The opposition Freedom and Solidarity (SaS) party plans to submit a bill introducing private foundations to help family businesses pass from one generation to the next without being broken up.
“The Slovak economy has reached a period when the first major generation of entrepreneurs after 1989 is ageing and gradually handing their companies over to their children,” SaS deputy chairman Marian Viskupic said on August 27.
Many of Slovakia’s privately owned businesses were established after the fall of communism in 1989, meaning their founders are now reaching the age when ownership and management are being passed to their children. “This is not a matter for the future. It is a current problem; it is really happening today.”
According to SaS, a private foundation could be used for the long-term management of a family company and other assets. The party says its planned system would include requirements to identify the ultimate beneficial owner, keep accounting records and, for larger holdings, undergo audits.
“We want to make it clear that this is not a tool for hiding assets, circumventing rules or creating anonymous structures,” Viskupic said.
The bill itself has not yet been made publicly available.
Viskupic said some Slovak family businesses used structures available under Czech, Liechtenstein or Cypriot law to manage family assets because Slovakia, according to SaS, lacked a suitable domestic option.
The private-foundation plan, presented in August, is the next step in a broader package of legislative changes SaS is proposing for family businesses.
The party submitted its first measure in May. It seeks to broaden an existing exemption that allows close relatives to help in certain family businesses without an employment contract.
Under the current rules, the exemption is subject to a limit on the number of shareholders (spolocnici) in a company. SaS family-business expert Monika Nadova Kroslakova said this could cause problems during succession. If a founder transfers a company to three children, for example, the parent’s continued help in the business may no longer qualify for the exemption.
“When a business passes to the next generation, it is not just ownership that is transferred,” she said in May. “Experience, know-how, relationships and company culture are transferred too.”
Parliament did not debate that proposal in June. (The Slovak Spectator)