There are cases where it makes sense to merge two foundations with legal capacity. This process is called gain. Since the addition is only regulated to a small extent by law, you should already pay attention to the possibility of addition in the statutes when foundation foundation is founded. The formal and material conditions must be clearly regulated. In this article, we explain the increase, what you have to pay attention to and how you act best.

The increase is usually based on a restructuring requirement. This is based on the fact that in the situation in which the foundation is located, the statutory purpose and thus the fulfillment of the founder's will no longer seems possible. Fundamental structural changes are necessary when operational possibilities are exhausted. Operational possibilities depend on the specifications of the founder. This may include the change of purpose, the conversion into a consumer foundation or the cancellation. These measures can also be ordered by the authorities according to § 87 BGB. In addition, the merger of foundations as an addition or as a merger is possible.

The question is how acquisition and merger differ from each other. Both cases involve design means. An increase is referred to when the assets of a transferring foundation are transferred to another, already existing foundation. Consequently, the hosting foundation continues to exist. On the other hand, the transferring foundation loses its legal capacity. Therefore, it expires and goes into the receiving foundation. In a merger, on the other hand, existing foundations are combined into this new foundation by transfers of their assets to a new receiving foundation. The previously existing foundations are all extinguished. These processes can be compared with a conversion. The addition can be considered as a merger by absorption within the meaning of §§ 4 ff. Understand UmwG. By contrast, the merger is comparable to a merger by new creation.

Uniting, merging and merging do their goal. Both design options are intended to ensure that all foundation purposes are sufficiently fulfilled again. In particular in the case of a distressed foundation, the merging and bundling can serve to ensure that the assets serve the purpose of realization in the sense of the founder.

The problem is to find a legal basis for the increase. § 87 BGB allows as an ultima ratio governmental measures in the case of a foundation with legal capacity. This also includes the merger of several foundations. Nevertheless, this is an administrative measure. Therefore, the increase on the basis of an institutional decision and on the basis of a statutory regulation is precisely not one of them. The conversion law also contains no legal basis. The reason for this is that § 3 UmwG defines the legal entities capable of being combined. The legislator deliberately did not mention foundations. This can be concluded from the fact that the legislature explicitly lists them in § 161 UmwG as part of the spin-off. It follows, therefore, that foundations should in principle not be covered by the conversion law. Nevertheless, state foundation laws provide for possibilities to merge foundations. This also explicitly mentions the increase.

This proved that the legal basis of the increase seems highly questionable. Nevertheless, within the framework of their private autonomy and the freedom of statutes, founders can make the addition possible in the design of the foundation constitution. Therefore, foundation business and statutes can create a basis for the acquisition. If the founder can lay down a ground for dissolution or set up a temporary foundation, it must even more be possible for him to create a basis for an increase. Therefore, as a founder of the foundation constitution, you should ensure that it allows an association with another foundation under certain conditions.

If you want to make an increase, there must be some requirements. If state foundation laws explicitly contain regulations, the conditions specified therein must be met. For this, the Land Foundation laws often require an explicit regulation in the statutes. Often the actual circumstances at the foundation must have changed and of course the actual or presumed will of the founder must not oppose.

In addition to the requirements of state law, the requirements in the foundation constitution must also be observed. This includes the foundation business and the foundation statutes. Both the formal conditions for decision-making and the material conditions must be met. It is important to note that in the event of an addition, the purposes of the transferring foundation are continued by the receiving foundation. Therefore, the hosting foundation often requires a change of statute in the form of a change of purpose. In material terms, the increase can be made under various conditions. When establishing the foundation, attention should be paid to how the regulations for the addition are made. They should allow the board room for manoeuvre but not be entirely at its discretion. Otherwise, the foundation’s stock will be placed in the hands of the board. Therefore, you should link the increase to changed circumstances. For example, you can make a requirement that the fulfillment of the purpose of the foundation no longer seems possible or meaningful.

The transferring foundation is dissolved upon completion of the addition. Since the legal consequences are so serious, especially in the case of the transferring foundation, the consent of the competent foundation supervisory authority is required. In the case of the hosting foundation, at least one statutory amendment is usually required. This also requires the approval of the foundation supervisory authority. It therefore makes sense to coordinate in advance with the foundation supervisory authority whether, how and under what conditions an increase is feasible from their point of view.

Of course, an increase also has tax consequences, which must also be observed. When adding tax-advantaged, for example, charitable foundations, §§ 52 ff AO must be observed. Therefore, you have to check whether the purposes of the foundations are related to each other. Furthermore, the division of the foundation assets of the transferring foundation should be maintained as far as possible. Therefore, in particular, funds to be used in a timely manner should also be identified and treated as such by the hosting foundation. For this to happen, basic assets must continue to be treated as such. In the case of tax-advantaged foundations, it is therefore advised to coordinate with the tax office before the addition. For this purpose, they may submit a request for binding information.