The Dubai International Financial Centre (DIFC) will introduce a new legal structure for foundations in early 2018 to offer enhanced wealth management and succession planning options to individuals, family offices and companies in Dubai and elsewhere, following a similar move by Abu Dhabi Global Market (ADGM) two months ago.
The DIFC on Tuesday launched a consultation on a new foundations law, signaling the introduction of the legal structure in the Dubai-based freezone for the first time. It also launched a consultation on revisions to its existing law governing trusts.
The new foundation law is expected to come into effect during the first quarter of 2018, according to a spokeswoman for the DIFC. Interested parties will have until November 8 to submit comments on the new law, which draws of legislation from jurisdictions including the Netherlands and Luxembourg.
“The proposed new Trust Law and Foundations Law will significantly enhance DIFC’s wealth management proposition by ensuring that lifetime and succession planning for families at the Centre will have a robust legal status,” said DIFC governor Essa Kazim.
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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.
Under the terms of the DIFC’s draft law, individuals and companies wishing to set up a foundation need not have a physical presence in the freezone, but will be required to conduct business via a DIFC-based registered agent.
Abu Dhabi's financial freezone ADGM introduced the UAE’s first legal structure for foundations in July, drawing on legislation from Guernsey and Jersey.
