DIFC Foundation

The Founder of a DIFC (Dubai International Financial Centre) Foundation is the individual or entity responsible for establishing the foundation. This person typically initiates the creation of the foundation and is often the beneficial owner of the assets transferred into the foundation.

• Establishment of the Foundation: The Founder prepares and signs the foundation's charter & bylaws, which include the foundation's objectives, governance structure, and operational guidelines.

• Asset Transfer: The Founder transfers assets to the foundation, such as cash, real estate, securities, or other valuable items, providing the financial base for the foundation's activities.

• Appointment Powers: The Founder has the authority to appoint key individuals to governance roles within the foundation, such as Council Members and Guardians.

• Amendment Rights: The Founder typically retains the right to amend the foundation's charter & bylaws, as outlined in those documents.

Unless the charter states otherwise, the Founder retains certain rights over the foundation, including the ability to: amend the charter & bylaws; appoint or remove Council Members; appoint or remove the Guardian; and dissolve the foundation. These rights can be customised and restricted in the charter & bylaws to suit the Founder's intentions.

Council Members are responsible for the day-to-day management and administration of the DIFC Foundation. They act in a similar capacity to directors of a company, overseeing the foundation's activities and ensuring it operates in accordance with its stated objectives.

• Management of the Foundation: Council Members are responsible for managing the foundation's affairs and activities in line with the charter & bylaws.

• Fiduciary Duties: Council Members owe fiduciary duties to the foundation, meaning they must act in the best interests of the foundation and its beneficiaries.

• Record Keeping: Council Members are responsible for maintaining accurate records and accounts for the foundation.

• Distributions: Council Members decide on the distribution of assets or income to beneficiaries, as permitted by the charter & bylaws.

Council Members are appointed and removed in accordance with the foundation's charter & bylaws. Typically, the Founder has the right to appoint and remove Council Members, although this can be modified. A DIFC Foundation must have at least one Council Member.

A Guardian is an optional role in a DIFC Foundation. The Guardian is appointed to oversee the Council Members and ensure that they are acting in accordance with the foundation's charter & bylaws and in the interests of the beneficiaries.

• Oversight: The Guardian monitors the activities of the Council Members to ensure compliance with the charter & bylaws.

• Veto Rights: The Guardian may be granted veto rights over certain decisions of the Council Members, as specified in the charter & bylaws.

• Protective Role: The Guardian acts as a protector of the foundation's objectives and the interests of the beneficiaries.

• A Guardian may not also be a Council Member

Qualified Recipients (also referred to as beneficiaries) are the individuals or entities who are entitled to receive distributions from the foundation. The foundation is established to benefit these recipients in accordance with its stated objectives.

• Named Individuals: Specific individuals identified in the charter & bylaws, such as family members of the Founder.

• Class of Beneficiaries: A defined group, such as the Founder's descendants.

• Charitable Purposes: The foundation can also be established to benefit charitable causes.

In some cases, the charter & bylaws may provide for "Designee Recipients" — individuals or entities who can be designated as recipients by the Founder or Council Members over time, providing flexibility for the foundation's distributions.

The Charter and Bylaws are the constitutional documents of the DIFC Foundation. Together, they set out the framework for how the foundation is governed and operated.

• Foundation Charter: The Charter is the primary constitutional document registered with the DIFC. It sets out the foundation's name, objectives, initial assets, and the broad governance framework.

• Foundation Bylaws: The Bylaws provide more detailed operational rules for the foundation, including the roles and responsibilities of the Council Members and Guardian, the rights of the Founder, and the process for distributions to beneficiaries.

Cavenwell uses standard precedent documents for the Charter and Bylaws. Please note that these are standard documents and are not able to be modified significantly. If you would like to review these documents, please see the templates below:

• Foundation Charter Template

• Foundation Bylaws Template