A foundation is a legal entity that combines the operational flexibility of a trust with the structural characteristics of a company. It serves as a centralized mechanism to manage a family’s diverse assets under a single entity, providing a clear and legally binding framework for the transfer of these assets upon the founder’s succession. Abu Dhabi Global Market (ADGM) allows the high-net-worth individuals and families to easily set up and manage a foundation in order to preserve and manage their wealth, plan the family’s succession and to protect their assets. In this article, we’ll give you the 5 tips you need to know about setting up a foundation with ADGM:

Tip #1 Exempt and Non- Exempt Foundations (ADGM Foundation Setup Tip)

Foundations within ADGM are divided into 2 categories which are exempt and non- exempt foundations. In general, there is a rule for foundations that are registered with ADGM to appoint a Company Service Provider, which should be registered with ADGM. Only there are several factors that demonstrate whether the foundation is exempt from appointing a Company Service Provider (CSP). Mostly, it depends on the purpose and structure of the foundation, if the foundation is used for a private or family purposes, it typically has simplified filing and reporting obligations, which makes is an exempt foundation. However, to register the foundation in ADGM without CSP, a founder has to demonstrate to the satisfaction of the registrar that he has “(a) substantial resources, experience and personnel in the United Arab Emirates, and (b) adequate governance policies and procedures within UAE entities”. Whilst if the foundation is used for commercial, or public benefit purposes, then it is subject to additional compliance and reporting obligation which makes it a non—exempt foundation.

Tip #2 No Physical Office Required

Foundations registered with the Abu Dhabi Global Market (ADGM) are not required to maintain a physical registered office. Non-exempt foundations may utilize the office of their registered Company Service Provider, while exempt foundations can use the registered office of their parent or related entity. However, if a founder chooses to establish a physical office, it must be located within ADGM’s jurisdiction.

Since its inception in 2013, ADGM has operated primarily on Al Maryah Island in Abu Dhabi. However, following Cabinet Resolution No. (41) of 2023, ADGM’s jurisdiction was expanded to include Al Reem Island, situated approximately 600 meters northeast of Abu Dhabi Island.

Tip #3 Roles to Appoint

To set up a foundation with ADGM, there are several roles that you must clearly be aware of and be able to define as below:

• Founder(s): Is the natural or legal person who’s the foundation is registered under, and the foundation is subscribed under their own account and endows the Foundation with a portion of its Initial Assets.
• Council Members: The founder or a legal person may be appointed as a councilor, and the foundation should have council that consists at least 2 Councilors.
• Guardian (optional): any natural or legal person that ensures that the council adheres to the foundation’s objectives. It is not mandatory to appoint a guardian unless there is no surviving founder. The guardian may not be the founder, councilor, or sole beneficiary.
• Beneficiaries (optional): a natural or legal person who may benefit from a foundation.

Tip #4 Requirements for Setting Up a Foundation in ADGM

Below are the requirements for setting up a non-exempt foundation with ADGM:

• Foundation Purpose Statement prepared by the Company Service Provider.
• Foundation name
• Foundation End-Term and the conditions which will trigger it’s dissolution
• Amount of assets in USD, it may be comprise of tangible and intangible assets
• Foundation Charter, there is a ready model on the ADGM website that can be amended, or a totally new charter can be uploaded as long as it complies with the ADGM Foundations Regulations.
• Registered office address.
• Company Service Provider (CSP) appointment
• Uploading requirements for authorized signatories
• Appointing the Council members
• Founder’s info. If the founder is an individual:
  • Personal info.
  • Address
  • Passport copies
  • Evidence of appointment,
• If the founder is a body corporate:
  • Entity Details
  • Registered address
  • Certificate of Incorporation/ Registration
  • Register of the members
  • Register of the directors
  • Evidence of appointment
• Ultimate Beneficial Owners details
• Contact person details
• Source of wealth declaration form

Explore the full picture of business setup in ADGM with our Ultimate Guide to ADGM Company Setup from licensing to operational steps.

Tip #5 Associated Fees

Registration Fee: $1,000 (inclusive of Name Reservation, License and Data Protection Fees)

Renewal Fee: $500

Continuation Fee within ADGM: $1,000

Continuation Fee from ADGM: $7,500

Notifications Fee (such as appointment of Company Service Provider or appointment of a council): $100 per notification.

CSP Fees (if applicable): from $3,000 

#Bonus Tip:

Consult with CorpLex, where we can provide you with qualified legal or financial guidance related to setting up foundations with ADGM. Our team is dedicated to completing the foundation setup to meet your unique requirements and ensuring the process is done efficiently and effectively!

Check out our complete guide: Fund Management Company Setup in ADGM Everything you need to know to launch and manage your fund.