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A foundation formed on Al Maryah Island carries the prestige of an English‑law domicile, the operational ease of a digital registry and the supervisory assurance of a respected regulator. None of those benefits, however, spares the structure from day‑to‑day governance duties. Indeed, foundations exist to safeguard wealth and purpose for decades, sometimes centuries. That kind of longevity is only credible when directors, guardians and advisers follow a clear, legally compliant framework. The following guide explains how the Abu Dhabi Global Market, or ADGM, conducts corporate governance for foundations. We will also go over what records companies must keep, which filings are compulsory and how founders can embed best practice from day one.
ADGM and its corporate governance for foundations
Launched in 2015, the ADGM applies English common law directly, not by reference or adaptation. Investors therefore recognise precedents set in London courts. At the same time, counterparties take comfort that contractual disputes are in the hands of judges with extensive knowledge about commercial jurisprudence. Three separate authorities underpin the ecosystem. These include the Registration Authority handles incorporations and ongoing filings, the Financial Services Regulatory Authority oversees licensed financial activities, and the ADGM Courts decide civil and commercial matters, all while maintaining corporate governance for foundations.
A zero‑tax pledge on corporate profits, dividends and capital gains until at least 2074, together with unimpeded capital repatriation. These are just some of the benefits that make ADGM attractive to families, philanthropists and asset managers who intend to centralise holdings or endow charitable causes. Foundations complement that environment by offering a hybrid between a trust and a company. They possess legal personality and may enter contracts, yet they issue no shares. Corporate governance for ADGM foundations rests with a council. That council is guided by a charter and private by‑laws rather than by shareholder resolutions. It is a reliable system, and one that many foundations have put their trust into.
Foundation anatomy: Charter, by‑laws and key officers
Every ADGM foundation is born with a publicly filed Charter. This document sets out the name, objects, initial assets, registered office, first council members and, in circumstances where a founder does not plan to sit on the council, the first guardian. The charter also states the duration of the foundation or any trigger event that will dissolve it. Prospective bankers, regulators and counterparties rely on this charter to verify authority and purpose.
Complementing the charter are the By‑laws, a private instrument lodged with the council or a registered agent rather than on the public record. Here, founders specify distribution policies, investment parameters, succession rules, dispute‑resolution methods and procedures for amending either governing document. Together, the charter and by‑laws operate much like a trust deed and letter of wishes, but within a statutory framework that grants the foundation separate legal identity.
Founders
A single individual or body corporate may act as founder. Residency in the UAE is not required, yet the founder’s powers after incorporation must be laid out clearly. Some founders retain the right to replace council members or veto amendments, while others surrender all involvement to avoid forced‑heirship claw‑back claims in home jurisdictions.
Council
At least two members must sit on the council. They can be natural persons or companies, resident or non‑resident, though appointing at least one UAE resident facilitates bank account operation and local document execution. The council manages day‑to‑day affairs, from signing investment mandates to approving audited accounts.
Guardian
If the founder dies, becomes incapacitated or deliberately refrains from ongoing oversight, a guardian steps in to supervise the council. The role is mandatory once no surviving founder remains. A professional service provider, family elder or trusted adviser often fills this position, ensuring continuity of intent.
Authorised signatory
While directors and guardians may live abroad, the ADGM insists that every foundation appoints one UAE‑resident authorised signatory. This individual signs licence renewals, banking instructions and lease agreements, and acts as point of contact for regulators. Where families lack a suitable relative in the Emirates, a licensed company‑service provider supplies a nominee.
Secretary and company‑service provider
Since April 2021, all ADGM foundations must engage a Company Service Provider (CSP) approved by the Registration Authority. The CSP performs secretarial functions: maintaining statutory registers, filing event‑driven changes and ensuring that anti‑money‑laundering controls match ADGM guidelines. Outsourcing these tasks frees council members to focus on strategy rather than paperwork.
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Governance framework: internal discipline and external compliance
At its simplest, governance means ensuring that decisions align with the charter, the by‑laws and ADGM regulations. Yet good governance goes further, embracing transparency, timely reporting and risk management.
Internal controls
Internal controls begin with a schedule of council meetings. Regulations do not dictate frequency, but an annual session, recorded in writing, signed by attendees and stored in the minute book, demonstrates oversight. Foundations holding trading subsidiaries or diversified portfolios typically convene quarterly to review performance, renew mandates and approve distributions.
Conflict‑of‑interest policies
These are equally important. A council member may also be an investment adviser or service provider. In that case, by‑laws should compel formal declarations and require the abstention of conflicted individuals from voting on relevant resolutions.
Document management
Document management underpins enforceability. The CSP or in‑house secretary keeps original or certified copies of the charter, by‑laws, register of founders, council members, guardians and beneficiaries, plus registers of council minutes and powers of attorney. Electronic versions stored on encrypted servers inside ADGM‑approved data centres provide resilience against fire or cyber‑attack.
Senior‑management requirements and substance
While the foundation may be founded and governed from abroad, the ADGM mandates local substance in two areas: the authorised signatory and the registered office. The authorised signatory physically signs bank and regulatory documents, receives official correspondence and, if necessary, attends court hearings. The registered office, meanwhile, must be located within the free zone and display the foundation’s name and licence number. A CSP’s business‑centre address satisfies this obligation for passive foundations, though active philanthropic entities often lease dedicated suites.
Economic Substance Regulations, introduced nationwide in 2019, specifically exclude foundations from the definition of “relevant entities”. Therefore, an ADGM foundation need only file a nil notification each year confirming its exempt status.
"If the foundation also operates a holding‑company subsidiary that earns dividends or capital gains, that subsidiary may itself fall within scope and must demonstrate adequate substance."
Meetings, decisions and record‑keeping
Council meetings need not occur in person, but resolutions should note the mode, physical, video or circular, and reference supporting papers. Where investment updates or valuation reports are discussed, attach them to the minute file. Banks and auditors frequently request proof that the council authorised major transactions such as the sale of a property or the appointment of a new asset manager, so diligent minute‑taking avoids last‑minute scrambles.
Guardians, when appointed, either attend council meetings or receive copies of minutes within a predefined period. They then sign an acknowledgement that they have reviewed decisions and found them consistent with the charter and by‑laws.
Foundations must retain accounting records for at least six years. Although filing audited accounts with the Registration Authority is not compulsory, the authority may order submission or audit if it suspects mismanagement. Best practice, especially where the foundation holds revenue‑generating assets, is to prepare annual financial statements in accordance with IFRS or another recognised standard and have them reviewed by an ADGM‑registered audit firm. Doing so reinforces banking relationships and facilitates inter‑generational reporting.
Annual obligations
Licence renewal
On the anniversary of incorporation, the foundation pays a renewal fee and files a brief return confirming the registered office, CSP appointment, authorised signatory and any changes to council or guardian composition. Missing the deadline triggers late fees and could impede bank transactions if the licence lapses.
Data‑protection registration
The ADGM Data Protection Regulations require an annual renewal fee of US $100. The registration lists the categories of personal data processed, typically beneficiary details, employee records and donor information, and the foundation’s lawful basis for holding such data. Breach notifications must reach the Commissioner within 72 hours of discovery.
Registers update
Any change to founders, council, guardian, beneficiaries or authorised signatory must be entered in the relevant register immediately and reported to the Registration Authority within 14 days using an online “event‑driven” form.
Banking confirmations
Most UAE banks demand a fresh copy of the renewed licence each year, together with updated KYC for signatories. Proactively sending these documents prevents account freezes.
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Event‑driven filings in detail
Foundations must alert the Registration Authority when significant changes occur. Common triggers include:
- Changing the foundation’s name, perhaps to reflect a new philanthropic focus.
- Amending the charter or by‑laws. For example, to expand investment powers or redefine beneficiary classes.
- Appointing or removing council members, guardians or authorised signatories, as each requires a signed consent and identification documents.
- Shifting the registered office. Even a move within the same building necessitates notice.
- Issuing or revoking powers of attorney. Particularly relevant when delegating authority to a CSP for property transfers.
Timely filings not only avoid regulatory penalties but also ensure the public register accurately reflects who may bind the foundation, a critical point for counterparties.
"Foundations must conduct council meetings, record resolutions, and keep comprehensive registers of decisions, powers of attorney, and beneficiaries."
Banking and compliance considerations
Though foundations cannot trade, they still open current accounts to receive dividends, pay service providers and distribute grants. UAE banks apply rigorous anti‑money‑laundering scrutiny: they will request the charter, by‑laws, registers of beneficiaries, passport copies for founders and council, and a narrative of the asset base. Expect enhanced diligence if the foundation holds interests in high‑risk jurisdictions or crypto‑assets.
Once the account is active, banks will monitor incoming transfers for consistency with the foundation’s purpose.
Common misconceptions clarified
“Foundations require resident council members.”
They do not; only an authorised signatory must reside in the UAE.
“No meetings are needed because the foundation is passive.”
While regulations do not force a schedule, a yearly council resolution approving accounts and strategy underlines diligence.
“Economic substance rules never touch foundations.”
True for the foundation itself, but subsidiaries can fall within scope. Directors must assess group structures holistically.
“Audited accounts are pointless if the RA does not ask for them.”
Banks, beneficiaries and future guardians value independently verified figures, especially when assets exceed seven figures.
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Annual tasks include licence renewal, data protection updates, and timely filing of any changes to council, guardians, or office address.
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Economic substance rules do not apply to the foundation itself, but any revenue-generating subsidiaries may fall under the regulations.
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ADGM recommends preparing annual financial statements, even if not mandatory, to support transparency with banks, auditors, and future beneficiaries.
Best‑practice governance checklist
- Quarterly information packs compiling asset valuations, cash reconciliations and investment‑manager reports.
- Register of powers of attorney with expiry dates and signatory specimen signatures.
- Cyber‑security policy covering password protocols and encrypted storage of beneficiary data.
- Succession binder that houses funeral wishes, guardian nomination letters and key contacts, updated annually.
- Philanthropic impact reporting where charitable grants form part of the mandate, reinforcing transparency to donors and regulators alike.
Aston VIP’s role in your governance journey
Drafting a robust charter, tailoring by‑laws, appointing a compliant council, securing a resident authorised signatory, liaising with banks and managing ongoing filings can overwhelm busy founders. Aston VIP offers an integrated service: we design governance frameworks aligned with family or philanthropic objectives, act as CSP and resident secretary, maintain statutory registers, prepare management accounts, coordinate audits and file every return on time. Our team also trains council members on ADGM obligations and benchmarks the foundation’s practices against international standards each year.
Entrust your legacy to professionals who navigate Al Maryah Island daily. Begin the conversation by visiting the Aston VIP contact page. Within one working day we will outline a costed roadmap that transforms your intentions into an ADGM foundation equipped for the next generation and beyond.
