnlicher Anstalten (“Foundation and Establishments organized similarly to a Foundation”)
- Trust
Verein (“Association”):
b. Reserved for Nonprofit Enterprises; corporate structure with members; one man, one vote; Materially differs from forms mentioned above under Question 2 in the context of for-profit Enterprises because management must consider specified mission (environmental, social, etc.) only. The special mission must be identified in the organizational documents agreed upon by the members. Simplified financial reporting standards apply, audit mandatory only if certain conditions, in particular regarding size, are met, otherwise audit is optional. Any amendment of the agreed special mission must be approved by at least 3/4 of the members.
c. Main benefit is that management must consider specified mission (environmental, social, etc.) only.
d. Nonprofit only, unless government grants a license under Art 259 PGR.
e. May even be formed faster and at less cost than traditional Enterprise.
f. The Verein has been around for more than a century.
Stiftung inklusive stiftungsähnlicher Anstalten (“Foundation and Establishments organized similarly to a Foundation”)
b. The Stiftung is a legal entity without members. It is a fund endowed for a specific purpose which becomes autonomous from the founder or founders and acquires the status of a legal entity. A foundation may either pursue exclusively or predominantly private purposes or predominantly or exclusively charitable purposes. The specific purpose needs to be stated in its formation document. Accounting and audit requirements depend from what type of foundation is formed. As the case may be, founder might have discretion to design degree of accounting and audit requirements.
c. The main benefit is designing flexibility for founder and that management must consider specified mission only.
d. The Stiftung does not have members or stakeholders, but only beneficiaries, who do normally not have any voting powers. The beneficiaries can be private or public. (Predominantly) public benefit foundations are subject to the supervision of the Liechtenstein Foundation Surveillance Authority to safeguard the jurisdiction's reputation as a philanthropic and social enterprise center.
e. There are no material differences in timing or costs for using this Enterprise form.
f. The Stiftung has been available in Liechtenstein for almost a century.
Trust:
b. The Trust is not a legal entity, but a segregated part of the trustee's property which he is bound to apply for the benefit of the beneficiaries or a specific purpose. The settlor has significant discretion in respect of accounting and audit requirements.
c. The main benefit is designing flexibility for settlor and that the trustee must consider only the interest of the beneficiaries/the specific purpose.
d. The Trust does not have members or stakeholders, but only beneficiaries, who do normally not have any voting powers. The beneficiaries can be private or public. (Predominantly) public benefit trusts are not subject to the supervision of the Liechtenstein Foundation Surveillance Authority.
e. May even be formed faster and at less cost than traditional Enterprise.
f. The Trust has been available in Liechtenstein for almost a century.
All legal forms discussed above are generally available for Social Enterprises with the exception that for-profit Social Enterprises cannot be organized in a form reserved for Nonprofit Enterprises. Social Enterprises are permitted to be formed and operated as Nonprofits if their promotors so wish; however, apart from tax matters as set out below (i) they are not given any special treatment by virtue of being a Nonprofit and (ii) not every type of business venture may be eligible to form as a Nonprofit. Thus, as a practical matter, not all Social Enterprises may form as Nonprofits. Tax exemption is available for i.) Nonprofit public benefit enterprises owned or controlled by the Liechtenstein government or its subdivisions [Art 4(1)(b) Tax Act], ii.) legal entities or trusts that exclusively and irrevocably pursue charitable or public benefit purposes [Art 4(2) Tax Act], Nonprofit Associations [Art 45(2) Tax Act], and corporate entities that exclusively pursue charitable or public benefit purposes, where certain profit caps and bans apply as against investors and management, respectively, and whereupon liquidation all capital other than the original capital is to be applied for similar charitable or public benefit purposes, in particular, all donations received [Art 45.(1) Tax Act]. For trusts and entities falling under groups ii.) or iii.), an annual maximum revenue allowance of CHF300k applies.
Yes, see discussion of the Genossenschaft above. Forming as a worker-owned Cooperative allows for worker control and management as well as alignment of worker and investor interests. Outside investors are not incentivized to make large investments since the level of financial investment does not determine control.
The reporting requirements for Social Enterprise do not differ from the reporting requirements of non-Social Enterprises.
We are not aware of any specific case law and jurisprudence in Liechtenstein in respect of Social Enterprises.
Apart from the usual corporate governance and anti-money-laundering standards: No.
Apart from the usual corporate governance and anti-money-laundering standards: No.
Apart from the usual corporate governance and anti-money-laundering standards: No.
No major investor classes are required to look at ESG issues. While investors may be permitted to consider such factors, the state of play is in flux. Many are pushing for increased focus on factors other than the profit motive.
That said, there are a number of private funds and large institutional investors that do consider ESG issues when making their investment decisions, and there has been a rise in impact funds that use ESG factors as part of an investment assessment process.
Social Enterprises receive grants, charitable investments, and traditional investments. The type of funding typically varies based on the Enterprise form that the Social Enterprise chooses. For example, Social Enterprises formed as Non-profits receive more grants and charitable investments, while Social Enterprises formed as for-profit corporations received more traditional investments.
For-profit impact investments have been increasing in Liechtenstein and parties are becoming more familiar with them.
There is no special government funding specifically available to Social Enterprises as such.
No, there is no securities exchange in Liechtenstein.
They are not required to disclose ESG factors, though some choose to do so for marketing reasons.
Impact bonds are not very prevalent in Liechtenstein.
No.
Crowdfunding is legal, provided all licenses required in the case at hand have been obtained. The financial industry in Liechtenstein and the neighboring countries is densely regulated and it needs to be assessed on a case-by-case approach which licensing is required.
There are tax exemptions available for Nonprofits and the like in general, but there are no tax exemptions that are uniquely available for Social Enterprises structured using a for-profit organizational form. See above under Item 1(5).
Nonprofits and the like (whether or not Social Enterprise) have two key tax exemption provisions, one being that they do not have to pay income tax themselves, and the other being that donors may take deductions on their reported income.
No.
No.
No.
No.
The Ministry of Economy provides advice and support for small businesses and Social Enterprises on the formation and thereafter.
No, reporting and compliance requirements do not depend on whether or not the Enterprise qualifies as a Social Enterprise as defined in this survey but depend on other parameters such as organizational form and tax status.
No.
No.
Depending on the current processing times, it can take a couple of days to form a legal entity in Liechtenstein.
The process to become a tax exempt Nonprofit typically takes between 1 -2 weeks.
N/A
Yes, startups can easily form and flourish in Liechtenstein. They have a number of Enterprise forms available to choose from, there are relatively few reporting requirements for private for-profit businesses and incorporation processes are fast, cheap and simple.
Social Enterprises can form relatively in Liechtenstein.
We are not aware of any laws in Liechtenstein that are obstructive to the formation of Social Enterprises in Liechenstein or disfavor Social Enterprises in any way.
No.
1. Providing tax benefits to Social Enterprises utilizing for-profit Enterprise forms.
2. Making crowdfunding easier, cheaper and more accessible to broaden public investment in Social Enterprises.
N/A
N/A