2023

Activity

The activities of STIFA focus on the supervision of common-benefit foundations and establishments as well as private-benefit foundations and establishments that have voluntarily submitted to supervision. Unless the entity is exempted from the obligation to appoint an auditor, STIFA receives an annual audit report on the proper management and use of the assets for its supervisory purposes. These reports are processed by STIFA and, if necessary, regulatory measures are requested from the Court of Justice. In the case of foundations and establishments that are exempt from the obligation to appoint an auditor, STIFA normally carries out audits itself every three years. Furthermore, STIFA’s remit also includes checking the accuracy of the filed notifications of formation and amendments in the event of private-benefit foundations not entered in the Commercial Register..

Supervised entities

¹These numbers include common-benefit and private-benefit foundations and establishments.

Besides the 74 foundations and establishments that came under supervision of STIFA in the year under report, 51 foundations were put into liquidation, five foundations were released from the supervision of STIFA and 48 foundations were removed from the Commercial Register. The positive increase in the number of common-benefit foundations, which had started again for the first time in 2022, thus continued in the year under review (increase of 1.2% compared to the previous year) and almost reached the peak number of common-benefit foundations from 2018 (1’392). It should be noted that although the number of common-benefit foundations dissolved in the year under review increased by a third compared to the previous year, the resulting reduction in the number of common-benefit foundations was compensated by an increase in the number of common-benefit foundations that came under the supervision of STIFA.

Proceedings concerning auditors

During the year under review, 115 foundations and establishments applied to the Court of Justice for statutory auditors to be appointed. This also includes those proceedings in which an application was made for the replacement or dismissal of auditors. STIFA was a party to each of these proceedings. During the year under review, six common-benefit foundations applied to STIFA to be exempted from the obligation to appoint an auditor (Art. 552 § 27 Para. 5 PGR).

Audits conducted by the auditors

On 31 December 2023, 85 (in the previous year: 100) audit reports relating to the financial year 2022 were still outstanding. This means the above stated number of objections and referrals relating to the audited 2022 financial year is expected to increase until the reports have been submitted in full.

With regard to the objections raised by auditors relating to the 2022 financial year, it should be noted that these were largely due to improper use of the assets, in particular due to the lack of distributions over a longer period of time. Furthermore, deficiencies in the management of the assets (e.g. disproportionately high costs for the foundation administration) as well as organisational shortcomings (e.g. lack of approval by foundation bodies to resolutions) also led to objections.

With regard to the referrals made by auditors concerning the 2022 financial year, the picture is broadly similar, namely that a large proportion of the matters requiring notification related to deficiencies in distribution practice. A large number of referrals were also made for the purpose of informing STIFA about pending legal proceedings or about an accounting over-indebtness pursuant to Art. 182e and Art. 182f PGR.

STIFA has examined the objections and referrals identified by the auditors and has taken the necessary measures.

Audits conducted by STIFA

In the case of foundations and establishments that are exempt from the obligation to appoint an auditor (by the end of the year under review: 102), STIFA normally carries out the audit itself every three years. STIFA subjected a total of 40 (in the previous year: 33) common-benefit foundations to an independent audit during the year under review, whereby these audits were now carried out in such a way that the audit documents had to be submitted to STIFA in advance and the audit was then carried out on-site at the foundation after an initial review of these documents. Furthermore, in the year under review, STIFA carried out a final independent audit of six foundations that were exempt from the obligation to appoint an auditor as a result of a decision to dissolve the foundation, so that these foundations could subsequently be terminated.

On 31 December 2023, 31 regular audits of STIFA were still pending (among other things due to a backlog of audits from 2021 and 2022 resulting from shortages of staff related to the Moneyval assessment). This means the above stated number of objections and referrals will increase until the audits of STIFA have been completed in full.

With regard to the objections and referrals ascertained by STIFA, it should be noted that the picture is broadly analogous to the objections and referrals made by the auditors. The findings were mainly made due to the improper use of the assets of the foundation, in particular due to the lack of distributions over a longer period of time, as well as organisational shortcomings (i.e. insufficient resolutions of the Board of Foundation). In addition, STIFA pointed out disproportionately high costs for the foundation administration in relation to the approved distributions.

STIFA took the necessary measures based on the objections and referrals identified.

Supervisory proceedings and other proceedings

In eight cases STIFA applied to the Court of Justice for supervisory measures during the year under review (Art. 552 § 29 Para. 3 PGR). In addition, in seven instances foundation participants applied to the Court of Justice for supervisory measures to be taken against foundations and establishments subject to STIFA supervision (Art. 552 § 29 Para. 4 PGR). STIFA was a party to each of these cases. With regard to the supervisory legal proceedings initiated by foundation participants, it can generally be said that the number of such proceedings, as well as their scope and complexity, has increased. As a result of the higher number of parties involved and the in some cases very high amount of and extensive assets affected by the proceedings, the legal proceedings are more comprehensive and take longer, which ultimately also places greater demands on STIFA’s resources.

Furthermore, in the year under review STIFA was asked to make statements in six cases on account of its party status in respect of changes to the purpose and other contents of the foundation documents, in particular the organisation, that had been requested at the Court of Justice (Art. 552 § 33 and 34 PGR).

In addition, in the year under review, STIFA reported two cases to the Office of the Public Prosecutor on suspicion of criminal offences and one case was reported to the Professional Ethics Committee of the Liechtenstein Institute of Professional Trustees and Fiduciaries on suspicion of possible violations of the Code of Professional Conduct.

Audits of formation and amendment notifications

In the case of a total of 31 representatives, the accuracy of the notifications of formation and amendments of private-benefit foundations not entered in the Commercial Register (Art. 552 § 21 PGR) was verified on a random basis during the year under review.

With regard to the total of 173 foundations audited, STIFA was informed of the following objections and referrals by the appointed auditors:

In the case of one foundation, it was found that this foundation has a common-benefit purpose, but was not registered in the Commercial Register and was not subjected to STIFA supervision. STIFA has asked the foundation concerned for its statement and will, if necessary, initiate further measures based on the response.
In the case of four foundations, it was found that there were discrepancies between the foundation documents and the information deposited with the Commercial Register regarding the date of establishment, the domicile and the purpose. In all cases, STIFA has requested the foundations concerned for their statements or modifications and will, if necessary, initiate further measures based on their responses.
In the case of one foundation, a discrepancy between the foundation documents and the information deposited with the Commercial Register was reported. Since this discrepancy is not covered by the information that must be disclosed pursuant to Art. 552 § 20 PGR, however, no further measures were required by STIFA.
In the case of eight foundations, not all notifications or foundation documents could be examined because they were not at the disposal of the representative concerned, for example due to a seizure by court.