Corporate Wealth Structuring
UAE Foundations and Residency
What do clients want to achieve in UAE?
- Position their brand name in a prestigious international financial centre
- Business located at the cross-road of the world's connectivity
- Access to latest of the art infrastructural amenities
- Access to air & sea connectivity hub
- Access to professional & skillful workforce
- Business located in a low corporate tax jurisdiction
- Banking solutions with no restrictions on foreign currency outward remittances
- Diversifying risks by externalizing assets (a fall back option / safety cushion from local market challenges)
- Eligibility to work and live in and from UAE
- Acquisition of moveable and immoveable properties
- Easing the process of investment raising from private and institutional investors
- Ensuring efficient exit mechanism for investors with no capital gains tax
- Succession & estate planning
- Relief from foreign exchange control
- Tap into the highly demand consumable goods market in UAE and the GCC region
- Tap into the MENA region's pool of wealth and assets
- Join forces with UAE for bilateral trade and investment programs
- Join the economy which is pushing towards inclusion of digital assets and technology
Foundation in UAE
A Foundation is an independent legal entity (unlike a Trust which is only a legal arrangement) used to hold assets separately from the Founder's personal wealth. The Foundation is governed by its Charter and By-Laws which sets out the objects (wishes) of the Founder. The objects are most of the time a purpose to serve for the benefit of the beneficiaries. The Foundation is managed by Council Members and may be supervised by a Guardian.
A foundation is a key structure for anyone who is looking for the following:
- Protect his/her assets from creditors and/or unwarranted claims
- Succession planning and transfer wealth to his/her heirs
- Consolidate his/her ownership of assets owned across the globe under one structure
- Preserve his/her wealth against uncertainty (political, economic or family related issues)
- Maintains confidentiality at the level of companies that are under the Foundation
- Do Charity or Philanthropic activities
Basic Structure of a Foundation
Guardian
Council Members
Founder → UAE Foundation → Beneficiaries
Benefits of a Foundation
Wealth structuring and legacy planning
Asset Protection
Long term holding structure of income generating assets
Philanthropic purposes
Key Positions of a Foundation
| Founder | The Founder is the one who funds and creates the Foundation |
|---|---|
| Guardian | The Guardian supervises the Council members and ensures strict compliance with the By-Laws of Foundation at all times |
| Foundation Council | Manages the Foundation, similar to a company's board of Directors. Council's role and obligations are outlined in By-Laws |
| Beneficiary/Qualified Recipient | A natural or legal person who is entitled to receive an amount of the Foundation in accordance with the Charter or the By-Laws |
| Designee/Default Recipient | A Designee is recipient to whom all property of Foundation has not otherwise been made shall pass in the event of termination thereof. In ADGM Foundation, a designee is a natural person or Legal Person who shall become a Beneficiary only in circumstances where a Foundation has no other Beneficiary. |
UAE Foundations - Comparative Chart
| Particulars - Foundation | RAK ICC | DIFC | ADGM |
|---|---|---|---|
| Overview | Foundation within RAK ICC, offers a choice of Common Law Jurisdiction between either: The Courts of the Abu Dhabi Global Market (ADGM); or The Courts of the Dubai International Financial Market (DIFC). Possibility to migrate to RAK ICC from overseas. Possibility to morph a RAK ICC Company to a Foundation. No public register | Theme freezone with core focus on Financial Services. Common law regulatory framework, Common law Courts. Possibility to migrate to DIFC from overseas. Possibility to morph a DIFC Company to a Foundation. Public Register - with limited information | Theme freezone with core focus on Financial Services. Common law regulatory framework, Common law Courts. Public Register - with limited information |
| Launched | 2019 | 2018 | 2017 |
| Objects | Objects which are exclusively charitable; or One or more of the following: (i) Objects which are not exclusively charitable; or (ii) Objects to benefit persons by name, category or class. May not carry out any commercial activities, except for those necessary for, and ancillary or incidental to, its objects | Objects which are exclusively charitable; or One or more of the following: (i) Objects which are not exclusively charitable; or (ii) Objects to benefit persons by name, category or class. May not carry out any commercial activities, except for those necessary for, and ancillary or incidental to, its objects | Objects shall include the management and distribution of its assets and income. May not carry out charitable purposes |
Estimated Fees
| Particulars | RAK ICC | DIFC | ADGM |
|---|---|---|---|
| Registration and First Yr Fees | USD 4,500 | USD 12,400 | USD 11,100 |
| Year 2 onwards (on going renewal) | USD 2,900 | USD 9,250 | USD 8,250 |
Optional Services
- Provision of (1) Nominee Council Member or Guardian “subject to client due diligence” - USD 4,000
- Assistance with bank account opening - from USD 3,000 onwards
Notes
- Above cost are indicative and currently prevailing and may vary depending on the complexity of structure.
- Review and modification of Foundation Charter and By-laws, inclusive of 8hrs of work. Any extra work shall be charged on hourly basis at “legal” rate.
- Above cost is based on a maximum of three (3) individual founders with up to three (3) beneficiaries; any additional individual shall be charged at a standard compliance fee of USD 100 per individual.
- Bank account opening assistance includes up to 8 hours of work at an administrative hourly rate per bank account, due irrespective of whether the bank approves or rejects the application. It includes up to two rounds of reviews and up to two meetings. Any work beyond such scope will be charged on a time-spent basis at the applicable hourly rates - USD 250 per additional hour.
- Provision of Nominee Council Member or Guardian does not apply for RAK ICC Foundation.
- 5% VAT applicable upon issuance of invoice
Required Documents
| Individual | Corporate Entity |
|---|---|
| a. Certified Valid Passport, visa & emirates ID copy of founder(s)/ foundation council member(s)/ guardian/ beneficiaries | a. Certificate of Incorporation/Trade License duly legalized |
| b. Certified Proof of physical address i.e. Utility Bill for each founder(s)/ foundation council member(s)/ guardian/ beneficiaries | b. Memorandum & Articles, Certificate of Good Standing, Incumbency duly legalized |
| c. Bank reference letter for the founder(s) | c. Certified Valid Passport, visa & emirates ID, Proof of physical address copy of beneficial owners, directors, shareholders of corporate entity |
| d. NOC from current sponsor for founder(s)/ foundation council member(s)/ guardian (applicable if holding UAE residence visa) | d. Certified Proof of physical address i.e. Utility Bill for each shareholder(s)/ directors(s)/ manager |
| e. CV's of founder(s)/ foundation council member(s)/ guardian/ beneficiaries | e. Supporting docs for source of wealth: i.e. 2 yrs Audit Report, bank statements etc. |
| f. Source of wealth documents and details (personal bank statements, financial portfolio etc) | f. Resolution |
| g. Business Plan & Structure Chart | g. Business Plan & Structure Chart |
Note: The list of required documents is for illustrative purpose. Upon confirmation to proceed, a comprehensive list of documents that the authority will require will be shared.
Trusts vs Foundations for Chinese HNWIs
| Feature | Trust | Foundation |
|---|---|---|
| Control | Trust: Limited unless powers reserved | Foundation: Founder can retain formal roles |
| Privacy | Trust: High privacy; not publicly registered | Foundation: Varies; some public registration |
| Asset Protection | Trust: Strong in offshore jurisdictions | Foundation: Effective but less tested |
| Cultural Fit | Trust: Abstract for civil law clients | Foundation: Familiar structure; resembles company |
| Succession Planning | Trust: Excellent for multi-generational transfer | Foundation: Effective for family governance |
Residency in UAE
| types of visa | validity | details |
|---|---|---|
| employment visa | 2 years renewable | applicant must have received employment under a uae based employer or through his own company in uae that he has established. the title can range from any post from officer to director, ceo, etc.. |
| partner / investor visa | 2 years renewable | applicant's name must feature on the register of shares owning at least aed 50,000 worth of stated capital of the company in uae. |
| family visa | 2 years renewable | once the main applicant has received his or her visa under employment or partner/investor, he or she can sponsor the spouse, the children and parents to take a family visa to reside in uae. this visa allows the family to reside in uae but not work. if the family wishes to work, they will need to seek an noc and the relevant approval from the ministry of human resources emiratization. for the family visa, the main applicant is required to earn at least aed 5,000 per month plus show ejiari (lease agreement) in his or her name. |
| golden visa | 10 years renewable | for the golden visa, anyone can apply under any of the 3 main categories: 1. applicant has acquired property in uae worth at least aed 2 million and has paid at least 20% 2. applicant being an employee is earning aed 30,000 per month 3. applicant has a fixed deposit / investment of aed 2 million in a financial institution in uae once main applicant has received golden visa, he or she can sponsor family visa. |
| green visa | 5 years renewable | for the green visa, anyone can apply under anyone of the following categories: 1. freelancers (must show proof of work and income of aed 360,000 over 2 years) 2. skilled employees (must show salary of aed 15,000 + bachelor's degree) |
Residency visa in UAE
There several types of residency visas that are available in UAE, each one tailored to a specific purpose such as Employment Visa, Partner or Investor Visa, Family Visa or Long term visa (Golden Visa).
| Types of visa | Validity | Details |
|---|---|---|
| Employment visa | 2 years renweable | Applicant must have received employment under a UAE based employer or though his own company in UAE that he has established. The title can range from any post from officer to Director, CEO, etc.. |
| Partner / Investor visa | 2 years renewable | Applicant's name must feature on the register of shares owning at least AED 50,000 worth of stated capital of the company in UAE. |
| Family visa | 2 years renewable | Once the main applicant has received his or her visa under Employment or Partner/Investor, he or she can sponsor the spouse, the children and parents to take a family visa to reside in UAE. This visa allows the family to reside in UAE but not work. If the family wishes to work, they will need to seek an NOC and the relevant approval from the Ministry of Human Resources Emiratization. For the family visa, the main applicant is required to earn at least AED 5,000 per month plus show ejiari (lease agreement) in his or her name. |
| Golden visa | 10 years renewable | For the golden visa, anyone can apply under any of the 3 main categories: 1. Applicant has acquired property in UAE worth at least AED 2 million and has paid at least 20% 2. Applicant being an employee is earning AED 30,000 per month 3. Applicant has a fixed deposit / investment of AED 2 million in a financial institution in UAE Once main applicant has received golden visa, he or she can sponsor family visa. |
| Green visa | 5 years renewable | For the green visa, anyone can apply under anyone of the following categories: 1. Freelancers (must show proof of work and income of AED 360,000 over 2 years) 2. Skilled employees (must show salary of AED 15,000 + bachelor's degree) |
Residency process in UAE
The timeline for the application of the residency visa takes between 2 to 5 workings days on fast track basis and between 7 to 12 working days on normal track. The process for the application of the residency visa includes:
- Application for the entry visa
- Applicant uses the entry visa to come to UAE
- Application & tying for the medicals
- Applicant undergoes blood test and x-ray in UAE
- Application & typing for biometrics
- Applicant undergoes biometrics in UAE
- Application & typing for Emirates ID
- Approval of e-residency visa
- Emirates ID card is printed and delivered
Documents required for each applicant:
- Background information
- High resolution scan copy of passport (full page)
- High resolution scan copy of recent passport sized photograph (against white background with natural facial expression) Where applicable:
- Copy of UAE MOFA attested degrees
- Copy of UAE MOFA attested birth certificate
- Copy of UAE MOFA attested marriage certificate
- Copy of Title Deed and Payment Schedule
- Copy of bank statements
Disclaimer
Whilst every effort has been made to ensure that the details contained herein are correct and up-to-date, it does not constitute legal or other professional advice. We do not accept any responsibility, legal or otherwise, for any errors or omissions.