Foundations Law

This article will reveal all the aspects that refer to the Foundations, how they are formed and how they work. Based on expanding a little all the information that includes what corresponds to these entities and what is the scope and needs that they require in each of them.

What is a Foundation?

As established in Art. 2 of Law 50/2002 on Foundations, Foundations are those:

"Non-profit organizations constituted that, by the will of their creators, have their assets permanently affected to the realization of general interest purposes"

 and therefore, they are protected by Art. 34.1 of the Spanish Constitution.

What are the fundamental characteristics of the Foundations?

• All initially need an estate.
• They must pursue objectives of general interest.
• They are not made up of partners.
• They lack the spirit of profit.
• When they are of state competence, they are governed by the Foundations Law 50/2002, when they act in more than one Autonomous Community or if the Autonomous Community lacks specific legislation. However, they will be governed by specific regional legislation, when there are cases such as the Community of Madrid where there is a Law on the Foundations of the Autonomous Community.

Taking into account these characteristics mentioned above, it must be taken into account that not having profit motives means that the benefits or economic surpluses produced annually cannot be distributed. But, if the following manifestations can be made:

• Obtain economic surplus at the end of the year.
• Carry out employment contracts within the Foundation.
• Produce economic activities from which economic surpluses can be generated.
• These surpluses obtained by the Foundation must be reinvested in the fulfillment of the entity's purposes.

What are the statutes of writing for the formation of the Foundation?

The Constitution of a Foundation is carried out legally through the formalized deed, which consists of a document of creation of the same and in which the aspects established in Article 10 of Law 50/2002, of Foundations, which are:

• If they are natural persons, the names and surnames, age and marital status of the founder or founders, if they are legal persons, the name or company name. And in both cases, nationality, address and tax identification number are necessary.
• The endowment, valuation, form and reality of the contribution.
• The respective statutes of the Foundation.
• The corresponding identification of the people who are part of the governing body, and the respective acceptance if it is made at the founding moment.

With respect to the Statutes, the following must be recorded:

• Name of the Entity that must comply with the provisions of Art. 5 of the Foundations Law.
• The respective foundational objectives.
• The home address of the Foundation and the territorial area in which the corresponding activities will be carried out.
• Establish the basic rules for the application of resources in order to fulfill the foundational objectives and to determine the beneficiaries.
• The constitution of the Board of Trustees, the rules for the appointment and replacement of the members that comprise it, the causes of their dismissal, the powers and the way to deliberate and adopt the resolutions.
• All other legal provisions and conditions in which the founder or founders have the authority to establish.

Note: When establishing the Statutes of the Foundation, it should be taken into account that:

“Any provision of the Statutes of the Foundation or any manifestation of the will of the founder or founders that is considered contrary to the Law will be considered as not put in place, unless the constitutive validity of that is affected. In view of this, the Foundation will not be registered in the Registry of Foundations ”.

How to create a Foundation?

To carry out the creation of a Foundation it is necessary: ​​a founder or founders, a patrimony and some aims or objectives, as established in Art. 9 of Law 50/2002 on Foundations and, for this, there are the following modalities:

Art. 9. On Modalities of Constitution.

1. The Foundation may be constituted by an act inter vivos or mortis causa.
2. If it is a constitution by inter vivo act, the procedure will be carried out through a public deed with the content determined in the following article.
3. If the Foundation is constituted by act of death, the procedure will be carried out in a testamentary manner, carrying out the fulfillment of the requirements established in the following article for the deed of the constitution.
4. If it happens that in the constitution of a Foundation by act mortis causa, the testator had limited himself to establishing his will to create a foundation and to dispose of the assets and rights of the endowment, the public deed containing the other requirements by this Law it will be granted by the testamentary executor and, failing that, by the testamentary heirs. If it is the case that these do not exist, or fail to comply with this obligation, the deed will be granted by the Protectorate with prior judicial authorization.

Whatever the case, it is clarified that it is necessary to establish the public deed for the constitution of the Foundation and register it in the Registry of Foundations according to Art. 3, 7 and 8 of Royal Decree 384/1996, of March 1 in which approves the Regulation of the Registry of State Competency Foundations. However, until the Registry of Foundations of state competence comes into operation, the currently existing registries will remain, in accordance with the sole Transitory Provision of Royal Decree 1337/2005, of November 11, which approves the Foundations Regulation state jurisdiction.

The main registers are the following:

• State foundations of social action - Protectorate and Registry of Welfare Foundations (Ministry of Health, Social Services and Equality).
• State cultural foundations - Protectorate of the Ministry of culture. Plaza del Rey, 1-2th floor (Seven Chimneys Building). Phones: 91 701 72 84. http://www.mcu.es/fundaciones/index.html. e-mail: [email protected]
• State Environmental Foundations - Registry of the Protectorate and Registry of Environmental Foundations. Plaza de San Juan de la Cruz, s / n 28073 Madrid. Telephone: 597 62 35. Fax: 597 58 37. http://www.mma.es.
• State Foundations of Science and Technology - Protectorate of the Ministry of Science and Technology. Paseo de la Castellana, 160 28071, Madrid.
• Foundations of another category, whose scope is the Community of Madrid - Registry of Associations of the Community of Madrid, C / Gran Vía, 18 28013. Telephone: 91 720 93 40/37.

What is the operation of a Foundation?

To carry out the operation of a Foundation, once its Deed and Statutes have been created and registered, and having in order all the obligations concerning the Treasury that are dealt with in the corresponding Prosecutor's Office section, the Foundation created must keep the Book up to date. of Minutes and Accounting, established in the Adaptation Rules of the General Accounting Plan and Budgetary Information Rules of non-profit entities. The specifications on the Minute Book and Accounting are made below.

• Minute book: This is a book that contains the numbered and bound sheets, in which the sections of the governing bodies of the Foundation will be recorded, making special reference to the agreements adopted. It must be kept chronologically and, if by chance a blank or unused page is left, it must be canceled to avoid annotations that do not correspond to the development of the sections. The data that must be collected in each record are the following:
• Organ that meets.
• Date, time and place of the meeting.
• Call number (First and Second).
• Assistants (nominal or numerical data).
• Order of the day.
• Development of the meeting where the main arguments related to the people who defend them are specified.
• All agreements adopted.
• Systems for adopting agreements and numerical results.
• Signature of the secretary and VºBº of the President, unless the Statutes foresee the need for other signatures.

All the minutes that are developed in the sections must be presented at the next meeting of the body in question in order to be approved, where, generally, the first point to be discussed of the day consists of the reading and approval of the minutes of the previous meeting .

• Accounting, auditing and action plan: The Foundations Law has introduced some new changes regarding accounting aspects, establishing the obligations of these entities as specified below:
• All Foundations must keep a Daily Book and a Book of Inventories and Annual Accounts.
• The Foundation's Board of Trustees must approve the annual accounts within a maximum period of six months from the close of the financial year.
• Foundations can formulate all their annual accounts in abbreviated models, once they meet the requirements established for commercial companies.
• It is mandatory to submit the Foundation's annual accounts to an audit.
• All the annual accounts will have to be approved by the Board of Trustees of the Foundation, which will then be presented to the Protectorate within ten business days following their approval.
• On the other hand, the Board of Trustees will prepare and send to the Protectorate an action plan, which reflects the objectives and activities that are expected to be carried out during the following financial year.
• In the case, in which economic activities are carried out, the Foundation's Accounting must comply with the provisions of the Commercial Code, and the consolidated annual accounts must be formulated when the foundation is in any of the assumptions that are provided there for the Dominant society.
• The corresponding functions relating to the deposit of accounts and the legalization of the books of the Foundations of State Competition are to the Registry of Foundations of State competence.
• The Government will be updating the Adaptation Rules of the General Accounting Plan and Budgetary Information Rules of non-profit entities within a period of one (1) year from the entry into force of this Law, as well as approving the rules for preparing the action plan of said entities.