| 16 August, 2017

Abu Dhabi creates new legal structure for preserving family wealth

Abu Dhabi Global Market announced foundations have been set up to provide a more flexible structure for managing inter-generational wealth than trusts

Dhaher Bin Dhaher, chief executive of Abu Dhabi Global Market Registration Authority

Dhaher Bin Dhaher, chief executive of Abu Dhabi Global Market Registration Authority

16 August 2017

Abu Dhabi Global Market (ADGM) has announced the launch of a new legal structure to support wealth management and preservation between family generations.

ADGM, which is the international financial centre based in the United Arab Emirates' capital, said that its new 'Foundations' regime provides a new platform for financial planning and structuring of investments that will serve as an  alternative either to trusts or corporate vehicles.

It said that foundations, like trusts, can be used for inter-generational wealth management of family assets. However, unlike trusts they have their own legal personality, so are similar to companies yet without individual shareholders.

The vehicles have been created in a bid to make ADGM a more attractive venue for the wealth management and private banking industries.

In a press statement announcing their creation, ADGM said that Foundations would allow private and corporate entities in the UAE a local method for succession and tax planning without resorting to overseas investment vehicles. It added that they have been created in line with international standards, and that they are immediately available for use.

Dhaher Bin Dhaher Al Mheiri, CEO of ADGM's Registration Authority, said: “ADGM has been working closely with local and international stakeholders and market panel of experts to understand their needs and develop a foundations regime that addresses the unique requirements of families and asset owners in Abu Dhabi, regionally and globally."

James Barber-Lomax, a director of PraxisFM, which is a financial services firm with $42 billion of clients' assets under management, said that foundations would be "an important wealth structuring and management tool where the local system of law is not always compatible with common law trusts".

Filippo Noseda, a partner at law firm Mishcon De Reya, added: “The introduction of a foundations regime in Abu Dhabi represents a first. Over the past 15 years, a number of common law jurisdictions around the world have introduced laws enabling the creation of foundations.  However, never before has a foundations regime, such as ADGM, been introduced in the rich cultural context of the Middle East." 

He added: "It is expected that the new ADGM Foundation Regulations will appeal to international clients with interests in the region, as well as local families who wish to find a suitable vehicle to deal with family succession and family governance with the help of local practitioners."

© Zawya 2017