When discussing wealth preservation, succession planning, and asset protection in the UAE, foundations increasingly emerge as a preferred structuring tool for families, entrepreneurs, and philanthropists. Yet among people it remains uncertain about what a foundation actually is and how the different UAE regimes operate in practice.
The UAE has been deliberate in positioning these three free zones, namely, DIFC, ADGM and RAK ICC, as sophisticated hubs for private wealth and family governance. Each has adopted its own foundation framework, calibrated to the needs of high-net-worth families, cross-border investors, and charitable or purpose-driven structures.
At their core, UAE foundations are independent legal entities with separate legal personality, distinct from the founder and beneficiaries. They do not issue shares and have no owners or members. It facilitates effective succession planning, reduces exposure to forced heirship rules, and protects assets from personal claims that might arise against the founder.
The process to set up a foundation is straightforward. A founder settles assets onto the foundation, transferring legal title. The foundation then owns those assets outright and holds them for specified purposes or beneficiaries under its constitutive documents. This transfer separates the assets from the founder’s personal estate, reinforcing asset protection and permitting orderly inter-generational transfers without probate.
Every foundation rests on two key documents, the Charter and the By-Laws. The Charter is filed with the registrar. It sets out the foundation’s name, objects, governance architecture, and duration. The By-Laws govern the internal operation of the Council, the scope of any reserved powers retained by the founder, and the mechanics for distributions and decision-making.
The governance of a UAE foundation typically centres on three key players: the Founder, the Council and, where appointed, a Guardian. The Founder establishes the foundation and contributes the initial endowment and, while legal ownership of the assets transfers to the foundation upon establishment, may retain specified reserved powers through the By-Laws, such as appointing or removing Council members, influencing or vetoing distributions, amending governing documents or initiating winding up. The Council operates in a manner comparable to a board of directors, usually comprising at least two members and responsible for managing the foundation’s assets, implementing its stated purposes and exercising discretion over distributions in accordance with the Charter and By-Laws, while owing fiduciary duties to the foundation itself rather than to the Founder or beneficiaries. Where appointed, the Guardian provides an additional layer of oversight by supervising the Council’s actions to ensure continued alignment with the foundation’s purposes and governing framework, a role that is particularly valuable where the Founder seeks long-term adherence to both the letter and spirit of the structure after stepping back from active involvement.
The Dubai International Financial Centre (DIFC) has implemented its foundation regime through DIFC Law No. 3 of 2018, creating a modern and flexible vehicle recognised by an English-law-based court system. DIFC foundations may be established for private wealth, commercial holding, or exclusively charitable purposes, provided their objects are lawful and not contrary to public policy.
From a procedural perspective, setting up a DIFC foundation involves preparing and filing a Charter, appointing at least one Council member, designating a registered office in the DIFC, and lodging the necessary documents with the DIFC Registrar of Companies.
Two features of the DIFC framework are particularly noteworthy. First, DIFC foundations benefit from a well-developed common law environment and access to the DIFC Courts, which are accustomed to complex commercial and private wealth disputes. Second, a Memorandum of Understanding with the Dubai Land Department allows qualifying DIFC foundations to own real estate in Dubai outside the DIFC itself, a powerful tool for families whose principal wealth is held in Dubai property. The DIFC is also distinctive in permitting certain corporate entities to convert into foundations, which can be attractive in succession-planning exercises where operating structures already exist.
The Abu Dhabi Global Market (ADGM) introduced its foundation regime under the ADGM Foundations Regulations 2017, positioning itself as a parallel common law jurisdiction with its own court system. The ADGM expressly emphasises the foundation’s status as a separate legal person owning its assets outright, in contrast to the trust model where trustees hold legal title for beneficiaries.
ADGM foundations must have a Charter specifying core details such as name, purpose, Council and Guardian arrangements, registered office, and duration, with more granular governance rules contained in private By-Laws. A distinctive feature of the ADGM regime is that a Guardian is mandatory where the foundation pursues charitable purposes, reflecting the regulator’s policy emphasis on proper oversight in the public-interest space.
Substantively, ADGM foundations can hold Abu Dhabi real estate and a broad range of international assets, making them well suited to families with substantial Abu Dhabi exposure or diversified cross-border portfolios. ADGM has introduced a DLT Foundations Regulations in 2023 for blockchain-related structures and decentralised autonomous organisations (DAOs), signalling a willingness to accommodate emerging virtual asset and token based governance models.
The Ras Al Khaimah International Corporate Centre (RAK ICC) sits alongside DIFC and ADGM as a third foundation jurisdiction, operating under the RAK ICC Foundations Regulations 2019, as consolidated and strengthened by 2025 amendments. The regime is designed to be accessible, flexible, and protective, catering in particular to families and entrepreneurs looking for robust asset protection at lower entry thresholds.
One of RAK ICC’s distinguishing features is its jurisdictional flexibility: founders can elect for disputes to be heard either in the DIFC Courts or the ADGM Courts, allowing them to align dispute-resolution mechanisms with their broader structuring and comfort levels. RAK ICC foundations operate under a common-law-style framework, with a Council of at least two members and, optionally, a Guardian.
The minimum capital requirement is deliberately modest, USD 100 making the regime more approachable for mid-sized families or charitable structures that may not wish to commit significant initial capital at the outset. The 2025 amendments introduced stronger firewall protections against foreign judgments and inheritance claims and imposed a three-year limitation period on challenges to the foundation’s formation or asset transfers. These reforms significantly enhance certainty and make RAK ICC foundations attractive for international families sensitive to conflict-of-laws risk.
Now, the question is less whether a foundation is appropriate and more which jurisdictional regime best aligns with the founder’s assets, family dynamics, and long-term objectives.
The three jurisdictional regiems share common base, each provides a separate legal entity without shareholders, a Council-based governance model, and the possibility of a Guardian, alongside a 0% UAE corporate and personal tax environment for foundation structures. The nuances lie in emphasis and positioning. DIFC skews towards founders who value an English-law-style court, the ability to convert existing companies, and access to Dubai real estate, attributes that resonate with internationally mobile families using Dubai as a primary hub. ADGM’s regime will often appeal where Abu Dhabi assets are central, where a stronger policy focus on charitable oversight is welcome, or where the family is looking to structure digital or blockchain-based holdings through the DLT framework. RAK ICC, by contrast, offers a lower capital threshold and flexible choice of DIFC or ADGM courts, underpinned by enhanced firewall and limitation provisions, making it a pragmatic choice for cost-conscious founders or those facing heightened foreign enforcement risk.
In practice, the ‘best’ jurisdiction is rarely determined by technical rules alone. It is decided based on how these features map onto the founder’s asset base, risk profile, and inter-generational governance philosophy.
Disclaimer: This article is provided for general information and educational purposes only and does not constitute legal, financial, investment, or other professional advice.
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