UAE SPVS, Foundations, and Trusts are three different legal entities having different legal structures. But when it comes to holding and protecting assets and legacy planning, they all play a similar role. Here’s all you need to know about the three different types of entities in the UAE.
A Special Purpose Vehicle (SPV) is a separate legal entity created to fulfil a temporary business purpose or undertake a limited and specific business activity. It is a bankruptcy-resistant entity deemed isolated if the parent firm goes insolvent and bankrupt, this is done by ring-fencing certain assets and liabilities.Sign up
It is considered a strong dynamic and cost-effective asset holding and investing structure. An SPV provides more freedom to business owners and asset owners while also separating financial and legal risks.
Foundations combine characteristics of trusts and corporations where assets are managed by directors (like that of a trustee). Foundations are legal entities with perpetual existence, meaning they can be used for a wide range of investments. Foundations have a great use as a means for private family wealth, offices and succession planning and also offer excellent asset protection.Sign up
As an independent legal entity, foundations separate individuals from the ownership of assets. This provides protection from creditors and government bodies if the founder gets into financial difficulties.
Foundations can manage employee pension and retirement plans, as well as company share schemes.
Founders can set up by-laws to ensure assets are used for charitable purposes.
By-laws can be created to establish how wealth is distributed from one family member to another.
DIFC is the only regime in the UAE that allows a company to be converted into a foundation, have charitable purposes and can own real estate.
All three regimes benefit from the UAE’s political stability and enjoy legal systems largely based on English law, although there are small variations between them. Corporate tax is 0% in all three. All offer flexibility and access to a comprehensive network of tax treaties.
It is set up for the sole purpose of approved charitable causes or charitable organisations, which must be specified in the main foundations charter.
Also called as Private Interest Foundations, they are used for personal asset protection and succession planning instead of a will.
It is used by corporations to manage employee-based schemes like pension plans, retirement plans, etc.
A trust is a relationship between three entities, known as the settlor (the individual who creates the trust), the trustee (the individual in charge of the trust) and the beneficiary (the individual who gets benefit from the trust).Sign up
This is a trust created for charitable purposes only. For e.g., the advancement of education, promotion of public health, or any other purpose regarded as charitable in law.
This is a trust in which the settlor gives the trustee full discretion to decide which beneficiaries are to receive either the income or the capital of the trust and when.
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