UAE Foundation regimes – an overview

Célia Titouni


Over the past twelve months, both the Abu Dhabi Global Market (ADGM) and the Dubai International Financial Centre (DIFC) extended their structuring and legacy planning offerings with the adaption of the civil law-based concept of foundation.

Both regimes are the result of a comprehensive review of best practices, models and principles of existing foundation frameworks in both common-law and civil-law jurisdictions around the world. The ADGM Law is primarily based on the principle of common law foundations; the DIFC regime combines features of common law foundations with selected elements of the Liechtenstein foundations model and the Dutch Stichting Administratiekantoor (STAK) regime.


A foundation is an independent legal entity with a distinct personality, separate from the founder; it may enter into contracts or hold assets in its own name. However, it is an ‘orphan’ structure as it has no shareholders or members.

Foundations are a concept derived from civil law principles. Common law jurisdictions typically only define the notion of companies and trusts, both of which foundations share mechanisms and functions with. To defy this classification issue, both ADGM and DIFC Laws explicitly emphasizes the corporate nature of the foundation.

ADGM and DIFC foundations must be registered with the relevant registrar, and their place of registration be located within the respective jurisdiction.

The constitutional documents comprise the Charter and By-laws. The Charter is publicly available; it must contain certain mandatory items – e.g. foundation’s name, its object(s), a description of the initial capital and duration (if not perpetual). The By-laws – which may and often do contain more sensitive information – are private.

Foundations are managed by a foundation Council and may be supervised by a guardian. Noticeably, the identity of Council members is private in ADGM but public in DIFC. While foundations must at all times have a registered office in their respective centre, their actual administration may take place elsewhere.


Foundations can have one or more founder(s) – individual(s) or body corporate(s). The two main requirements for the creation are the presence of initial capital and one/several specific object(s).

The scope of permitted objects under both regimes is broad. A DIFC foundation may be set up purely for charitable purposes – a notable difference from the ADGM regime. Foundations may however not carry out any commercial activities as far as they are not incidental or ancillary to its objects.


Following the creation of a foundation, the founder has no more rights towards the foundation or its property unless he proactively reserves such specific rights. The founder may opt to retain (but not bequeath) significant control powers via the By-laws, a great advantage compared to a standard trust. The founder may notably reserve the right to change the Charter and By-laws or terminate the foundation.

The founder may elect one or more individual(s) or group(s) of “qualified recipients”, which may include himself and should be mentioned in the by-laws. Qualified recipients have no rights to or interest in respect of the foundation– other than a right to payment of amounts based on the by-laws, a contract with the foundation or – in the DIFC – a depository receipt, which can be enforced by way of court order if not provided. A qualified recipient may however, by way of writing request (limited) information regarding the foundation.

Foundations must have a Council of at least two members (individuals or body corporates) to administer its property and carry out its objects pursuant to the foundation documents. Its role is equivalent to the board of directors’, and the usual standards of care apply in deploying the fiduciary duties towards the foundation. The Founder can be one of the Council members.

Appointing a guardian is voluntary, unless the foundation has a charitable object or a specified non-charitable object. The guardian’s duty is to supervise the Council and to ensure that the council carries out its functions. To do so, he may require the council to account for its action. The by-laws may contain reserved powers of the guardian to approve or disapprove actions of the foundation council – like the protector of a trust. Anyone can be appointed as a guardian, including the founder. The guardian may however not be a member of the Council, to ensure separation of powers.

In most cases, a registered agent of the foundation will have to be appointed. The registered agent is required to be a “qualified person”, i.e. properly licensed by ADGM/DIFC to carry out such activity. The appointment of a registered agent will increase the level of confidentiality for the foundation as the audited accounts must be filed with the Registrar in the absence of a registered agent.


By introducing arguably the most modern and forward-thinking foundation regimes in the world, both UAE centers noticeably improved their existing framework for succession planning, private wealth management, creditor protection, and charitable institutions’ purposes, which until then primarily consisted of companies, personal trusts and family offices.

Which regime to choose? Both regimes are similar from a structural and administrative standpoint, and contain exceptional asset protection and firewall provisions to safeguard the foundation’s assets from any forced heirship or creditor claims based on foreign law or foreign judgments, administrative orders or arbitral awards.

A migration from a foreign jurisdiction is possible to both ADGM and DIFC.

Fundamentally, following Memorandum of Understandings entered by the Dubai Land Department with ADGM and DIFC, both ADGM and DIFC foundations are allowed to own real estate plots, lands or properties within the Emirate of Dubai.

The regimes differ on a number of strategic aspects:

    • Privacy: Whilst only limited details are publicly available under both regimes, the identity of Council members is private only in ADGM.
    • Employee Benefit Programs: A DIFC foundation may issue securities, including depository receipts with respect to assets of the foundation, by which the economic benefits can be granted to a recipient without disposing of the ownership of the asset – a particularly interesting feature for family businesses and employee benefit programs.
    • Arbitration: The DIFC regime specifically provides for arbitration as a form of alternative dispute resolution.
    • Charitable object: The DIFC Law allows foundations to have an object exclusively charitable. The objects of an ADGM foundation cannot have an exclusive charitable purpose [on the other hand, the object of a company underlying the foundation – e.g. a company limited by guarantee – can].
    • Morphing: The DIFC specifically provides for the morphing of an existing DIFC company into a foundation, and vice versa.
    • Template please: As of writing, the DIFC does not make templates Charter and By-laws available to applicants, where ADGM has opted for a more democratic – and cost-effective – route.



Yann Mrazek

Managing Partner


Célia Titouni

Senior Associate


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