Comparisons

Using a Foundation to Keep a Family Business in the Family

By Hansruedi Mueller, Swiss foundation lawyer · Published 21 July 2026 · Last updated 21 July 2026

Some of the best-known companies in Europe are owned by foundations, and the appeal for a family business is obvious: put the company’s shares into a foundation and the business cannot be sold out from under the next generation, split among quarrelling heirs, or picked apart by a private-equity buyer. The ownership is locked, and the business continues under a purpose the founder set. This is the enterprise foundation, or Unternehmensstiftung, and it is a genuine succession tool, but in Switzerland it comes with real limits that a founder must understand before relying on it.

The central tension is this: a Swiss foundation exists to serve a purpose, not to run a business for private profit. Swiss law is cautious about foundations that hold operating companies, and it does not permit a foundation whose real purpose is simply to enrich a family through a trading business. Understanding where the line falls is the difference between a structure that works and one that a supervisory authority will not accept.

This guide explains what an enterprise foundation can and cannot do in Switzerland, why some families look to Liechtenstein instead, and how to think about locking a family business into permanent ownership.

Key takeaways

An enterprise foundation (Unternehmensstiftung) holds the shares of an operating company, fixing its ownership across generations.

It prevents the family business being sold, split among heirs or broken up, keeping it whole.

Swiss law is restrictive: a foundation may hold a company, but not exist merely to enrich a family from a trading business.

A foundation should not itself actively run a business; it holds shares and exercises ownership, with management left to the company.

Where Swiss limits do not fit, families sometimes use a Liechtenstein foundation, which permits wider commercial purposes.

What an enterprise foundation does

An enterprise foundation owns the company so that no individual does. Instead of shares passing to heirs who may sell, disagree or lose interest, the shares sit in a foundation whose purpose ties them to the continuation of the business. The company keeps trading under its own management; the foundation is the stable owner above it, exercising shareholder rights in line with the founder’s purpose. The result is a business that cannot be dismembered by succession, divorce or a tempting offer.

For a founder who has built a company and wants it to survive as an independent business rather than become someone else’s acquisition, this permanence is the whole point. It is the corporate equivalent of what a family foundation does for passive wealth: it removes the asset from the churn of individual ownership and gives it an institutional owner with a fixed mission.

The Swiss limits you must respect

Switzerland allows a foundation to hold a company, but not to be a disguised profit machine for a family. A Swiss foundation must serve a defined purpose, and a purpose of “make the founder’s descendants rich from the family firm” is not permitted; Swiss law restricts foundations that simply maintain a family, and the pure family foundation cannot be used to channel ongoing business profits to relatives at will. A foundation can hold company shares where doing so serves a legitimate purpose, but the supervisory authority will look hard at a structure whose substance is private enrichment through a trading business.

Equally, a foundation is not meant to be an operating business itself. The accepted model is a holding foundation: the foundation owns the shares and acts as owner, while the company below it does the trading and is run by its own management. A foundation that tried to run the business directly would sit uneasily with its nature as a purpose-serving entity. These constraints are why the enterprise foundation, though real, is a specialist tool in Switzerland rather than an off-the-shelf answer. Our comparison of a foundation and a holding company sets out where each fits.

Why families look to Liechtenstein

When the Swiss limits do not fit, Liechtenstein is the usual alternative. A Liechtenstein foundation (Stiftung) permits broader commercial and family purposes than a Swiss one, including structures whose main role is to benefit a family, and it has a long tradition of holding family businesses and wealth. For a family whose goal is squarely to keep a trading business under family-benefiting ownership, Liechtenstein often accommodates what Switzerland will not.

The trade-off is jurisdiction: a different legal system, supervisory regime and reputation profile, and a structure sitting outside Switzerland. For some families that is exactly right; for others, staying within Switzerland matters more than the extra flexibility. Our note on the Swiss versus Liechtenstein foundation sets out the differences that drive this choice, which is best made with advice on the specific business and family.

Is a foundation the right tool at all

A foundation is one succession option, not automatically the best. For keeping a family business intact, the alternatives, a shareholders’ agreement, a family holding company, a trust in another jurisdiction, each solve part of the problem, and the right answer depends on how much the family values absolute permanence over flexibility. A foundation offers the strongest lock, but that lock cuts both ways: once the business is in a Swiss foundation, the family cannot easily change course.

Because the Swiss limits are real and the choice is consequential, an enterprise foundation should be planned with advice on both the company and the family’s goals, not adopted because it worked for a famous brand. If you are weighing how to pass a family business to the next generation, contact us and we will assess whether a foundation, in Switzerland or elsewhere, actually fits.

Frequently asked questions

What is an enterprise foundation (Unternehmensstiftung)? It is a foundation that holds the shares of an operating company, fixing the company’s ownership so it cannot be sold, split among heirs or broken up. The company continues under its own management, while the foundation is the stable owner above it, exercising shareholder rights in line with the purpose the founder set. Several well-known European companies are owned this way.

Can a Swiss foundation own a family business? Yes, a Swiss foundation can hold company shares, but within limits. Swiss law does not permit a foundation whose real purpose is simply to enrich a family from a trading business, and the pure family foundation cannot channel ongoing business profits to relatives at will. A holding structure that serves a legitimate purpose is possible; a disguised profit machine for the family is not.

Can the foundation run the business itself? It should not. The accepted Swiss model is a holding foundation: the foundation owns the shares and acts as owner, while the operating company below it does the trading and is run by its own management. A foundation actively running a business would sit uneasily with its nature as an entity that exists to serve a defined purpose.

Why do families use a Liechtenstein foundation instead? Because Liechtenstein permits broader commercial and family purposes than Switzerland, including foundations whose main role is to benefit a family, and it has a long tradition of holding family businesses. Where a family’s goal is squarely to keep a trading business under family-benefiting ownership, Liechtenstein often accommodates what Swiss law restricts, at the cost of using a different jurisdiction.

Does a foundation stop the business being sold after I die? That is its main purpose. Once the company’s shares are in the foundation, they do not pass to heirs who might sell or disagree; the foundation is the permanent owner, and the business continues under the purpose you set. This lock is the reason founders choose the structure, and also the reason it should be entered into deliberately, since it is hard to unwind.

What are the alternatives to a foundation for business succession? A shareholders’ agreement, a family holding company, or a trust in another jurisdiction each address part of the succession problem, with different balances of permanence and flexibility. A foundation offers the strongest ownership lock but the least flexibility. The best tool depends on how much the family values absolute continuity against the ability to change course later.

Is an enterprise foundation only for large companies? No, but it is a specialist structure that suits businesses the family genuinely wants to keep independent and intact for the long term, and it carries setup and governance costs that need to be proportionate. For a smaller business, simpler succession tools may achieve enough of the goal without the permanence, so the decision turns on the family’s objectives rather than the company’s size alone.

Can I keep control of the business through the foundation? You can shape how control is exercised, through the foundation’s purpose and board, but not own the business personally once it is in the foundation. The foundation, not you, becomes the owner, and after your death the board exercises the shareholder rights. Designing that governance carefully is essential, because it determines how the business is steered once you are no longer directing it.

This article is general information and not a substitute for formal legal advice. Whether a foundation suits a business succession depends on the company and the family. Please contact us for advice on your specific case.

Sources

Restrictions on Swiss family foundations and the prohibition on foundations existing merely to maintain a family, Swiss Civil Code Art. 335 (fedlex.admin.ch, SR 210); general foundation law, Arts. 80-89.
Holding of operating companies by foundations and the holding-foundation model, Swiss foundation practice and Federal Supervisory Authority for Foundations guidance.
Broader commercial and family-benefit purposes permitted for Liechtenstein foundations, Liechtenstein Persons and Companies Act (PGR).