UAE Foundations could be considered as a hybrid between a trust and a company as they share features of both. The Foundation exists in its own right so unlike a company there are no shares which pass on death of the owner(s). It is a so-called ‘orphan’ structure.
A foundation is an independent legal entity, with a legal personality different from its Founder. The Foundation consists of council members and the founder. The founder provides the initial assets – known as the endowment – which are then held for the purposes set out in its constitutive documents. Those assets are then managed by the foundation council (equivalent to a board of directors for a company) in accordance with the foundation’s charter and by-laws for the benefit of beneficiaries or in support of a cause or a purpose.
With the separation of legal and beneficial ownership, a foundation enables families to facilitate their inter-generational legacy planning and wealth protection objectives, particularly where the family is internationally mobile with assets in multiple jurisdictions.
One of the key advantages of a Foundation over a Trust is its ability to hold and register assets in its own name. This appeals to many families as there is no need to transfer assets to third-party trustees in foreign jurisdictions.
Foundations are primarily used for:
Another significant benefit of UAE Foundations are (with variances in the different Emirates) is that, unlike overseas Trusts, they are permitted to own real estate located in the UAE (as well as shares, bank accounts and investment portfolios).
Foundations in UAE are established through 3 different regimes
- The Dubai International Financial Centre (DIFC)
- The Abu Dhabi Global Market (ADGM)
- The RAK International Corporate Centre (RAK ICC)
Sovereign can assist with all aspects of setting up and registering UAE Foundation and can act as a council member, Guardian and a registered agent. Sovereign is also able to provide full administrative services enabling a Foundation to perform including the preparation of financial statements, accounts, the completion and filing of tax returns.