When it comes to protecting and structuring your wealth, the right tools can make all the difference. Effective wealth management isn’t just about growing your assets—it’s about safeguarding them for future generations and ensuring they are passed on seamlessly. In a world where personal and business interests often span multiple jurisdictions, finding a robust yet flexible solution is crucial. This is where Dubai International Financial Centre (DIFC) foundations come into play. Combining the strengths of trusts and companies, these unique entities offer a powerful vehicle for asset protection, succession planning, and wealth management. Established under the exclusive governance of DIFC laws, DIFC foundations provide a secure, versatile, and globally recognized framework, ideal for individuals and families looking to preserve and manage their wealth across borders.

Key Features of DIFC Foundations

DIFC foundations are unique legal entities governed exclusively by DIFC laws, with limited exceptions. These exceptions apply when the original endowed property is situated outside the DIFC, and the founder lacks the power to dispose of it according to the law where the property is located.

Foundations can be used for various purposes, including wealth management, succession and inheritance planning, and owning private trust companies. They are particularly beneficial for families with members and business interests in both civil and common law jurisdictions. The DIFC’s comprehensive support for financial and non-financial business activities, including banking, professional services, and wealth management, makes it an ideal jurisdiction for establishing such entities.

Incorporating DIFC Foundations

To establish a foundation in the DIFC, the following requirements must be met:

• Founder: A minimum of one founder is required to establish a foundation.
• Council Members: The foundation must have at least two members on its council.
• Registered Office: The foundation must maintain a registered office in the DIFC. This can be achieved by setting up an office within the DIFC, sharing an office with an affiliated entity, or appointing a registered agent.
• Charter and By-Laws: While a standard foundation charter can be used, it is customizable to suit the specific needs of the client.
• Guardian Appointment: If the foundation has a charitable or specified non-charitable object, a guardian must be appointed. In other cases, appointing a guardian is optional.

Purpose and Governance

A DIFC foundation’s objectives must be certain, reasonable, and possible, and they must align with the laws and public policy of the DIFC. Foundations can be established for charitable purposes, non-charitable purposes, or to benefit specific individuals or classes of persons.

While a foundation cannot engage in commercial or charitable activities directly, it may conduct activities ancillary or incidental to its objectives.

Governance of the foundation is overseen by a council responsible for administering the foundation’s property and carrying out its objectives. The founder or a corporate entity can serve as a council member, providing flexibility in managing the foundation’s affairs.

Founder Rights and Registered Agents

Founders of DIFC foundations enjoy significant control over the foundation’s operation, including the ability to amend, revoke, or vary the terms of the charter, by-laws, or objectives. Additionally, the founder can terminate the foundation during their lifetime.

While appointing a registered agent is optional, any agent appointed must be licensed by the DIFC Authority and registered with the DFSA as a designated non-financial business or professional (DNFBP).

Qualified Recipients and Depository Receipts

DIFC foundations may provide benefits to individuals or classes of persons as specified in the charter or by-laws. Importantly, information about these recipients is not placed on any public register, ensuring privacy.

Moreover, foundations in the DIFC can issue securities, such as depository receipts or certificates, representing the value of contributed assets. These certificates act as contracts, reflecting the value of the underlying assets owned by the contributor.

Accounting and Compliance

Foundations in the DIFC must prepare annual accounts in accordance with international financial reporting standards. These accounts must be approved by the foundation council and signed by two council members within six months of the end of the financial year. A copy of the approved accounts must be filed with the Registrar (if no registered agent is appointed) or provided to the registered agent. Unlike other entities, DIFC foundations are not required to have their accounts audited, reducing the administrative burden.

DIFC Foundations: Region’s Best Wealth-Protecting Structure

The DIFC’s framework for foundations offers a robust, flexible solution for managing and protecting wealth, particularly for families and individuals with diverse global interests. With its strong legal foundation, comprehensive support for business activities, and flexible governance structure, DIFC foundations are an attractive option for those seeking to safeguard and manage their assets effectively.