22 May Setting Up the UAE Foundation | Dubai Foundation | DIFC and ADGM Foundation
Setting up a Foundation in the UAE can be complex and requires careful planning and attention to detail.
A foundation in the UAE is a type of legal entity that is gaining a lot of attention recently. It is separate from its founders and operates under its own governance structure. Foundations can be set up for various purposes, including asset protection, social welfare, wealth structuring, and inter-generational legacy planning.
Most UAE foundations are governed by the Commercial Companies Law (the “Companies Law”) and its implementing regulations. Foundations incorporated in free zones are subject to the rules and regulations applicable within the jurisdiction.
Step 1: Choose a Purpose and Name for the Foundation
Before setting up a Foundation, it is essential to identify the purpose for which it will be established. The foundation’s purpose should align with the UAE’s legal and regulatory framework. Once the purpose has been identified, the foundation’s name should be chosen. The name should reflect the purpose of the foundation and should comply with the local naming conventions.
Step 2: Identify the Initial Endowment
The UAE requires foundations to have an initial endowment, the capital needed to establish and operate the foundation. The endowment can be in the form of cash, property, or other assets. The amount of the endowment will depend on the purpose and scope of the foundation’s activities and must be sufficient to cover the foundation’s expenses.
Step 3: Choose the Type of Foundation in the UAE
Two types of foundations can be established in the UAE: public foundations and private foundations. Public foundations are established for the benefit of the general public, while private foundations are established for the benefit of a specific group of individuals or a particular cause.
Typically, when a client desires to safeguard their assets, they enlist the services of a lawyer or corporate service provider such as us to establish a foundation under their name. The client assumes the role of founder, with their family named as beneficiaries of the foundation.
The founder may also participate in the council of members, along with at least one other individual or legal entity. In addition, to ensure proper oversight, a guardian who has the authority to monitor the council’s actions and safeguard the founder’s intentions may be appointed.
Foundations in the UAE can be set up under various regimes from which some of the most popular ones are:
- Dubai International Financial Center (DIFC)
- Abu Dhabi Global Market (ADGM)
- RAK International Corporate Centre (RAK ICC)
Step 4: Prepare the Foundation’s Articles of Association
The Articles of Association are the legal document that outlines the purpose and scope of the foundation’s activities, as well as the governance structure of the foundation. The Articles of Association must comply with the jurisdictions’ legal and regulatory framework.
Step 5: Register the UAE Foundation
Once the Articles of Association have been prepared, they must be submitted to the relevant UAE authorities for registration. The registration process can take several weeks and requires the submission of various documents, including:
- The foundation’s Articles of Association
- A copy of the founder’s passport or identification card
- A copy of the initial endowment
- A letter from a UAE bank confirming the deposit of the initial endowment
- A copy of the lease agreement for the foundation’s office (if applicable)
Step 6: Obtain Necessary Permits and Approvals
Once the foundation has been registered, obtaining permits and approvals from various UAE authorities may be necessary, depending on the nature of the foundation’s activities. For example, if the foundation is engaged in educational activities, obtaining approval from the Ministry of Education may be necessary. On the other hand, if the foundation is established within a free zone, it may be possible to obtain all approvals internally.
Step 7: Establish the Foundation’s Governance Structure
The foundation’s governance structure is outlined in the Articles of Association and typically includes a board of directors or trustees responsible for overseeing the foundation’s activities. The governance structure should ensure transparency, accountability, and effective management of the foundation’s activities.
Step 8: Commence Operations
Once the foundation has been registered and all necessary permits and approvals have been obtained, it can commence operations. The foundation’s activities should be in line with its purpose and scope and should be conducted in a transparent and accountable manner.
In conclusion, setting up a foundation in the UAE can be a complex process that requires careful planning and attention to detail. If you want to start a foundation in the UAE, contact us today for a free consultation.
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