Final beneficiary refuses the foundation assets: replacement rule and reversion

Section 36(1) PSG requires the foundation board to invite creditors to submit claims with reference to the dissolution. Section 36(2) applies the creditor protection rules in section 213 AktG and provides for the transfer of the remaining assets to the final beneficiary. The transfer therefore belongs to the orderly winding-up process.

Section 36(3) PSG addresses the situation in which there is no final beneficiary or the final beneficiary does not wish to take over the remaining assets. The assets pass to the Republic of Austria when the foundation deed contains no other applicable rule. These elements must be assessed together.

The provision identifies the destination of the remaining assets. It does not resolve every question about the scope of the refusal, the position of several final beneficiaries or the practical transfer of individual assets. Those questions remain governed by the deed, the statement and the winding-up record.

Another applicable rule may appear in the foundation deed, a valid supplement or an amendment connected with the deed. Section 9(2) no. 12 PSG lists designation of a final beneficiary as a possible provision of the foundation deed. The entire documentary scheme must therefore be read rather than an isolated name or sentence.

The review should cover a replacement person, an order of succession, a defined group, another recipient or a rule for the final beneficiary’s refusal. The clause must be identifiable in the effective version and fit the particular dissolution situation. A family expectation or an informal agreement cannot replace that basis.

The reference to another rule in section 36(3) PSG requires a case-specific interpretation. A provision dealing with the death of a beneficiary, a waiver of a current distribution or another situation cannot be treated as a rule for the remaining assets without checking its subject and legal effect. The proposed consequence must match the provision.

The foundation deed, supplementary deed and effective amendments should be arranged in chronological order. Our article on the foundation deed and supplementary deed explains the documentary distinction. The version applicable to the individual case remains decisive.

The statutory wording concerns the remaining assets. A particular statement may still require interpretation when it mentions one asset, a share or a single transfer. Before applying the statutory default, it must be clear whether the person refuses all remaining assets or only a defined part.

A written, dated and signed statement makes proof easier. It should identify the private foundation, the final beneficiary, the dissolution situation and the scope of the refusal. The file should also show when the foundation received it, whether conditions were attached and which deed provisions it relates to.

Where several final beneficiaries exist, section 36(5) PSG provides equal shares unless the foundation deed states otherwise. That rule does not give a universal answer to a refusal by one person. The deed may contain a replacement, accretion or alternative-destination clause. If it does not, the effect of the statutory rule must be assessed with the facts of the case.

Under section 36(1) PSG, the foundation board must, without delay, publish a notice in the “Amtsblatt zur Wiener Zeitung” inviting creditors to submit claims. Claims must be submitted no later than one month after publication of the notice. The board must also identify known liabilities, continuing contracts and pending proceedings from the foundation’s records.

Section 36(2) PSG applies the creditor protection rules of section 213 AktG. A refusal by the final beneficiary therefore does not permit an early transfer or remove an obligation of the private foundation. The assets remaining after the protection rules are the basis for the next allocation decision.

The file should separately record the creditor notice, submitted claims, disputed positions, security measures and discharged liabilities. The asset schedule should make clear which items remain open and which assets are still available for the later transfer or statutory consequence.

The review should include the effective foundation deed, every relevant supplementary deed, effective amendments, the commercial register record and proof of the ground for dissolution. The original refusal, evidence of receipt and correspondence concerning the foundation’s response belong in the same file.

The financial file requires a current asset schedule showing ownership, encumbrances, claims, liabilities and continuing contracts. Real estate, shareholdings and other assets may require separate records for transferability and implementation. The refusal does not replace the valuation or the review of existing burdens.

For several final beneficiaries, shares, replacement persons and conditions should be entered in a separate decision table. This shows which conclusion comes from section 36 PSG and which consequence is derived from the foundation deed or the facts of the case.

The file should finish with a short explanation of the result. It should connect the refusal, the applicable deed provision, creditor protection and the remaining asset position in a traceable order.

If the final beneficiary does not wish to take over the remaining assets and the foundation deed contains no other applicable provision, section 36(3) PSG provides that the assets pass to the Republic of Austria. The same statutory consequence applies where no final beneficiary exists and no different provision is available.

This result must be distinguished from a free choice of a new recipient. The statutory default follows from the conditions in section 36(3) PSG. The foundation board therefore cannot create a replacement recipient by resolution alone where the foundation deed supplies no basis for that consequence.

The winding-up file should identify the deed provisions reviewed, the precise content of the refusal, the assets remaining after creditor protection and the legal consequence drawn from those facts. The specific implementation steps and required evidence must then be matched to each affected asset.