The DMCC Foundations Regulations add another foundation regime to the UAE’s increasingly sophisticated private wealth landscape. For family businesses, entrepreneurs and private clients, however, the significance of this development is not simply that there is now another jurisdiction in which a foundation can be established.
It should prompt a more fundamental question: what is the foundation actually intended to solve?
In practice, incorporating a foundation is rarely the difficult part of a private wealth restructuring. The more complex legal exercise is determining what should sit beneath it, who should control the structure during and after the founder’s lifetime, how economic benefit should pass between generations, and how the structure interacts with operating companies, real estate, investments, existing constitutional documents, and the family’s wider succession arrangements.
DMCC’s entry into this space is therefore important. However, it should not reduce the structuring exercise to a comparison of incorporation costs or a question of whether DMCC, DIFC, ADGM or RAK ICC is the “best” foundation jurisdiction.
There is no foundation regime that is inherently right for every family. The appropriate jurisdiction should be the result of the structuring analysis, not its starting point.
A Foundation Is Not, by Itself, a Succession Plan
A foundation can provide a powerful legal mechanism for separating legal ownership, economic benefit, and management control.
Unlike a conventional company, a foundation does not have shareholders. Once assets are validly transferred to it, they are owned by the foundation itself and administered in accordance with its constitutional documents and applicable law. This makes the foundation particularly useful where a founder wants assets to remain within a structured ownership framework beyond his or her lifetime rather than passing directly between individuals from one generation to another.
Nonetheless, placing a foundation at the top of an organisational chart does not itself resolve succession.
A properly designed structure must address what happens underneath it.
For a family whose wealth originates from an operating business, a typical architecture may involve a foundation at the ultimate ownership level, one or more holding companies or special purpose vehicles beneath it, and operating businesses, investment assets, and other holdings further down the structure.
The legal analysis should therefore begin before the foundation is incorporated.
Which assets should ultimately be brought within the structure? Should operating businesses be held directly or through an intermediate holding company? Should real estate sit within the same ownership chain or be separated? Are there existing shareholders, lenders or contractual counterparties whose consent is required before ownership can be transferred? Are there restrictions in memoranda of association, shareholders’ agreements or financing documents? What are the tax consequences of the proposed transfers?
Most importantly, what does the founder actually want to happen when he or she is no longer managing the family wealth?
These questions cannot be answered by selecting a jurisdiction from a comparison table.
Ownership, Benefit, and Control Should Not Be Treated as Identical
One of the most important conversations in family wealth planning is the distinction between who owns, who benefits, and who controls.
In a conventional family company, these concepts can become concentrated in the founder. The founder may own the shares, manage the business, control distributions, and make the principal strategic decisions.
Such model can work during the founder’s lifetime. However, it becomes more difficult when the ownership passes to the next generation.
Not every child may work in the family business. Those who do, may have different responsibilities, while other family members may require economic benefit without management authorities. Even though certain members may be capable of managing the operating business, they should not, however, necessarily have unilateral control over the family’s wider investment assets.
Hence the significance of a foundation’s structure: it allows these questions to be addressed separately and thoroughly.
The founder may reserve certain powers during his or her lifetime, while day-to-day governance is exercised through the foundation council. Where appropriate, additional oversight may then be layered on through a guardian or other governance mechanisms, reinforcing the council’s decision-making. Together, these arrangements make it possible for beneficiaries to receive economic benefits without becoming shareholders of the underlying family business, while the constitutional documents set out how those benefits and governance arrangements are to evolve over time.
The objective is not simply to move assets into a foundation; rather, it is to create a governance system capable of continuing when the founder is no longer the person making every decision.
The UAE Now Offers Several Foundation Ecosystems
Over a relatively short period, the UAE’s private wealth market has developed significantly, prompting regulators and free zone authorities to develop and establish their own foundation regimes.
DIFC and ADGM have established foundation regimes within their respective common-law financial free zone ecosystems. RAK ICC has operated its Foundations Regulations since 2019 and amended that framework in 2025[1]. DMCC has now formally established its own Foundations Regulations as part of an offering that also includes its existing SPV and Holding Company structures. According to DMCC, the framework was developed following market consultation, international benchmarking and a comparative review of leading foundation regimes.
The said regimes share certain fundamental characteristics, including separate legal personality and the ability to establish governance arrangements for the holding and administration of assets. They should not, however, be treated as interchangeable products.
The surrounding legal ecosystem matters.
The maturity of the relevant regime, the applicable courts and dispute-resolution framework, including any prescribed court jurisdiction under the relevant foundation legislation, the assets that will ultimately be held, the location of underlying companies, the family’s international exposure, migration possibilities, administrative requirements, and the practical experience of registrars and other authorities can all influence the appropriate choice.
RAK ICC is particularly relevant to this analysis and should not be overlooked. Its foundation regime was materially amended in 2025, and its framework provides for a choice of common-law court jurisdiction and contains provisions addressing, among other matters, governance, and the treatment of dispositions of property to a foundation.
DMCC, on the other hand, brings a different dimension to the UAE landscape.
Its significance lies partly in the fact that many entrepreneurs and family businesses already operate within the DMCC ecosystem. DMCC has positioned its new Foundation alongside its SPV and HoldCo structures, potentially allowing the ultimate succession vehicle, intermediate holding layer, and existing business interests to sit within the same broader ecosystem.
For some families, that may materially simplify the architecture.
For others, there may be compelling reasons to use DIFC, ADGM, or RAK ICC instead.
Hence, the correct answer depends on the structure.
DMCC Changes the Question for Existing Business Owners
This is where the new regime becomes particularly interesting.
Historically, a family whose principal business was established in DMCC, but wanted a UAE foundation at the top of its succession structure, generally had to introduce a foundation from another UAE jurisdiction into the ownership chain.
There is nothing inherently problematic about a structure involving more than one jurisdiction. In many sophisticated structures, that remains entirely appropriate. However, such structure should exist for a reason.
With DMCC now offering its own foundation framework, an existing DMCC business owner can ask a different question: is there a legal, governance, asset-specific, tax, or cross-border reason why the ultimate succession vehicle should sit outside the ecosystem in which the underlying business already operates?
Sometimes the answer will be yes. In other times, it will not.
That is a more useful analysis than assuming that a particular foundation jurisdiction should automatically be selected because it has historically been the market standard.
DMCC has stated that its Foundations Regulations are intended to support succession planning, long-term asset holding, wealth preservation and governance, with full onboarding processes expected to follow the establishment of the framework[2]. For existing DMCC groups, the possibility of integrating a Foundation with DMCC HoldCo and SPV structures creates an additional restructuring option that did not previously exist.
DMCC has also indicated that Foundations may be established with initial assets starting from USD 100, further broadening accessibility to the structure.
The important point, however, is that structural convenience should not replace legal analysis.
Start with the Family, Then Assets, Then Jurisdiction
When advising on a private wealth structure, it is often preferable to reverse the order in which the discussion is sometimes approached.
Therefore, do not begin by asking “where” the foundation should be incorporated. Rather, begin with questions about the family itself.
Who is the founder trying to provide for? Which family members are involved in the business? Which are not? Should all beneficiaries have the same economic entitlements? Who is capable of exercising management responsibility? What decisions should require collective approval? What happens on incapacity? What happens on death? What happens if a family member wishes to exit while others want to preserve the business?
Once the answers to these questions are clear and available, the assets’ examination begins.
There may be operating companies, investment portfolios, UAE and foreign real estate, intellectual property, cash, overseas companies and other family investments. They do not necessarily all belong in the same ownership chain.
Only then should the legal architecture be designed.
The said architecture may ultimately involve a foundation, a HoldCo, one or more SPVs and separate asset-holding vehicles. It may also require amendments to existing constitutional documents, transfers of shares, changes to management arrangements, financing consents, wills or other succession documents.
Once those requirements are understood, the appropriate foundation jurisdiction can be selected against the family’s actual objectives.
The sequence should therefore be:
family objectives → assets → governance → control and succession → tax → legal architecture → jurisdiction.
Not the other way around.
The Constitutional Documents Are Where Succession Planning Becomes Real
There is another reason why the choice of foundation jurisdiction is only a part of the exercise: Constitutional documents.
Two families can establish foundations, under the same legal regime, and yet achieve very different outcomes. It all depends on how their constitutional documents are drafted.
The foundation’s charter and by-laws should not be treated as standard incorporation documents. They are the documents which incorporate the founder’s intentions into legally workable governance.
Among other matters, the drafting of constitutional documents should address the powers retained by the founder, the composition and succession of the council, appointment and removal rights, the role of any guardian, the identification and treatment of beneficiaries, distribution principles, and the decision-making framework after the founder’s death or incapacity.
For business-owning families, those provisions should also work alongside the governance arrangements of the underlying companies.
A carefully drafted foundation structure can be undermined if the memorandum of association or shareholders’ agreement of the operating company points in a different direction.
Private wealth restructuring therefore requires the foundation documents and the corporate documents beneath them to be considered as one legal architecture.
Tax Treatment Must Also Be Tested at Structure Level
The UAE Corporate Tax regime contains specific provisions for Family Foundations.
An eligible Family Foundation may apply to the Federal Tax Authority to be treated as an Unincorporated Partnership for Corporate Tax purposes, subject to satisfying the statutory conditions[3]. Where such treatment is approved, the Foundation is treated as fiscally transparent rather than being subject to Corporate Tax in its own right.
That treatment should not, however, be assumed simply because an entity is called a foundation.
The conditions must be tested against the particular structure, its beneficiaries, its activities and the assets held through it. In multi-tier structures, the tax position of entities beneath the Foundation also requires separate consideration.
This is another reason why foundation planning should not be approached as an incorporation exercise. Corporate, succession, and tax advice needs to be coordinated before assets are transferred.
What Should Existing Family Businesses Do Now?
DMCC’s entry into the foundations market does not mean that every existing structure should be reorganised.
It does, however, create a useful reason for founders and family businesses to review arrangements that may have developed incrementally over many years.
For an established business owner, that review should go beyond asking whether a foundation is required.
It should consider whether ownership is currently concentrated personally in the founder; whether existing wills adequately address the corporate structure; whether the next generation’s economic rights and management roles have been separated; whether existing companies are held through an appropriate holding structure; whether key constitutional documents contain inconsistent succession provisions; and whether the structure would continue to operate as intended following death or incapacity.
In some cases, the answer may be a DMCC Foundation.
In others, a DIFC, ADGM or RAK ICC Foundation may remain more appropriate.
And in certain cases, establishing a foundation may not be the first restructuring step at all.
The Real Development Is Choice
DMCC’s Foundations Regulations are a welcome addition to the UAE’s private wealth infrastructure.
But their importance should not be measured simply by whether DMCC can now offer a product already available elsewhere.
The more significant development is that families now have a broader range of legal frameworks through which ownership, governance and succession can be designed in the UAE.
With greater choice comes a greater need for proper structuring.
For founders, the objective should not be to establish a foundation for its own sake. It should be to create a legal architecture that can preserve assets, govern businesses and provide for family members in accordance with the founder’s intentions long after the founder is no longer managing those assets personally.
A foundation should therefore be designed around the family and the assets – not the family and the assets around the foundation.
That, ultimately, is the distinction between incorporating a foundation and building a succession structure.
Seek Legal Counsel
Should you have any questions or require assistance, please do not hesitate to reach out to our Senior Associate Gulsun Ozmen.
Disclaimer
The content provided in this article is intended for informational purposes only and does not constitute legal advice. While every effort has been made to ensure the accuracy and completeness of this information, the article does not offer a guarantee or warranty regarding its content. The matters discussed in this article are subject to interpretation, and legal outcomes may vary based on specific facts and circumstances. We recommend that readers seek individual legal counsel before making any decisions based on the information provided. If you require specific legal advice, please contact us directly.
