How can a Foundation Structure Protect your Properties, Business Assets and Licenses in Dubai?

How can a Foundation Structure Protect your Properties, Business Assets and Licenses in Dubai?

The United Arab Emirates (UAE) has become a key jurisdiction for structuring business assets, securing business licenses, and ensuring regulatory compliance. In recent years, Dubai has become a leading global destination for businesses, investors, and high-net-worth individuals looking for strategic opportunities in wealth management, and asset protection.

Understanding Foundations in Dubai

A foundation in Dubai is a legal structure designed to manage and safeguard assets for various purposes, including wealth preservation, estate planning, asset protection, and charitable contributions. Unlike trusts, foundations operate independently, without shareholders or members, and are governed by a charter and by-laws established by the founder.

A council is appointed to oversee the foundation’s management, ensuring it aligns with the founder’s objectives. In Dubai, foundations are commonly set up under two key jurisdictions: the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM). These jurisdictions provide a robust legal framework, regulatory stability, and tax benefits, making them an attractive option for individuals and businesses looking to secure and structure their assets effectively.

What Are the Requirements for Establishing a Foundation in Dubai?

Setting up a foundation in Dubai requires compliance with specific legal, financial, and procedural guidelines. While the requirements may vary between the DIFC and ADGM jurisdictions, the key aspects generally include:

Founders

• Minimum Number: At least one founder, who can be an individual or a corporate entity.
• Residency: The founder does not need to be a UAE resident, allowing foreign individuals and businesses to establish foundations in Dubai.

Council Members

• Minimum Requirement: A foundation must have at least two council members, either individuals or corporate entities.
• Responsibilities: Council members oversee asset management, operations, and ensure compliance with the foundation’s objectives.
• Residency: No specific residency requirements, offering flexibility in appointing members from different jurisdictions.

Registered Agent

• If the foundation does not maintain a physical office in DIFC or ADGM, a registered agent licensed in the relevant jurisdiction must be appointed to act as the main regulatory contact.

Foundation Charter and By-Laws

• Foundation Charter: A legal document outlining the foundation’s name, objectives, duration, initial assets, and founder details, which must be registered with the relevant authority.
• By-Laws: Internal governance rules covering council powers, decision-making, and administrative processes. These remain private, ensuring confidentiality in the foundation’s management.

How Can a Foundation Protect Business Assets?

A foundation provides a strong legal structure for securing business assets against financial risks, creditor claims, and legal disputes. By transferring ownership of assets to the foundation, businesses can separate them from personal liabilities, ensuring continuity, stability, and long-term protection from external threats including potential litigation.

Furthermore, Foundations are some of the best instruments in securing a smooth succession to the new generation in a family businesses, securing the rights of all beneficiaries meanwhile ensuring business continuity, conflict avoidance and organized transition.

How Can a Foundation Enhance Tax Efficiency?

Foundations registered in DIFC and ADGM may, subject to fulfilling certain legal conditions, benefit from a 0% corporate tax rate on income, capital gains, and withholding tax, making them an effective tool for business asset management. Additionally, businesses can leverage the UAE’s extensive network of Double Taxation Avoidance Agreements (DTAA) to optimize tax efficiency and reduce international tax exposure.

Best Lawyers to Establish Your Foundation in Dubai

Expert legal guidance is essential for entrepreneurs and corporations looking to secure their business assets, licenses, and tax benefits in Dubai.

Charter Legal is a business and real estate specialized law firm in Dubai that provides the best legal support and services for business owners setting up DIFC Foundations and ADGM Foundations. Our team of some of the best lawyers in Dubai will guide you through the planning and establishment of your foundation to ensures a seamless foundation setup process, helping clients structure their businesses efficiently, protect their assets, and optimize tax positioning.

With a deep understanding of UAE corporate law, Charter Legal offers customized solutions to help businesses achieve stability, compliance, and long-term sustainability. Contact us for any queries or requirements on UAE Foundations.