DIFC FOUNDATONS

Key features of DIFC Foundations

• 01

  Founder(s) and object of the foundation

  A DIFC Foundation might be established by one or more founders who dedicate certain assets towards a specified charitable or non-charitable purpose. The scope of permitted objects is broad. However, the foundation cannot undertake commercial activities, except those necessary for, and ancillary or incidental to its objects.

• 02

  Presence in the DIFC

  The DIFC Foundation must be registered and located in DIFC. In most cases, a registered agent is appointed to provide the domiciliation in the jurisdiction, nevertheless it is also possible for the foundation to rent its own office space to comply with the necessary presence in the jurisdiction.

• 03

  Charter and By-laws

  The management, governance and control of the DIFC Foundation and its assets can be tailor- made, to the extent permitted by the Foundation Law, to reflect the arrangements that the founder desires, via a combination of provisions set out in the Charter and By-laws. The founder(s) may for instance retain significant control powers via the By-laws and can decide to be appointed as one of the Council members (see below point 4). Whilst the Charter is publicly available, the By-Laws remain strictly private.

• 04

  Council of foundation and Guardian

  Although a DIFC Foundation has a separate legal personality, it does not have partners, shareholders or members, but it is rather a ‘self-owned’ entity. In the absence of an ownership structure as such, a DIFC Foundation is administered by a Council of foundation, composed of two members appointed by the founder(s), and it may be supervised by a guardian who will be in charge to verify that decisions undertaken by the Council are in line with the Charter and By-laws.

• 05

  Beneficiaries

  The founder can be part of the beneficiaries as well his/her family members or even a corporate vehicle.

• 06

  Capital / assets

  A DIFC Foundation shall have a capital, which can be in the form of cash or in kind/other assets, including real estate within the Emirate of Dubai. There is no minimum capital requirement, any endowment will be sufficient for the establishment of the foundation. Further endowment towards the capital can be made by the founder(s).

The DIFC Foundation concept proves to be suitable in the context of succession planning as the founder(s) can remain in control of the assets of the DIFC Foundation during his/her lifetime and beyond, under the terms of the Charter and the By-laws. Once the assets of the founder(s) are transferred to the DIFC Foundation, those assets cease to form part of his/her private estate. Those assets then form part of the DIFC Foundation’s capital, providing a robust asset protection, by safeguarding these assets from forced heirship or creditor claims.