Why do we have a Foundations Regime?
ADGM works closely with local and international stakeholders as well as market experts to understand the market’s needs. Through that engagement, ADGM developed its Foundations Regime to address the unique requirements of families and asset owners in Abu Dhabi, regionally and globally.
There has also been a strong demand from Private Banks who want to be able to provide locally a full suite of structuring solutions to local and regional clients.
Foundations, like trusts, are used for a variety of purposes including wealth management, planning and preservation. Unlike trusts, however, Foundations are incorporated as a legal entity with their own distinct attributes and legal personality. In this respect, foundations are similar to companies but without shareholders, making them suitable for wealth management across generations.
ADGM foundations support local and international families and High Net Worth Individuals to efficiently manage their business and investment interests across multiple generations.
ADGM foundations supplement ADGM’s existing suite of products and services available to families. To date, the ADGM platform has been widely used by local families for structuring a wide range of business interests using holding companies and Special Purpose Vehicles as well as setting up family offices.
What are the benefits of an ADGM foundation?
ADGM’s Foundations Regime is the first in the UAE, offering the local private and corporate community an international product for a variety of functions including wealth management and preservation, family succession planning, tax planning, asset protection and corporate structuring, without relying on foreign regulations and structures.
ADGM foundations offer a robust balance of client confidentiality and high standards of transparency under the ADGM’s internationally recognised legislative environment. International clients who seek to effectively manage and supervise their wealth and assets under a competitive and international jurisdiction will find ADGM foundations useful. ADGM foundations also serve as an alternative to trusts for financial planning and structuring.
Benefits of ADGM’s Foundations Regime:
Access to UAE’s DTTs (subject to the UAE Ministry of Finance Requirements)
Robust governance features, with the Foundation Council acting in an equivalent manner to a board of directors. Council members’ duties are prescribed in the ADGM Foundations Regulations. The regime follow international best practice and sets a regulatory standard for the foundation council. This standard includes statutory duties similar to directors’ duties in companies’ law.
Assurance through Guardian oversight. The Guardian supervises the Foundation Council and ensures that it acts in accordance with the Foundation’s Charter and By-Laws. Appointment of the Guardian is compulsory upon Founder’s death and optional during Founder’s lifetime.
Distinct legal personality, unlike a Trust. Having a legal personality provides Foundations with the flexibility to enter into contracts and arrangements directly, as a company would be able to.
Separation of liability whilst maintaining control of assets. A Foundation is a distinct legal entity which allows for separation of liability between Founder and the Foundation.
Perpetual existence after the lifetime of Founder. Like a company, a Foundation is a perpetual concept, allowing arrangements to continue and therefore providing certainty after the Founder’s death.
Asset protection mechanisms to assist in protection from bankruptcy claims, claims in the event of divorce and from the effect of forced heirship rules.
Are foundations the same as trusts?
Though a foundation operates similarly to a common law trust, it has certain features more akin to a company, such as being incorporated with a separate legal personality and holding assets in its own name on behalf of beneficiaries. Unlike a company, though, a foundation cannot carry out commercial activities, other than those necessary, ancillary or incidental to its purposes.
A key feature of a foundation (as compared to a common law trust) is the ability of the founder to retain more control over the foundation.
In contrast, the settlor has a more limited role and, once assets are settled on trust, the duties of trustees are towards the beneficiaries, rather than the settlor.
What are the key features of ADGM’s Foundations Regime?
An ADGM foundation is a legal entity with its own distinct attributes
Protecting the confidentiality of the foundation’s arrangements whilst ensuring that the Registrar can access sufficient information
Governance controls and safeguarding the founder’s ability to exercise control over a foundation; and
Facilitating migrations from other jurisdictions to ADGM and vice-versa.
Does the ADGM Foundations Regime require local representation at ADGM?
All ADGM foundations are required to have a registered office in ADGM, either itself or through its registered agent.
An ADGM foundation can decide whether or not it wishes to appoint a registered agent.
Can foreign persons take advantage of ADGM foundations?
We welcome local, regional and international applicants to take advantage of the efficient, hassle-free and market-customised Foundations Regime to maintain their wealth, assets and financials. ADGM’s Foundations Regime is anchored by ADGM as an international financial centre and is based on an internationally-aligned legislative structure and framework. ADGM’s Foundations Regime facilitates migrations from other jurisdictions to ADGM and vice-versa.
Which Court has jurisdiction over ADGM foundations?
The ADGM Courts have jurisdiction over ADGM Foundations, as part their overall jurisdiction under Article 13 of Abu Dhabi Law No. 4 of 2013.
The ADGM Foundations Regulations preserve a pro-active role for ADGM Courts.
Does the ADGM Foundations Regime provide for the preservation of assets?
Like other common law jurisdictions, ADGM has incorporated asset protection mechanisms into its Foundations Regime. These are known as firewall provisions, and are a familiar feature in common law trust jurisdictions, as well as Foundations jurisdictions.
Of course, ADGM encourages founders to obtain independent legal and taxation advice on their proposed structures to ensure that they meet their intended objectives.
How long does it take to set up an ADGM foundation?
For a new foundation, it should take about 3-5 days to set up once the Registrar has received all required information and documentation.
The ADGM team will provide the appropriate guidance to assist the entities.
How confidential is my information in respect of an ADGM foundation?
ADGM has carefully sought to balance preserving client confidentiality and maintaining transparency of ownership by splitting the formation process into two separate elements: Public and Private.
Private/Confidential Disclosure: Foundation By-Laws governing, for example, the constitution of the foundation council would remain private and would only be provided to the Registrar upon request (and, if requested, would not be made available for public inspection without the consent of the founder). However, the Foundation By-Laws and other non-public information would be disclosed to governmental authorities in limited circumstances, such as those prescribed in the ADGM Companies Regulations 2015.
What is the cost of an ADGM foundation?
The ADGM Foundations Regime is benchmarked with international best practices and its fees structure is very competitive.
The application fee is $500, with an annual renewal fee of $500.