What are the key considerations when establishing a foundation in the UAE?
Establishing a foundation in the United Arab Emirates (UAE) involves careful planning and adherence to the following key considerations outlined by Leevyn Isabel, Business Development Director:
1. Clearly defined purpose
The foundation's charter should explicitly outline its purpose, which should fall within charitable, religious, or educational realms. Defining the purpose with clarity is paramount to the foundation's mission and credibility.
2. Founders & their roles
A foundation must have at least one founder, who can be an individual or a legal entity. Consider the option of a nominee founder or other roles such as a contributor or guardian to suit your specific situation.
3. Council members
A minimum of two council members is required for the foundation's governance. It's advisable for these council members to be UAE residents, ensuring effective oversight and local understanding.
4. Guardian role
If the foundation is charitable or has specific objectives, appoint a guardian. The guardian oversees that the foundation's assets are utilised for its intended purpose.
5. Defined beneficiaries
Specify the beneficiaries of the foundation within its charter. These beneficiaries can be individuals or legal entities, ensuring transparency in distribution and impact.
6. Adequate funding
Sufficient funding is crucial for the foundation to achieve its goals. Sources of funding can include founders' contributions, donations, and various funding streams.
7. Jurisdiction selection
The UAE offers diverse jurisdictions for foundation setup, each with its advantages and drawbacks. Prominent options include the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM).
8. Legal structure
Choose between a charitable foundation or a private foundation. Keep in mind that charitable foundations are subject to more regulatory requirements compared to private foundations.
9. Tax implications
Foundations are subject to taxation in the UAE. Tax rates vary based on the foundation's type and revenue sources. Understand the tax implications to make informed decisions.
10. Financial considerations
The cost of establishing and operating a foundation in the UAE varies based on factors like size, complexity, and jurisdiction. Account for these expenses when planning the foundation's budget.
11. Professional guidance
Seek advice from qualified legal and financial experts when establishing your foundation. Their expertise will ensure legal compliance and alignment with your family's specific goals.
How can Ocorian help?
Our primary focus in the Middle East is working with families, assisting them in setting up and supporting family offices, and structuring their wealth. We also collaborate with managers, including those based in Europe and the US, who are seeking investors. This link is important as it involves professionalising the family office and aligning with the requirements of international co-investors or managers.