Creates the DIFC foundation as a separate legal person with definite, feasible and lawful objects (charitable or not), managed by a council of at least two members, with a guardian where objects are charitable or specified non-charitable, registered and licensed by the Registrar. Consolidated Version No. 3, March 2024.
The Foundations Law, DIFC Law No. 3 of 2018, creates the DIFC foundation: a body corporate with legal personality separate from its founder, with the capacity of a natural person, whose property is held for its objects and not on trust for anyone (Article 10). Made by the Ruler of Dubai, it is the DIFC's vehicle for succession planning, asset holding and philanthropy. The copy read is Consolidated Version No. 3 of March 2024, as amended by DIFC Laws Amendment Laws No. 8 of 2018, No. 2 of 2022, No. 1 of 2024 and No. 3 of 2024; the index records enactment on 14 March 2018 and commencement on 21 March 2018.
A foundation's objects must be certain, reasonable, possible and lawful, and may be exclusively charitable, non-charitable, or to benefit named persons or classes; it may not trade except as necessary for and ancillary to its objects (Article 12). Articles 13 to 16 are the firewall: all questions about a foundation or dispositions to it are decided under DIFC law without reference to any other jurisdiction, foreign forced-heirship rights over a living person's property are not recognised, and foreign judgments inconsistent with those rules are not enforced.
The founders establish a foundation by filing an application with the name, the registered office address in the Centre, the founders and council members, any registered agent, the charter and, unless a registered agent is appointed, the by-laws (Article 17). The council of at least two members, who may include the founder or a body corporate, administers the property, keeps accounting records and must act honestly and in good faith in the foundation's best interests (Article 22). A guardian is mandatory where there is a charitable or specified non-charitable object, optional otherwise, and cannot also sit on the council (Article 23). A registered agent is optional and must be a qualified person (Article 24). The founder may reserve powers to amend the charter or by-laws, change the objects or terminate the foundation, but only if set out in full in the charter and only for the founder's lifetime or, for a corporate founder, 50 years (Article 26). Endowing capital gives the founder no interest (Article 27).
Accounts must be approved and signed by two council members and filed with the Registrar, or given to the registered agent, within 30 days of approval (Article 33). The Registrar keeps a public register without natural persons' nationalities and addresses (Article 35). The DIFC Court may order compliance, amend the charter and set aside mistaken dispositions (Articles 39 to 49), and disputes may be arbitrated (Article 51). Foreign foundations and companies may continue into the DIFC and foundations may migrate out or dissolve (Articles 54 to 72). Schedule 3 sets fines of USD 1,500 to USD 10,000 and fees from nil for registration to USD 350 for the licence and USD 500 for continuation.
Founders and contributors establishing or endowing a DIFC foundation, the foundation itself, its council members, any guardian and registered agent, the qualified recipients named or described in its charter or by-laws, foreign foundations and companies continuing into the DIFC, and the Registrar of Companies.
| Article 10 | A foundation is a body corporate with legal personality separate from its founder and anyone else, with the capacity of a natural person; its property is not held on trust, and founders and other persons have only the rights the by-laws give them. |
| Article 12 | Objects must be certain, reasonable, possible and lawful, and may be exclusively charitable, non-charitable, or to benefit persons by name, category or class; a foundation may not carry out commercial activities except those necessary for and ancillary to its objects. |
| Articles 13–16 | All questions concerning a foundation or dispositions to it are determined under DIFC law alone; foreign heirship rights over a living person's property are not recognised, and foreign judgments inconsistent with these rules are neither recognised nor enforced. |
| Article 17 | Founders establish a foundation by filing an application signed by each founder with the name, the registered office address in the Centre, details of founders and council members, any registered agent, the charter and, unless a registered agent is appointed, the by-laws. |
| Article 22 | The council of at least two members, who may include the founder or a body corporate, administers the property and carries out the objects, must keep accurate accounting records, needs written consent to act, cannot include the guardian, and must act honestly and in good faith in the foundation's best interests. |
| Article 23 | A guardian is mandatory where the foundation has a charitable or specified non-charitable object and optional for objects benefiting persons; the guardian must be named in the register, keep records for six years after ceasing, take reasonable steps to ensure the council performs, and cannot also be a council member. |
| Article 24 | A foundation may have one registered agent, who must be a qualified person and takes on the functions the Law and by-laws assign; changes of agent must be notified to the Registrar within 30 days on pain of a Schedule 3 fine. |
| Article 26 | A founder may reserve powers to amend, revoke or vary the charter or by-laws, change the objects or terminate the foundation only if the powers are detailed in full in the charter, and only for the founder's lifetime or, for a corporate founder, 50 years from establishment. |
| Article 27 | The initial capital may be any property given or provided for value; further property may be endowed if the charter permits, and endowing property gives the founder or contributor no interest in the foundation. |
| Article 33 | The accounting provisions of the Companies Law apply as if the foundation were a company; accounts must be approved by the council and signed by two members, and within 30 days of approval filed with the Registrar or, where there is a registered agent, provided to the agent. |
| Article 35 | The Registrar keeps a public register of each foundation's name, registered office, founders, council members and registered agent, excluding the nationality and address of natural persons, and issues certificates of status on payment of the fee. |
| Schedule 3 | Maximum fines of USD 1,500 to USD 10,000, the highest for failing to keep or file accounts, misleading accounts statements and false or withheld information to the registered agent; fees of nil for registration, USD 350 for the licence, USD 100 for notifications and USD 500 for continuation in or out. |
Schedule 3 Part 1 sets the Registrar's maximum fines: USD 10,000 for failing to keep or make available accounting records (Article 33(1)), failing to file accounts (Article 33(4)), making a materially misleading statement about accounts, and failing to provide information or giving false information to the registered agent (Article 73); USD 5,000 for accounts not approved by the council; USD 2,000 for each failure to notify changes to the charter, by-laws, council, guardian or registered agent or cancellation of registration; and USD 1,500 for not providing a copy of an assignment of rights. Articles 35 to 38 of the Operating Law govern the Registrar's proceedings and the liability of persons knowingly concerned.
DIFC foundations are the succession and asset-holding vehicle we most often recommend to family clients, and this Law fixes who may be founder, council member and guardian and what the charter and by-laws must contain. We draft the charter around Article 26, reserving to the founder only the amendment and termination powers the family actually wants and spelling them out in full, seat the founder and a trusted relative or our nominee on the council, and appoint a guardian where the objects require one. The firewall in Articles 13 to 16 is what lets us tell clients that forced-heirship claims will not unwind the structure. Polaris acts in fiduciary capacities and handles the documentation, filings and the annual accounts approval and 30-day filing, while the registered office and any registered agent role sit with a DIFC-registered provider we appoint and coordinate. Foundations, not trusts, are what we form.
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