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Set up a Foundation in Dubai for Family Wealth Planning & Asset Protection

Dubai offers efficient options for local and international families as well as other High Net Worth Individuals to manage their business and investment interests through Foundations. The families can manage their asset and business interests across multiple generations by setting up a foundation in Dubai International Financial Centre (DIFC).

A foundation is an independent legal entity with a distinct personality separate from the founder. A foundation is somewhere between a company and a trust but definitely not a hybrid of the two forms.

By setting up a foundation in DIFC the founder is able to bestow his assets to the foundation, and the assets will be held in the name of the foundation but separate from the founder’s personal wealth. Seek advice from the consultants in Dubai for assistance in setting up a foundation in DIFC by forming foundation.

Related: How to form a company in DIFC free zone?

What is the Purpose of Setting up a Foundation in the UAE?

A foundation is a legal entity and the concept is mainly derived from the countries governed by Civil Law. The foundation is known for its lack of members or shareholders. In a foundation, the foundation council manages the assets of the founder as per the foundation’s charter and by-laws.

The Foundation is mainly used by the family business where a patriarch will be controlling the enterprise from the top. A number of family members will also be holding significant positions with a say in the running of the business. However, a foundation gives such enterprises a more structured leadership which is a departure from the single-family-member leadership.

Transferring the ownership of the business to a foundation and appointing managers to enable the family businesses to reduce the risks generated by the unexpected illness or death of key family members. In a foundation, even though the family is transferring the ownership, it can still have control over the ownership through a properly crafted charter and by-laws. The founder can even be one of the foundation council members and/ or beneficiaries.

In short, the foundations are primarily used for:

  1. Wealth structuring, legacy planning across multiple-generations
  2. Protecting the assets against forced heirship rules or forced takeovers
  3. Long term holding structure of businesses, real estate portfolios
  4. For charity and other philanthropic causes

Ownership of Real Estate in DIFC Foundation

By setting up a foundation in DIFC, the investors get the benefit of an efficient framework of family governance structure and opportunity for real estate ownership. The DIFC Foundations LAW enables the local and international family businesses to structure their businesses and family accession planning in Dubai. DIFC’s took inspiration from Foundations Law in Liechtenstein, Jersey, Guernsey, and the Netherlands, and modified it for the business environment of the UAE.

The owners of the foundation can invest in Dubai real estate outside the DIFC (within Dubai) as part of the MoU between the Dubai Land Department and the DIFC. Utilizing this opportunity, a founder can cede the property to the foundation and the foundation becomes the owner of the property. The property is no longer subjected to the laws and regulations that the rest of the founder’s estate will be subjected to. The founder can still control the assets through the Foundation council.

Salient Features of a DIFC foundation

By setting up a foundation in DIFC, the investors can enjoy the benefits of the following features:

  1. Free of interference from foreign laws
  2. Founders need not worry about the enforcement of foreign judgments
  3. There are no statutory duration limits
  4. Beneficiaries can transfer payment rights
  5. Foundation can be migrated in and out of DIFC
  6. Foreign foundation can apply for a DIFC license
  7. Benefits of access to private arbitration for disputes

Foundation Constitutional Document

The constitution of the Foundation is composed of the following:

1. Charter

A Charter is integral to the constitutional documents of the Foundation. The Charter must include name, objects, initial capital, duration, etc. The Charter also contains a declaration by the Founder asking the members to comply with the Charter terms. Consult with the best business setup consultants in Dubai for additional information regarding the Charter and other legal requirements.

2. By-laws

A foundation in DIFC can also have by-laws although not mandatory. The by-laws specify the functions of the Council, detail the procedure for appointment, resignation, and removal of the Council and Guardian. Consult with the best DIFC foundation service providers to know more about the constitution of a Foundation.

Registering a Foundation in DIFC

The family businesses can set up a foundation in DIFC with the assistance of a DIFC foundation setup service provider who will act as the registered agent. However, the registration of the foundation should take place in the DIFC. The registered agent can conduct the registration process on behalf of the investors.

How Jitendra Business Consultants can Assist?

Investors holding assets but seeking a flexible civil law structure can establish a Foundation in DIFC. Setting up a foundation in DIFC provides the family businesses with efficient wealth management and legacy planning structure. Registering a foundation in DIFC offers the family businesses own real estate properties in Dubai as well as eliminate the risks of unexpected illness or death of a key member. To establish a foundation in DIFC, the family businesses need to understand the procedures and regulations in DIFC and for which a prominent business setup consultant such as Jitendra Business Consultants (JBC) can provide guidance. JBC’s business setup consultants in Dubai are well aware of the DIFC laws as well as other UAE laws and therefore the clients can have a hassle-free foundation registration process in DIFC.

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