On October 10, the Dubai International Financial Centre (DIFC) has issued today the draft of a new Foundation Law as well as a revised version of the Trust Law (No.11 of 2005) for public consultation, following the recommendations of the DIFC Wealth Management Working Group.
The DIFC is the second common law jurisdiction within the UAE to extend its structuring and legacy planning offering with the adaption of the civil law based foundation regime. Abu Dhabi Global Market (ADGM) launched the first legislative and regulatory framework for foundations within ADGM on 16th of August 2017.
The DIFC draft foundations regime is the result of a comprehensive review of best practices and models of other jurisdictions, specifically financial centers. It provides for very strong firewall rules and other mechanisms to protect the founder’s whishes and the foundation’s assets, it also allows for great flexibility as regards the founder’s powers while it ensures appropriate governance control. Fundamentally, a DIFC foundation shall be able to issue securities representing the value of the contributed assets (a concept based on the Dutch “Stichting Administratiekantoor”). Furthermore, foundations existing and operating in other centers may apply for a license to operate as a “Recognized Foreign Foundation” in or migrate to the DIFC and the regime allows for companies to convert into Foundations.
The DIFC has also amended its Trust Law based on the suggestions of the DIFC Wealth Management Working Group. The proposed changes address issues identified by the Wealth Management Group and reflect the latest international trust law practice and developments to upgrade the existing regime.
The draft of the Foundations and the Trust Law are published for a 30-day consultation period until the 8th November 2017 before they will be implemented.
