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The UAE's Foundations Regimes

In the following article, originally published in The Oath Magazine, Rima Mrad and Bradley Moran offer a comparison of the Foundations in the ADGM, DIFC & RAK ICC – the formation, key features and differences.

Foundations are a form of hybrid entity similar to both a private company and a trust structure. Combining the mechanisms of both, a Foundation is established for a beneficial purpose determined by the ‘Founder’ yet retains a corporate level of independent legal personality.

With the benefit of the independent legal personality, Foundations are well suited to offer practical and flexible structures for a multitude of purposes including: private wealth management and preservation, succession planning, tax planning, charitable institutions, asset protection, corporate structuring and creditor protection.

Foundations are not used as trading or commercial vehicles; however it is common to find a foundation structure with an underlying vehicle used for such purposes in line with the wishes, trading and investment goals of the Founder.

Foundations are generally created to protect the wishes of the Founder being an individual or corporate body. When established by the Founder their assets are transferred and the legal title transferred to the Foundation. Unique to Foundations is the fact that they are established as a self-owned entity or ‘orphan structure’ and therefore have no shareholders or members. Importantly this allows the Foundation to own and hold assets either in its own name or on behalf of the beneficiaries offering a layer of separation between the Founder, the assets and their estate.

Foundations are governed by its Charter and By-Laws, whilst the Charter is publicly available the By-Laws are strictly private. Powers can be drafted into the By-Laws to preserve oversight and control in favor of the Founder if so desired. Beyond this, Foundations are managed by a Council and may be supervised by a Guardian (if necessary or applicable).

Foundations are now available across the United Arab Emirates (the “UAE”) in:
  • The Dubai International Financial Center (the “DIFC”) under the governance of the Foundations Law DIFC Law No. 3 of 2018,
  • The Abu Dhabi Global Market (the “ADGM”) under the Foundations Regulations 2017; and
  • The RAK International Corporate Centre (the “RAK ICC”) following the RAK ICC Foundations Regulations 2019.
The above regimes are largely similar with a few more particular differences which we shall address at the end of this article.


The following components and constitutional documents make up a Foundation.

Founder: A minimum of one (1) founder is required (which can be an individual or legal entity). Typically post establishment a Founder has no more rights towards the Foundation however if necessary these can be drafted into the By-Laws.

Council: Formed by the Founder, the Council must comprise at least two (2) members, which can include the Founder. The Council’s role is to conduct the affairs of the Foundation, similar to a board of directors, in accordance with its Charter and By-Laws and applicable laws.

Guardian: The Guardian (which can be an individual or legal entity) is appointed by the Founder to supervise the Council and must take reasonable steps to ensure that the Council carries out its functions appropriately. Powers may be reserved to the Guardian in the By-Laws to approve or reject actions taken by the Council.

Registered Agent: A foundation will often have an appointed Registered Agent (although not compulsory other than in RAK ICC) who will need to be properly licensed by the regulatory body in the regime.

Beneficiaries: Or otherwise known as ‘qualified recipients’ are appointed by the Founder and can be an individual, group or further entity. Qualified recipients have no rights to or interest in respect of the foundation other than a right to payment or receipt based on the constitutional formation documents.

Registered Office Presence: All Foundations must maintain a registered office presence, often this is the address of the Registered Agent, however the administration and location of the Council, Founder and Guardian can be elsewhere.

Governing Documents: The constitutional documents of a Foundation consist of its Charter and By-Laws. We recommend these be tailored to the goals and wishes of the Founder and Foundation, we can assist in this respect.


Independent Legal Personality: Unlike a typical trust a Foundation is able to hold the assets of the Founder in the name of the Foundation offering improved asset protection measures. As the assets no longer belong to the Founder a level of ring-fencing protection is placed between the Founder and their assets against creditors, governments or other family members.

Tax: Foundations in the UAE benefit from a favorable tax environment of a 0 per cent corporate tax rate, a 0 per cent personal income tax and access to a wide network of ‘Double Taxation’ treaties.

Compatibility: Foundations are permitted to own all classes of UAE asset including property in Abu Dhabi (ADGM) and mainland Dubai (DIFC and RAK ICC). Additionally, most international assets can be held including shares and investment portfolios. Consequently, they enable Founders to consolidate their assets and protect them.

Privacy: The beneficiaries of a foundation are kept confidential.

Protectors (Guardians): In addition to the Council a Guardian can be appointed with sufficient powers of oversight and correction in relation to the decisions of the Council.

Flexibility: The Council can be located anywhere in the world.

Migration: Foundations from overseas can be migrated to the ADGM, DIFC or RAK ICC regimes.

Lifespan: A Foundation can be established for an undefined lifespan or for a limited time offering a Founder the opportunity for their goals to continue in perpetuity.

No Beneficial Owner: A Foundation is a self-owned entity or ‘orphan structure’ and therefore has no shareholders or members. As noted above, this offers a layer of separation between the shareholders and the assets of the Foundation. If you consider the example of a private company, shares are held by individual shareholders in their personal capacity and remain at risk of third-party arrangements, debts, and even probate or estate planning complications.

Beneficiaries: Can be individuals, corporate entities, a further Foundation or even unnamed at the time of formation.

Legacy Planning: Foundations are able to collate and hold assets across multiple jurisdictions including holding shares in an active company. To that end they can be used as a means of legacy planning ensuring smooth succession and business continuity from one generation to the next in a family business.

Islamic Succession Laws: With appropriate measures Foundations can be established and be Sharia’ compliant.



The DIFC regime is the only regime which allows for a company to be morphed into a Foundation. DIFC Foundations are permitted to have an exclusively charitable purpose where ADGM may not (however if is established for charitable purposes a Guardian is a mandatory requirement). The DIFC regime specifically provides for arbitration as a form of alternative dispute resolution.

Finally, a DIFC Foundation is able to issue depository certificates (i.e. securities) representing the value of the contributed assets from the contributor and their entitlement to the same.

Fees: Registration Fee / Annual Renewal Fee

(as at 2021) - USD 200.


The identity of the Council Members is kept confidential in the ADGM whereas in the DIFC their information is publicly available (subject to payment of an access fee).

The ADGM Foundation regime is the only one with no ongoing annual requirement to file or audit accounts unless requested by the Registrar. Account records must be properly maintained as per the other regimes however are not required to be filed unless requested.

ADGM Foundations cannot be established for solely philanthropic or charitable purposes without more tailored structuring.

Fees: Registration Fee / Annual Renewal Fee (as at 2021) - USD 200.


RAK ICC does not maintain a publicly accessible register of information in relation to a Foundation.

Information related to the Foundation benefits from the applicable privacy laws in the UAE and will not be disclosed unless required by the relevant authorities. Within RAK ICC however a Registered agent is a mandatory requirement whereas with DIFC and ADGM it is only optional.

Fees: Registration Fee / Annual Renewal (fee as at 2021): AED 750 (approximately USD 200).


Foundations are exceptionally flexible can be used for a variety of purposes. As a result, we are seeing that Foundations are becoming more widely utilised and in turn more important in the region. Most commonly Foundations are associated with purposes such as wealth management, family succession planning, inter-generational continuity, and asset protection. However, Foundations can be utilised for a multitude of purposes a few of which we note below:
  • Holding of Investments: As noted above, a typical Foundation structure would be for a special purpose vehicle (“SPV”) to hold the investments and the SPV itself is held by the Foundation.
  • Asset Protection: Foundations as a separate legal personality can hold assets in its own right on behalf of the designated beneficiaries. As an added benefit, the layer of separation of ownership between Founder and asset offers protection for the assets from creditors and government bodies.
  • Charitable or Philanthropic Purposes: With the benefit of customisable By-Laws and Charters a Foundation offers a means of oversight and adherence to the vision of the Founder. A Foundation can therefore be effectively utilised for charitable and philanthropic purposes.
  • Business Growth: From business growth and inter-generational continuity perspective, a Foundation can provide a flexible means for a family business to hand over management of a business to a Foundation. The management of a family business is then governed by the vision of the Founder through the By-Laws and Charter and, in the event of passing or incapacity of the Founder, the management and business itself can continue from one generation to the next.
  • Employee Share Schemes: Foundations can be used in the context of an employee share scheme whereby the shares of the employer company are held by the Foundation. In lieu of granting actual shares to an employee rights or units within an employment share scheme are granted instead. The payment right granted to the employee in line with the scheme is linked to the value of the employers shares however said shares remain secure and held by the Foundation.
The original article can be downloaded here:The UAEs Foundation Regimes
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