ADGM foundation setup: establishing a foundation in ADGM

ADGM foundation setup begins with submitting the prescribed incorporation documents to the ADGM Registration Authority under the ADGM Foundations Regulations 2017, which govern the creation, administration and dissolution of foundations in the Abu Dhabi Global Market jurisdiction.

Related Services: Explore our Foundation & Trust Setup and ADGM Courts services for practical legal support in this area.

WHAT IS AN ADGM FOUNDATION AND WHEN IS IT USED?

An ADGM foundation is a separate legal personality that holds assets for a defined purpose-such as charitable giving, family wealth preservation, succession planning or private philanthropy-without issuing shares or having members. Because it does not rely on share capital, the foundation can own property, receive donations, invest in securities and enter into contracts in its own name. High-net-worth individuals and families often choose an ADGM foundation when they want to shield assets from forced-heirship claims that may arise under personal status laws in their home jurisdictions, to create a vehicle for multi-generational wealth transfer, or to establish a philanthropic entity that benefits from the common-law framework of the ADGM while retaining the flexibility of a corporate structure.

Establishing a foundation in the Abu Dhabi Global Market (ADGM) is governed by the ADGM Foundations Regulations 2018, part of the ADGM Companies Regulations, within the ADGM jurisdiction, providing a legally recognised entity for families, private equity and charitable purposes.

WHAT ARE THE MINIMUM REQUIREMENTS TO REGISTER AN ADGM FOUNDATION?

To register an ADGM foundation the founder must file a completed application form, a signed charter, and a set of by-laws that comply with the ADGM Foundations Regulations 2017. The charter must contain:

• the exact name of the foundation (which must end with the word "Foundation" or an approved abbreviation);
• a clear statement of objects-these may be charitable, non-charitable, or a mixture of both;
• the duration of the foundation, if it is intended to be limited (otherwise it is presumed perpetual);
• the details of the initial council members, including full names, nationalities, addresses, and, for corporate council members, the jurisdiction of incorporation;
• any provisions regarding the appointment, removal, and remuneration of council members; and
• where a guardian is contemplated, the scope of the guardian's powers and the procedure for their appointment or removal.

At least one council member must be either a natural person or a corporate entity that has been approved by the Registration Authority. A registered office must be maintained within the ADGM; a virtual office is not sufficient unless the Authority expressly permits it. Although there is no statutory minimum capital contribution, the founder must demonstrate that the foundation possesses sufficient assets-whether cash, securities, real estate, or other property-to fulfil its stated objects at the time of incorporation. This is typically shown by attaching a schedule of assets or a bank confirmation letter to the application package.

WHICH DOCUMENTS MUST BE SUBMITTED TO THE ADGM REGISTRATION AUTHORITY?

The registration package comprises the following items, each of which must be in English or accompanied by a certified translation:

1. Application form - the standard template provided by the Registration Authority, completed in full and signed by the founder or their authorised representative.
2. Foundation charter - signed by the founder; if executed outside the ADGM, the charter must be notarised and, if in a language other than English, accompanied by a certified translation.
3. Foundation by-laws - signed by the founder; these govern internal procedures such as council meetings, voting thresholds, and amendment processes.
4. Identification of natural-person council members - a clear copy of the passport biodata page and, for UAE residents, the visa page; for non-resident foreigners, a comparable government-issued ID.
5. Corporate council member documents - certificate of incorporation, memorandum and articles of association, and a board resolution authorising the entity to act as a council member.
6. Proof of registered office - a tenancy agreement, Ejari certificate, or recent utility bill showing the ADGM address; if the office is serviced, a letter from the provider confirming exclusive use.
7. Fee payment receipt - evidence of payment of the initial registration fee (currently AED 2,000).

All documents must be uploaded through the Authority's online portal or submitted in hard copy at the Registration Authority's office. The Authority reviews the package for completeness, conformity with the Regulations, and the lawfulness of the stated objects. Any deficiencies trigger a request for additional information or clarification, which can extend the processing timeline.

WHAT ARE THE ONGOING COMPLIANCE OBLIGATIONS FOR AN ADGM FOUNDATION?

Once incorporated, an ADGM foundation is subject to a series of continuing duties designed to maintain transparency and good governance:

• Annual return - filed within thirty days of the anniversary of registration. The return must disclose any changes to council members, the registered office, the foundation's objects, and, if applicable, the appointment or removal of a guardian.
• Accounting records - the foundation must keep accurate books of account that reflect all receipts, payments, assets, and liabilities. Records must be retained for a minimum of five years.
• Audit requirement - if the foundation's annual expenditure exceeds AED 1 million, its financial statements must be audited by an auditor approved by the Registration Authority. The audited statements are attached to the annual return.
• Charitable reporting - for foundations with charitable objects, additional reporting may be required under the ADGM Charities Regulations, including details of donations received and distributions made.
• Guardian oversight - when a guardian is appointed, the foundation must provide the guardian with periodic reports (often quarterly) on financial performance and compliance with the charter.
• Notification of significant events - any amendment to the charter or by-laws, any change in the foundation's purpose that could affect its classification, or any legal proceedings involving the foundation must be notified to the Authority promptly.

Failure to meet these obligations can result in administrative fines, suspension of the foundation's ability to transact, or, in cases of persistent non-compliance, removal from the register and consequent loss of legal personality.

HOW LONG DOES THE ADGM FOUNDATION SETUP PROCESS TAKE AND WHAT ARE THE ASSOCIATED COSTS?

The Registration Authority does not publish a fixed timetable; processing speed depends on the quality of the submission and any queries raised during review. In practice, a fully compliant application-complete with correctly notarised documents, clear identification, and a registered office proof-is typically processed within five to ten business days. Applications that require clarification or additional documentation may take longer, occasionally extending to two or three weeks.

Fees

• Initial registration fee - AED 2,000 (payable upon submission).
• Annual renewal fee - AED 1,000, due each year on the anniversary of registration.
• Professional fees - drafting the charter and by-laws, notarisation, translation, and, if needed, legal advisory services vary widely but generally range from AED 5,000 to AED 15,000 depending on complexity.
• Audit fees - applicable only when the expenditure threshold is crossed; audit costs for a modest foundation start around AED 3,000 and increase with the scale of operations.
• Office costs - rent for a physical ADGM office or serviced desk space, which can range from AED 20,000 to AED 60,000 per annum depending on location and amenities.

Because there is no mandatory minimum capital contribution, the founder's out-of-pocket expense is limited to these administrative and professional charges, making the ADGM foundation a cost-effective vehicle for wealth structuring compared with jurisdictions that impose high capital thresholds.

FREQUENTLY ASKED QUESTIONS

What law governs the internal affairs of an ADGM foundation?
The internal governance of an ADGM foundation is governed by its charter and by-laws, which must be drafted in accordance with the ADGM Foundations Regulations 2017. The Regulations set out mandatory provisions concerning the appointment and removal of council members, the role of a guardian (if any), the handling of conflicts of interest, and the procedures for amending constitutional documents. Any provision in the charter or by-laws that contradicts the Regulations is void to the extent of the inconsistency.

Can an ADGM foundation hold shares in a UAE mainland company?
Yes, an ADGM foundation may hold shares in a UAE mainland company, provided the shareholding complies with the UAE Commercial Companies Law and any sector-specific regulations that apply to the target company. The foundation must disclose such holdings in its annual return if requested by the Registration Authority, and it must ensure that the acquisition does not violate foreign-ownership caps or prohibited activities under UAE law.

Is a guardian required for every ADGM foundation?
A guardian is only required when the foundation's charter expressly provides for one or when the founder wishes to appoint a supervisor to oversee the council's actions. The Regulations do not impose a blanket guardian requirement; the decision is left to the founder's discretion and must be recorded in the foundation's constitutional documents. Where a guardian is appointed, the charter should clearly define the guardian's powers-such as veto rights over certain decisions, the authority to remove council members, or the right to approve amendments to the objects.

How can an ADGM foundation be dissolved?
Dissolution may occur voluntarily by a resolution of the council approved by the founder (or guardian, if appointed) or by court order under the ADGM Foundations Regulations 2017. The process involves:

1. Passing a dissolution resolution that complies with the voting thresholds set out in the charter.
2. Filing a notice of dissolution with the Registration Authority, accompanied by the resolution and a statement of the foundation's liabilities.
3. Settling all outstanding debts and obligations.
4. Distributing the remaining assets in accordance with the winding-up provisions of the charter-whether to beneficiaries, charitable purposes, or as otherwise directed.
5. Applying for a certificate of deregistration once the Authority confirms that all requirements have been satisfied.

Are there any restrictions on the objects an ADGM foundation may pursue?
The foundation's objects must be lawful and not contrary to public policy; they may be charitable, non-charitable, or a mixture thereof. Objects that aim to circumvent UAE laws-such as those facilitating money laundering, terrorism financing, sanctions evasion, or other illegal activities-are prohibited. The Registration Authority reviews the stated objects during incorporation to ensure compliance with both the ADGM Regulations and applicable UAE federal legislation.

What tax treatment applies to an ADGM foundation?
Foundations incorporated in the ADGM are exempt from UAE federal corporate tax on income derived from their permitted objects, provided they do not engage in commercial trading activities that generate profit unrelated to their purpose. However, any income earned from permissible investments-such as dividends, interest, or capital gains-remains tax-exempt under the ADGM regime. Foundations must still comply with VAT regulations if they make taxable supplies within the UAE, and they should seek professional advice to confirm the applicability of any withholding tax or reporting obligations under double-tax treaties.

How does an ADGM foundation compare to a DIFC foundation?
Both the ADGM and DIFC foundations offer a common-law-style vehicle for wealth holding, but they differ in regulatory detail. The ADGM Foundations Regulations 2017 require a registered office within the ADGM and impose an annual renewal fee of AED 1,000, whereas the DIFC Foundations Law DIFC Law No. 3 of 2018 mandates a minimum endowment of USD 100,000 (or equivalent) and imposes a different fee structure. The ADGM regime places greater emphasis on the founder's ability to appoint a guardian without statutory compulsion, while the DIFC framework includes more prescriptive rules on beneficiary rights and enforcement. The choice between the two often hinges on the founder's preferred jurisdiction for banking relationships, proximity to specific free-zone services, and the desired level of regulatory oversight.

Can an ADGM foundation be used as a holding structure for private equity or venture-capital investments?
Yes, an ADGM foundation can serve as a holding platform for private-equity or venture-capital investments, particularly when the investors wish to isolate liability, facilitate succession planning, or benefit from the foundation's tax-neutral status. The foundation's council can act as the investment decision-making body, and the charter can impose restrictions on the types of investments permissible, the approval process for new ventures, and reporting obligations to beneficiaries or a guardian. Because the foundation does not issue shares, ownership interests are represented through beneficiary rights rather than equity, which can simplify transfer mechanisms and avoid certain corporate-law constraints.

What safeguards exist to protect the foundation's assets from creditor claims?
An ADGM foundation enjoys a degree of asset protection because it is a separate legal personality; creditors of the founder or beneficiaries generally cannot reach the foundation's assets unless the foundation has incurred its own liabilities or the assets were transferred with the intent to defraud creditors. The Regulations require that the foundation be adequately funded at incorporation to meet its objects, which discourages undercapitalisation designed to shield assets improperly. Courts in the ADGM and UAE will scrutinise any transaction that appears to be a sham or that violates insolvency law, and they may set aside transfers deemed to be made with fraudulent intent. Properly drafted charter provisions-such as limiting distributions to beneficiaries until certain conditions are met-can further enhance protection.

Is it possible to migrate an existing foundation from another jurisdiction into the ADGM?
Migration is feasible through a process of re-domestication, whereby the existing foundation is dissolved in its home jurisdiction and a new ADGM foundation is incorporated with substantially the same charter, by-laws, and asset portfolio. The founder must ensure that the dissolution complies with the laws of the original jurisdiction and that the transfer of assets does not trigger adverse tax or regulatory consequences. Professional advice is essential to coordinate the two-step process, obtain any required clearances from the home-jurisdiction regulator, and satisfy the ADGM Registration Authority's substantive requirements.

This article provides a comprehensive overview of the ADGM foundation setup process, legal framework, compliance obligations, and practical considerations. It is intended for informational purposes only and does not constitute legal advice for any specific situation.

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