By Hexagon Advisory | UAE Corporate Advisory

For many business owners in Dubai and Abu Dhabi, building wealth is only part of the challenge. The next question is what happens to that wealth in the years ahead.

A business may have taken decades to establish. Property investments may have grown over time. Children may be studying overseas, family members may live in different countries, and the founder may be approaching retirement. Yet the ownership of these assets is often spread across several companies and held in the names of different individuals, without a single plan for the future.

This is where a UAE foundation may be worth considering.

A foundation can provide a formal structure for holding assets, organising family wealth and planning how assets are managed for future generations. The UAE offers foundation regimes through jurisdictions including the Dubai International Financial Centre (DIFC), Abu Dhabi Global Market (ADGM) and Ras Al Khaimah International Corporate Centre (RAK ICC).

But establishing a foundation is not necessarily the first step. The more important question is whether it addresses a genuine need in your circumstances.

At Hexagon Advisory, we believe that understanding the purpose of the structure should come before choosing a jurisdiction or comparing registration fees.

What is a foundation, and how does it work?

A foundation is a separate legal entity established under a specific legal framework. It does not have shareholders in the same way as a conventional company. Instead, it holds and administers assets according to its constitutional documents and applicable law.

The person or entity establishing it is known as the founder. A foundation council is responsible for its administration, while a guardian may be appointed where appropriate or required under the relevant regime. The foundation’s charter and by-laws set out its purpose and governance arrangements.

Depending on the jurisdiction and the assets involved, a foundation may hold shares in companies, investments and certain property interests.

Consider a business owner in Dubai who owns two operating companies, several investments and a family property portfolio. At present, the assets may be held separately. The owner wants to establish a plan for their management and future succession.

A foundation could potentially sit above some of these assets or hold shares in an appropriate holding company. The family would then have a defined governance structure to consider when planning the future.

The precise arrangement depends on the client’s objectives, legal requirements and tax position. A foundation should not be treated as a substitute for every other corporate or estate-planning arrangement.

Why are business owners and families considering foundations in Dubai and Abu Dhabi?

The reasons vary from one family to another. In practice, the discussion often begins when a business owner starts thinking beyond the current year and considers what should happen to their assets over the next 10, 20 or 30 years.

1. Planning for the next generation

A founder may have accumulated significant wealth but not yet decided how it should be managed or distributed in the future.

For example, a family may have three children, each pursuing a different career. One child may be involved in the family business, while the others may have no interest in running it. Dividing the underlying business interests without considering the consequences could create practical difficulties.

A foundation may help establish a framework for holding assets and providing benefits to family members under defined arrangements.

This does not mean every family should transfer its wealth into a foundation. Wills, succession documents and other arrangements remain important, and the legal implications must be assessed before any transfer takes place.

2. Keeping a family business organised

Business continuity is another consideration.

An entrepreneur who has built a successful company may want to reduce uncertainty around its ownership if they retire, die or become incapacitated. A foundation can potentially hold shares in the business or in a holding company, with governance arrangements established in advance.

The operating company can continue conducting its business, while the foundation’s council administers the assets held by the foundation.

This can help distinguish the management of the business from the ownership of family wealth. However, the arrangement must be coordinated with shareholder agreements, company constitutional documents, financing arrangements and any applicable regulatory requirements.

3. Bringing different investments under a planned ownership structure

Some UAE residents accumulate assets gradually. They establish a trading company, later invest in property, acquire shares in another business and eventually build an international investment portfolio.

Over time, the ownership structure can become difficult to administer.

A foundation may provide a central ownership arrangement for eligible assets, either directly or through underlying companies. Whether this is worthwhile depends on the number and type of assets, the costs of restructuring and the benefits expected from the proposed governance arrangements.

A foundation is not automatically more efficient than a holding company. The two structures can serve different purposes and may sometimes be used together.

4. Considering the family’s international connections

Dubai and Abu Dhabi are home to entrepreneurs and families with international business interests. Their assets, beneficiaries and family members may be located in different countries.

This makes succession planning more complicated because the relevant legal and tax rules may differ from one jurisdiction to another.

A UAE foundation may form part of a broader international wealth structure. However, it does not override foreign inheritance laws, tax obligations or reporting requirements. Cross-border advice is particularly important before transferring assets into the structure.

5. Establishing rules for family wealth

Some families want to do more than identify who should benefit from their assets. They also want to establish how those assets should be administered.

For example, a founder may wish to establish a framework for supporting children’s education, maintaining family investments or distributing benefits in accordance with agreed arrangements.

The foundation’s governing documents can help formalise permitted arrangements, subject to the relevant law. These documents need careful drafting because they determine how the structure is administered and how decisions are made.

Who should consider setting up a foundation in the UAE?

A foundation is generally more relevant where there is a clear need for long-term ownership or governance arrangements.

It may be worth exploring if you are:

• A business owner with substantial company shares or multiple business interests.
• An investor with a portfolio of assets and a long-term succession plan.
• A family with wealth that needs to be managed across generations.
• An expatriate with assets or beneficiaries in several countries.
• A family business owner who wants to plan the transition to the next generation.
• A family office seeking an appropriate structure for holding and administering family assets.

There is no universal minimum level of wealth that makes a foundation necessary. Its suitability depends on the complexity of the assets, the family’s objectives, the jurisdiction’s requirements and the costs involved.

For someone who simply wants to start a trading business, a foundation will usually not be the first structure to consider. A conventional company may be more appropriate.

DIFC, ADGM or RAK ICC: where should you establish the foundation?

The UAE does not have just one foundation regime. The appropriate jurisdiction depends on the intended use of the foundation, the assets involved and the client’s circumstances.

DIFC foundation in Dubai

The Dubai International Financial Centre has a dedicated legal framework and an established financial services ecosystem.

A DIFC foundation may be considered by Dubai-based business owners, investors and families who want a formal structure for holding assets and planning succession.

For clients already working with advisers or businesses in the DIFC ecosystem, the jurisdiction may also be relevant when coordinating wider wealth and corporate arrangements.

Official website: https://www.difc.com/

ADGM foundation in Abu Dhabi

Abu Dhabi Global Market offers a separate foundation regime under ADGM regulations.

It may be suitable for families, entrepreneurs and investors seeking a structured approach to asset holding, succession planning and wealth management.

The legal framework is modelled on English common law.

ADGM’s rules also address the appointment of company service providers. Non-exempt foundations are generally required to appoint an ADGM-licensed Company Service Provider, subject to the applicable exemption criteria.

Official guidance: https://www.adgm.com/faqs/setting-up/

RAK ICC foundation in Ras Al Khaimah

RAK ICC provides another option for private wealth and corporate structuring.

Its suitability should be assessed against the client’s intended assets, governance requirements, administration costs and long-term plans.

Official website: https://www.rakicc.com/

How should you choose?

The decision should not be based solely on which jurisdiction advertises the lowest registration fee.

Before making a recommendation, it is sensible to consider:

• Where the founder and beneficiaries live.
• What assets the foundation will hold.
• Whether the assets can legally be transferred into the structure.
• How the foundation council will operate.
• The registered office and service provider requirements.
• Initial and annual costs.
• Corporate Tax treatment and cross-border implications.

A jurisdiction that works well for one family may not be appropriate for another. The structure should follow the client’s objectives, not the other way around.

What are the requirements for setting up a foundation in the UAE?

The exact requirements vary between DIFC, ADGM and RAK ICC, but the process generally involves several key steps.

First, define the purpose. The founder should be clear about what the foundation is intended to achieve, which assets it may hold and who is expected to benefit.

Second, choose the jurisdiction and name. The proposed name must satisfy the relevant registrar’s requirements and be available for registration.

Third, prepare the constitutional documents. These usually include the foundation charter and by-laws, setting out the purpose, governance and other required provisions.

Fourth, appoint the relevant officeholders. The founder must establish the required council arrangements and determine whether a guardian is necessary or appropriate.

Fifth, arrange the registered office and any required professional representation. Depending on the jurisdiction and exemption criteria, a registered agent or licensed company service provider may be required.

Sixth, complete due diligence. The registrar or service provider may request identity documents, proof of address, corporate records, information about beneficiaries and evidence relating to the source of funds or wealth.

Finally, complete the registration and implement the ownership structure. Once the foundation is registered, any intended asset transfers must be completed in accordance with the applicable legal and administrative procedures.

The registration certificate is only one part of the process. If the objective is to hold company shares or property, the relevant ownership records, approvals and transfer documents must also be addressed.

What documents should you prepare?

Although requirements vary, clients should generally be prepared to provide:

• Passport and identification documents for the founder and relevant officeholders.
• Proof of residential address.
• Emirates ID and UAE visa documents, where applicable.
• The proposed foundation name and a description of its purpose.
• Details of beneficiaries or beneficiary classes.
• Information about the proposed foundation council and guardian, if applicable.
• Corporate documents where the founder is an entity.
• Details of the assets intended to be held.
• Source-of-funds and source-of-wealth evidence where requested.

Additional documents may be required depending on the complexity of the structure and the registrar’s due diligence requirements.

How much does it cost to set up a foundation in the UAE?

The total cost associated with setting up the structure depends on the jurisdiction, the complexity of the structure and the professional services required.

The initial registration fee is only one part of the budget. Clients should also consider the preparation of constitutional documents, registered office costs, company service provider fees where applicable, annual administration and any additional legal or tax advice.

If assets are to be transferred into the foundation, further costs may arise. For example, transferring shares or property may involve documentation, approvals, registration fees or other charges.

For this reason, a useful quotation should distinguish between:

1. Initial registration and government charges.
2. Professional incorporation and document preparation.
3. Annual administration and renewal.
4. Asset-transfer costs.
5. Additional legal, tax or cross-border advisory work.

UAE Corporate Tax: what should you know before establishing a foundation?

Corporate Tax is an important part of foundation planning and should be considered before assets are transferred.

A UAE foundation is not automatically exempt from Corporate Tax simply because it is used for family wealth or succession planning.

Under the UAE Corporate Tax framework, an eligible Family Foundation may apply to be treated as an Unincorporated Partnership for Corporate Tax purposes, subject to the applicable conditions and approval requirements.

The Federal Tax Authority’s guidance explains the relevant eligibility, registration and compliance considerations. The treatment must be assessed on the facts of the particular case; it should not be assumed merely because the entity is described as a family foundation.

Clients should review the following before proceeding:

• Whether the foundation meets the relevant eligibility requirements.
• Whether Corporate Tax registration and an application for the relevant treatment are required.
• How the structure’s assets and income will be treated.
• Whether beneficiaries have separate tax or reporting considerations.
• Whether foreign assets or beneficiaries create cross-border implications.
• What records and ongoing compliance arrangements will be required.

Official reference: https://tax.gov.ae/en/content/taxation.of.family.foundations.ctgff1.2026.aspx

The tax position should be confirmed using the current legislation and Federal Tax Authority guidance, with professional advice where necessary.

Foundation, trust, holding company or will: which should you choose?

These arrangements serve different purposes, and the choice should depend on the problem you are trying to solve.

A foundation can provide a dedicated legal structure for holding assets and establishing governance arrangements for beneficiaries.

A trust involves a different legal arrangement in which a trustee holds and administers assets under the terms of the trust.

A holding company is generally used to own shares in other companies, subsidiaries or investments.

A will sets out instructions for the distribution of assets after death, subject to the applicable law and any relevant formalities.

These options are not always mutually exclusive. A family might use a foundation to hold shares in a holding company while also maintaining appropriate estate-planning documents.

The objective is to identify an arrangement that meets the client’s requirements without introducing unnecessary costs or administration.

Common mistakes to avoid

One of the most common mistakes is choosing a jurisdiction before defining the purpose of the foundation. The structure may then need to be redesigned because it does not fit the assets or governance arrangements.

Another is assuming that registration automatically provides tax advantages or protection from every creditor or inheritance claim. Legal outcomes depend on the relevant law, the circumstances and the way the arrangement is implemented.

Clients should also avoid transferring property or shares before checking the relevant transfer rules, financing agreements, approvals and costs.

Finally, the ongoing administration should not be overlooked. A foundation needs appropriate records, governance and compliance arrangements throughout its existence.

How Hexagon Advisory can help

At Hexagon Advisory, we approach foundation setup as a structuring decision rather than simply a registration exercise.

The starting point is to understand what the client owns, what they want to achieve and how their existing arrangements operate. From there, the available jurisdictions and structures can be assessed against the client’s objectives.

Depending on the requirements, the process may involve reviewing the proposed foundation structure, comparing jurisdictional options, coordinating incorporation documentation and considering relevant corporate and tax compliance requirements with the appropriate professionals.

The scope and fees should be agreed based on the complexity of the case.

If you are considering setting up a foundation in Dubai, Abu Dhabi or elsewhere in the UAE, contact Hexagon Advisory to discuss your requirements and the available options.

Website: https://www.hexagonadvisory.com

Frequently asked questions

Can a foreign national establish a foundation in the UAE?

Foreign nationals are eligible to establish foundations under the relevant jurisdiction’s rules, subject to its incorporation, due diligence and other applicable requirements.

Can a foundation hold shares in a UAE company?

A foundation may hold shares in a UAE company where permitted by the applicable rules of the state and subject to any relevant ownership restrictions, company documents and approvals.

Can a foundation own property in Dubai or Abu Dhabi?

This depends on the property, the relevant land registration authority, the ownership eligibility rules and the proposed structure. The legal and financial implications should be assessed before transferring a property.

Does a foundation automatically protect assets from inheritance claims?

Not necessarily. a foundation can form part of a succession plan, but it does not automatically override applicable inheritance laws or eliminate all potential claims.

Is a foundation automatically exempt from UAE Corporate Tax?

No. Any available special treatment depends on the applicable statutory conditions and approval requirements.

How long does registration take?

The timeframe depends on the jurisdiction, the completeness of the application, due diligence and the complexity of the proposed structure. Confirm the expected processing time with the relevant registrar or service provider.

Is a private foundation the same as a charity?

No. A private wealth foundation and a charitable organisation have different purposes and may be subject to different rules. Anyone intending to conduct charitable activities should first establish the appropriate legal and regulatory requirements.

Final thoughts

A foundation can be a useful tool for families and business owners who need a clear framework for holding assets, managing family wealth and planning for the future.

But its value lies in the way it addresses the client’s actual circumstances, not simply in the fact that it has been registered.

For some clients, a foundation will form part of a wider wealth structure. For others, a holding company, will or different arrangement may be more appropriate.

The right starting point is a careful review of the assets, the family’s objectives, the applicable legal framework and the costs of implementation.

Hexagon Advisory can help you explore the available options and determine the next steps for your foundation setup requirements in the UAE.

Disclaimer: This article is for general information only and does not constitute legal, tax or financial advice. Requirements, fees and regulations may change. Obtain appropriate professional advice before establishing a foundation or transferring assets.