New structure offers alternative to trusts
ADGM offers foundations for wealth management
The UAE’s first legal structure for foundations has gone live at Abu Dhabi Global Market (ADGM), the emirate's financial free zone, providing an alternative mechanism for wealth management and the safeguarding of assets for individuals, companies and families.
The foundation structure is used for financial planning and structuring purposes, working as an alternative to trusts and corporate vehicles. It is available to international users as well as those based in Abu Dhabi.
“The new foundations regime, together with the existing world-class legislative and regulatory framework, adds to ADGM’s extensive corporate and legal structure offerings,” said Dhaher Al Mheiri, chief executive of ADGM’s Registration Authority.
“This is part of ADGM’s ongoing commitment to enhance its ecosystem and serve the needs of its stakeholders by introducing innovative and efficient business solutions.”
ADGM launched a consultation in May on its foundations regulations and regime, which are based largely on similar regulations in Guernsey and Jersey.
A foundation is a corporate body with features and uses similar to a company but with similar features to a common law trust. The structure is an incorporated entity with a separate legal personality but one that, unlike a company, does not have shareholders.
Unlike a company, a foundation cannot carry out commercial activities, other than those necessary, ancillary or incidental to its purposes.
It typically holds assets in its own name on behalf of beneficiaries or for particular purposes, or both, and operates in accordance with a constitution.
"Unlike a trust, a foundation need not have beneficiaries, nor does it have to confer information about the assets or management of the foundation, meaning that a foundation may be more beneficial for geographically-diverse or multi-generational families," said Sam Instone, chief executive of Dubai-based wealth management firm AES International.
"The availability of foundations in the UAE via ADGM means greater choice in asset structuring and legacy planning – critical components of wealth management."