DIFC Foundation Regime

PUBLICATIONS / Articles / 2018 / DIFC Foundation Regime
On 10th October 2017, Dubai International Financial Centre (DIFC), the foremost international financial hub in the Middle East, Africa and South Asia (MEASA) region, proposed a new Trust Law regime and a new Foundations Law regime.
 
Now, DIFC approved the draft Foundations Law (DIFC Law No. 8 of 2017).
 
The DIFC foundation regime originates from a comprehensive review of the finest practices, models and principles of contemporary foundation regimes of both common law and civil law backgrounds. The result is based on the best practices of international financial centres.
 
In line with the legal background of the DIFC, the Foundations Law is mainly based on the principle of the common law foundations and enhanced with some aspects of the Liechtenstein foundations model, the Dutch Stichting Administratienkantoor regime ("STAK") and other features that are unique to the DIFC foundation. 
 
What are the benefits of DIFC Foundation Regime?
 
• Tier 1 international financial centre
• Strong governance structure
• 0% corporate tax rate
• No tax filing
• Comprehensive tax treaty network
• Flexibility
• Can issue depository certificates
• An option of corporate migration to DIFC from overseas
• An option to transform a company into a foundation
• Private arbitration of disputes
• Strategic location in the Middle East
 
 
The Foundations Law delivers strong rules and other mechanisms to protect the founder’s requirements and the foundation’s assets. The law provides flexibility on the founder’s powers whilst ensuring appropriate governance control. Primarily, a DIFC foundation shall be able to issue securities representing the value of the contributed assets based on the STAK model.
 
In addition, existing foundations operating in other centres can apply for a license to operate as a ‘Recognized Foreign Foundation’. Alternatively, the foundation can migrate to DIFC from other centres. Companies can also convert into Foundations. To register foundation, any property can serve as an initial endowment. 

 

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