Foundations in the UAE
A Foundation is a legal entity historically useful in corporate structuring and legacy planning, as well as to further charitable purposes. A Foundation is established by a Founder, who transfers assets in the Foundation’s name to be held on behalf of the beneficiaries, for a specific purpose.
The advantage of a Foundation, similar to a Trust, is that the entity acquires a distinct legal personality separate from the Founder and as such the Foundation holds the title of the assets in its own name. A Foundation therefore provides protection to assets from forced heirship rules governing inheritance, creditor claims, as well as providing long term holding mechanism options.
The purpose, which may not consist in commercial activity, is set out in the Charter and By-laws of the Foundation, which is then registered at the relevant authority and managed by the Foundation Council. A Foundation therefore confers control over assets from the Founder to the Council. While the Founder may retain significant control per the By-laws, as a Council Member or as a named beneficiary for their lifetime, the Foundation exists perpetually after the death of the Founder.
The common law oases of Abu Dhabi Global Market (ADGM) and the Dubai International Financial Centre (DIFC) have introduced a Foundations law affording individuals and entities access to structuring alternatives in the UAE to which previously was not available.
The UAE has historically not recognized the use of fiduciaries and trusts forcing individuals to make use of foreign offshore tools and making legacy planning an unenviable task, however, Foundations may now be established in both centers with relative ease providing advantages in corporate structuring, asset protection and control, as well as enhanced legacy planning.
The legislation is forward thinking and although the ADGM and the DIFC each offer unique features, overall the legislation builds on the existing foundation regimes of both common law and civil law backgrounds providing a sophisticated regulatory framework within which assets may be safeguarded.
A Foundation may now be registered with either authority with both regimes providing for domiciliation and migration into and out of the ADGM and the DIFC. The Foundation may hold initial assets of as little as USD 100 and requires no physical office space other than a registered address in the relevant jurisdiction, which may be provided by a registered agent. The ADGM and DIFC also require very limited public disclosure thereby ensuring that confidentiality is maintained.
We are currently promoting ADGM and DIFC Foundations as a means in succession planning for Muslims and non-Muslims alike to ensure that family wealth may be protected, assets safeguarded and inter-generational legacy ensured.
Senat MEA is a full service platform, founded in 2014, with roots in Dubai that go back as far as 1984. Dedicated to trust and efficiency, at Senat MEA we ensure that our clients are equipped with leading counsel in navigating the region while taking into account the global nature of business and the importance of developing long lasting relationships.
Senat MEA’s team of lawyers, accountants and business consultants are highly qualified and come from a variety of backgrounds enabling us to supply you with incomparable expertise and outstanding services.