pruh+znak_PF_13_gray5+fialovy_RGB PF_PPT
Legal personality,
Legal persons, Trusts and trust-like instruments
Kateřina Ronovská
Faculty of Law, Masaryk University, Brno
The Czech Republic

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Sturcture of the lecture:
n
nIntroduction (why?, how? etc.)
nPerson in legal sense and legal personality
nLegal Person
nCategorization and Characteristics of types of legal persons (generally)
nTrust
nTrust like forms
nDiscussions in 21 st century?

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Terminology: „Person in legal sense“, „a legal person“, „a legal entity“
nIn order to be eligible to hold/exercise subjective rights (and duties), one must be qualify as a
„person“ in legal sense“ nPerson in „legal sense“: a natural person or a legal person (germ.
Rechtstäger), what else?
nWhat is and what is not person in „legal sense“?
nLegal person (fiction or reality?, nexus of obligations?)
nLegal entity (with/without legal personality?)
n
n

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The Choupette case: „named in his will“
n
nhttps://www.forbes.com/sites/megangorman/2019/02/20/why-one-of-karl-lagerfelds-legacies-might-be-e
state-planning-for-your-pet/?sh=45f6041e433a
nhttps://www.thewealthadvisor.com/article/karl-lagerfelds-cat-locked-inheritance-battle
nKarl Lagerfeld died in 2019, 270 mil. USD
nThe seven beneficiaries are trying to access Lagerfeld's assets that include real estate in Paris
and Monaco, a bookstore, and designer furniture. nChoupette is a blue-cream tortie Birman cat who
was owned by German fashion designer Karl Lagerfeld from 2011 until Lagerfeld's death in 2019 at
the age of 85.

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River Whanganui, New Zeelend:
nhttps://edition.cnn.com/2020/12/11/asia/whanganui-river-new-zealand-intl-hnk-dst/index.html
n
nRiver in India:
nhttps://edition.cnn.com/2017/03/22/asia/india-river-human/index.html
n
nRiver in Bangladesh:
qhttps://www.reuters.com/article/us-bangladesh-landrights-rivers-idUSKCN1TZ1ZR
q
n

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Legal personality – what is it?
n Legal personality is a eligibility to have a right and duties (f.e. hold property, enter into
contracts etc.)
nEasy to accept by natural persons are persons in a legal sense (nature rights), although from a
historic perspective not a given fact
nOther „entities“ existed (historicly): universitas personarum (state, province, municipia,
collegia), universitas rerum/bonorum, church
nBUT! the theoretical concept of legal person was unknown till 19th centry!
n

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Church law
•pope Gregorius VII – 1075:
•Church is an autonomous body, governed by its own internal laws, headed by the clergy
•Persona Ficta
•Strong influence in continental Europe in the middle ages (Ius Commune)
•
•First business „corporations“ (1600- East India Trading Company, one of the first joint stock
companies)
•
•
n

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Different theories and their influence today?
•Savigny: only natural persons have will:
nlegal persons can exist only as a legal fiction (fiction theory)
•Brinz: legal persons have no will – the assets are owned by the purpose (purpose is legal entity)
•Gierke: corporation have a body and soul, therefor have a will (theory of reality)
•Jehring: The legal person is the instrument for joint entitlement to the assets. Legal personality
is a specific form of ownership..
•And many others….

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Example no. 1: Switzerland (ZGB 1912, based on theory of reality)
nEugen Huber: nature and legal persons are treated the same way (with a few exceptions) nTheories
are today in codes or in case law, tool for interpretation nNumerus clausus of legal persons
(protection of third parties)
n

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Examples 2: The Netherlands (based on theory of reality)
nMeijers: Legal persons serve the intersts of natural persons, but their interests are not
identical. Legal person have an autonmous interest and therefor are recognized by law equally like
natural persons (no fiction) nScholten: Legal persons social phenomena that present themselves in
real life (no fiction) and are recognized as legal entities because otherwise they would not be
adequately embedded in law
n
n

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Example 3: Czech Republic (based on fiction theory)
n A legal person is an organised entity whose legal personality is provided or recognised by the
law. nA legal person may, without regard to its objects of activities, have rights and duties
consistent with its legal nature.
nNumerus clausus of legal persons
nOnly persons may have and exercise their rights. Duties may only be imposed upon and their
performance enforced against persons. nIf anyone creates a right or imposes a duty upon something
other than a person, such a right or duty shall be attributed to the person to whom it belongs
according to the legal nature of the case.
n

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What is legal person? diversity of perspectives
nAn organized unit (purpose) that is endowed by force of law with legal personality (a creature of
law)? nA person in the legal sense - a self-contained person/subject of law (sepaprate property
autonomy and responsibility)?
nEntity which is having a deeper social essence?
nType of ownership structure? (a form of property management) n Nexus of obligations? (constitutes
it/is a consequence of it)
nInstrument of financing?
nMix of contract and property law and agency?

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Legal person: main features?
nGeneral:
§Influence of State and Law on the formation/creation of a Legal Person
§Legal personality ( i.e. legal subjectivity)
§Purpose of the legal person
§Organisational structure (at least minimum)
§Property autonomy and separate property liability
nIdentification:
§Name
§Registered office
§Nationality?

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Categorization of legal persons (different criteria):
n
nSource of regulation:
§Legal persons of public law (municipalities,chambers, public institutions/funds) vs.private law
(associations, foundations, business corporations
nTrade unions?, Political parties?
nPersonal/propertial base:
§Coroporation vs. Foudations
nPurpose of existence:
§Business vs. non-business (private benefit vs. public benefit)
n

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„Corporations“
nthe oldest, most important, most widely used type of legal persons (entities) na combination of
several persons for a specific purpose/objective
nmembership principle
nseparation of property spheres
nability to decide to exist or not to exist (dissolution)
nX
n „Partnership“ (societies) – not always recognized as a legal person
n

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„Foundations“
npersonalised special-purpose assets
nDepend on the will of the founder,
n3 characteristic features: purpose, property, organization
n„purpose“ a an epicentrum of foundation world
nmembership conceptually excluded
nnot be able to dissoleve itself by its own discretionary decision of the board
n
nOther „institutions“ (private/public) – mix of features
n
n

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Legal Persons (private law) – system in the Netherlands (NBW)
n
nLegal persons: public and private law
n
nCorporation (associations, business corporations, cooperatives)
nFoundation
n

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Legal Persons (private law) – system in Switzerland (ZGB + separate laws)
nLegal persons (private and public law)
nPublic law – central, cantonal law
nCoroporations (municipalities, chambers
nFoundations and Institutions (Anstalten)
nPrivate law:
nCorporation (associations, trade unions ZGB), business corporations and cooperatives (OR)
nFoundation (family foundations, church foundations, pensions-foundations)
n
n

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Legal Persons (private law) – system in the Czech Republic
(CC + Business corporation Act)
nLegal persons
nCorporation (associations, business corporations, cooperatives, trade unions…)
nFondation (foundation, foundation fund)
nInstitution
n
nhttp://obcanskyzakonik.justice.cz/index.php/home/zakony-a-stanoviska/preklady/english
n

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Other „legal structures“? „entities“?
Trusts and trust(like) vehicles: different concepts I
§
§
§„Classical“ common law trust: divided owhership; trustee holds legal title (a formal ownership) to
the trust assets; change of trustees requires transfer of legal title; beneficiary holds equitable
title(an economical ownership)
n
n3 actors:
§Settlor (founder) – trustee - beneficiary
§

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Trusts and trust(like) vehicles: different concepts II
§Lichtenstein Truhänderschaft (trust-like):
§Czech Trust fund (trust-like): the ownership of trust fund assets is not liked to anybody; change
of trustees does not require transfer of legal title to the trust assets;
§Quebec, Hungary, South Africa, French Fiducia, Luxembourg San Marino…
§In Italy solution „trust interni“ (also in Switzerland)
§Austrian (Privatstiftung)
n
n

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Similar features of a foundation and trusts
(functional approach):
n3 elements: assets, purpose, organization
nPurpose - serve to a purpose, not to a specific person, nFoundation/trust as a "vehicles" for
purpose, a tool for resolving conflicts of interest nConflicts of interest are "omnipresent" in
foundations/trusts (on many levels), foundations as conflicts of interest "per se“ nRules for
governance of the foundation (foundation governance)/position of trustee.
nThe specific position of founder and beneficiary

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Trusts, trust-like vehicles, foundations
n
nWhat is different?
n
n Foudnations - Legal title is owned by the legal person
n

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Trust fund, what is it?
nRelationship (obligation)? Set of obligations?
nProperty? Way of „holding“ property?
nPerson? Legal entity?
nor Something else?
n
n„….one cannot define the essence of an institution as a series of relationships among three people
when none of those people is essential to its existence ”.
n (Pierre Lepaulle, 1932)
n

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Czech Trust like vehicle „Svěřenský fond“ (Trust fund)
nTrust-like instrument (asset management)
n
ninspiration in Trust/fiducie (Quebec)§ 1260 CCQ
-
nstrange concept for Czech legal enviroment – problems
n
ndifferent concept of ownership/patrimony (separated property without owner)
n
n„Fear of the unknown“ – getting better/more regulation
n
nquestion, if not better solution f.e. – Austrian Private Foundation (the same function)
n
-
-
n

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Czech Trust fund: characteristic
nAutonomous assets (Quebec concept)
nNOT A TRUST! (although certain aspects of the common law trust are reflected)
nOriginally a contractual concept (French fiducie)
nModified (statute, registration of trusts)
nThere is no property right of beneficiaries (x trust)
nNo legal personality (x trust)
nSelected comparable foreign concepts in Europe (Austria, Liechtenstein, Cyprus)

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Czech Trust fund - § 1448 ef CC
n(1) A trust fund is created by setting aside part of the property owned by the founder in such a
way that the owner entrusts the trustee with the property for a particular purpose through a
contract or disposition mortis causa, and the trustee obliges himself to keep and administer the
property.
n (2) The creation of a trust fund establishes separate and independent ownership of the part of
property and the trustee is obliged to assume the property and its administration.
n (3) The rights arising from the right of ownership in the property in a trust fund are exercised
by the trustee in his own name and on the account of the trust fund; however, the property in a
trust fund is not owned by the administrator/trustee or the founder, or the beneficiary.
n

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European „legal persons“
nSocieta Europea
nEuropean Economic Interest Grouping
nEuropean Cooperative
n
n
n
nProjcts: Fundation Europea, European Association

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Freedoms for legal persons in European Law
nFreedom of establishment
nFree movement of sevices
nFree movement of capital
n

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Free movement of capital/Freedom of establishemt in within EU, Case Law of ECJ (and EFTA): examples
of
functional approach in the EU
nFor business corporations:
nDaily Mail
nCartesio
nSevic
n….
nFor foundations:
nPersche, Stauffer
nFor trust (trust-like) strucutres
nOlsen and others
nPanayi
n
n
n

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Conclusions
nNatural person vs. legal person
nLegal person is a „person“ by virue of law, In continental Europe – formal concept, numerus
clausus of legal persons
nCategorization of legal persons
n„Europeanisation“ for business companies (not only), freedom of establishment free movement of
capital nTrusts, „Trust-like“ vehicle, each country different unique concept (functionally similar
to foudations)
nCase law of EFTA and ECJ
n

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Questions:
n1. What are the sources of the legal regulation of legal persons?
n2. Try to categorize legal persons (on general level)
n3. What is the distinction between foundation and corporation kind of legal person? n4. Legal
persons of public and private law? Could you mention similarities and differences? n5. What is
different between the legal person and trust (trust-like) form?
nDo you find concept of a legal person useful?
n

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nThank you very much for your attentionJ
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n katerinaronovska(et)gmail.com