UAE Foundations

UAE Foundations could be considered as a hybrid between a trust and a company as they share features of both. The Foundation exists in its own right so unlike a company there are no shares which pass on death of the owner(s). It is a so-called ‘orphan’ structure.

A foundation is an independent legal entity, with a legal personality different from its Founder. The Foundation consists of council members and the founder. The founder provides the initial assets – known as the endowment – which are then held for the purposes set out in its constitutive documents. Those assets are then managed by the foundation council (equivalent to a board of directors for a company) in accordance with the foundation’s charter and by-laws for the benefit of beneficiaries or in support of a cause or a purpose.

With the separation of legal and beneficial ownership, a foundation enables families to facilitate their inter-generational legacy planning and wealth protection objectives, particularly where the family is internationally mobile with assets in multiple jurisdictions.
One of the key advantages of a Foundation over a Trust is its ability to hold and register assets in its own name. This appeals to many families as there is no need to transfer assets to third-party trustees in foreign jurisdictions.

Foundations are primarily used for: