ADGM Consultation Paper No. 3 of 2017: Foundations Regime

CONSULTATION PAPER
NO. 3 OF 2017
31 MAY 2017
ADGM FOUNDATIONS REGIME

CONTENTS
INTRODUCTION............................................................................................3
BACKGROUND..............................................................................................5
REGULATORY FRAMEWORK.........................................................................6
ANNEX 1: PROPOSED FOUNDATIONS REGULATIONS .................................13

INTRODUCTION
WHY ARE WE ISSUING THIS PAPER?

The Board of Directors (the "Board") of Abu Dhabi Global Market ("ADGM")
have issued this Consultation Paper to invite public comment on the Board's proposals to issue regulations governing the establishment and operation of foundations in ADGM. A proposed draft of the Foundations Regulations is set out at Annex A to this Paper. WHO SHOULD READ THIS PAPER?
The proposal in this Consultation Paper would be of interest to individuals,
organisations and their professional advisors with an interest in establishing a foundation in ADGM. HOW TO PROVIDE COMMENTS
All comments should be in writing and sent to the address or email
specified below. If sending your comments by email, please use the Consultation Paper number in the subject line. You may, if relevant, identify the organisation you represent in providing your comments. The Board reserves the right to publish, including on its website, any comments you provide, unless you expressly request otherwise at the time of making comments. Comments supported by reasoning and evidence will be given more weight by the Board. WHAT HAPPENS NEXT?
The deadline for providing comments on this proposal is 5 July 2017. Once
we receive your comments, we will consider whether any modifications are required to this proposal. We will then proceed to publish the Foundations Regulations.
You should not act on these proposals until the relevant regulations are
issued by the Board. We shall issue a notice on our website telling you when this happens.

COMMENTS TO BE ADDRESSED TO:
Consultation Paper No. 3 of 2017
Abu Dhabi Global Market
Abu Dhabi Global Market Square
Al Maryah Island
PO Box 111999
Abu Dhabi, UAE
Email: consultation@adgm.com
Telephone: +971 (0)2 333 0888

BACKGROUND

The Board of ADGM, after careful consideration of the various legislative
and regulatory regimes worldwide, has decided to introduce a Foundations regime in ADGM.
Foundations regimes currently exist in many financial centres, including
common law jurisdictions such as Guernsey and Jersey, which have traditionally relied heavily on the traditional trust structure. ADGM has identified strong market demand for foundation structures in the MENA region. Our existing focus on wealth management and asset management make ADGM an ideal location for both new and existing foundations worldwide.
ADGM conducted a substantive benchmarking exercise across a variety of
civil and common law jurisdictions, including Guernsey, Jersey, Liechtenstein, Austria and Seychelles.
Ultimately, the proposed Foundations Regulations have been modelled on
the foundations regimes found in Jersey and Guernsey. The proposed ADGM Foundations Regulations follow international best practice and establish robust regulatory framework for foundations within ADGM. BACKGROUND – FOUNDATIONS
Foundations, like trusts, are used for a variety of purposes, including wealth
management, succession planning, asset protection and tax planning. While trusts have their roots in the common law, foundations are a civil law concept originating in continental Europe.
A foundation has features and uses similar to a company but operates more
like a common law trust:- a) it is an incorporated entity with a separate legal personality but which, unlike a company, does not have shareholders; and b) it holds assets in its own name on behalf of beneficiaries or for particular purposes (or both), and operates in accordance with a constitution.
Unlike a company, a foundation cannot carry out commercial activities,
other than those necessary, ancillary or incidental to its purposes.
Typically, a ‘founder’ establishes a foundation by entering into a deed of
incorporation and then transferring assets to the foundation.
REGULATORY FRAMEWORK
KEY FEATURES OF THE PROPOSED ADGM FOUNDATIONS REGIME
The proposed features of the ADGM foundations regime include the
following:
a) Creating a new type of legal entity with its own distinct attributes; b) Protecting the confidentiality of the foundation’s arrangements whilst ensuring that the Registrar has or can access sufficient information; c) Safeguarding the founder’s ability to exercise control over a foundation whilst ensuring effective governance mechanisms are built into the regulations; d) Facilitating migrations from other jurisdictions to ADGM and vice versa; e) Incorporating appropriate protection mechanisms for ADGM foundations; and f) Preserving a proactive role for ADGM Courts. KEY POLICY CONSIDERATIONS OF THE FRAMEWORK
Key considerations regarding the proposed foundations regime include:
a) Client confidentiality; b) Governance controls; and c) Asset protection mechanisms.

Client Confidentiality
11. Whilst potential users of foundations may wish to minimise disclosure of
their private affairs and reduce the likelihood of the identity of the ultimate beneficial owner being revealed to the general public, these wishes must be balanced against ADGM’s objectives and obligations, including international standards and the UAE’s international treaty obligations. Registration Information
12. We have sought to balance preserving client confidentiality and
maintaining transparency of ownership by splitting the formation process into two (2)separate elements - public and private. This approach was also adopted by Guernsey when they introduced their foundations regime.
13. Our approach involves two separate parts, namely:-
a) Part A - Public Disclosure
A Foundation Charter, which contains limited information (the name of the foundation and the name of a fiduciary or nominee founder) will be submitted to the Registrar as part of registration requirements. This would be publicly available (along with the registered address, registration date and service provider) and would allow third parties to verify the existence of the foundation and enable the foundation to demonstrate that it is properly constituted and in good standing. b) Part B – Private/Confidential Disclosure Foundation By-Laws governing, for example, the constitution of the foundation council would remain private and would only be provided to the Registrar upon request (and, if requested, would not to be made available for public inspection without consent of the founder). However, the Foundation By-Laws and other non-public information would be disclosed to governmental authorities in limited circumstances, such as those prescribed in the ADGM Companies Regulations 2015. KYC Information

Further to splitting the formation process, we propose that KYC
information is submitted to and held by the Registrar, in particular the beneficiaries’ details. This information would not be made public, unless in the public interest to do so or the Registrar is legally compelled to disclose this information.
This approach would, for example, enable information to be provided to a
foreign regulatory authority in the event of a double tax treaty information request and also allow the Registrar to screen the applications through all levels of ownership up to the ultimate beneficial owners, to ensure appropriate due diligence and protect ADGM’s reputation.
In our view, this option strikes the appropriate balance between the clients’
need for confidentiality and privacy and ADGM’s need to fulfil its functions and objectives. Governance Controls
As a foundation does not have a board of directors with fiduciary duties,
one of the fundamental policy questions is to ensure there are safeguards in place to protect the wishes of the founder, safeguard the assets of the foundation, oversee the foundation council and provide the beneficiaries the right to some information whilst reducing the likelihood of potential interference in the ongoing management of the foundation. Examples of proposed governance controls are set out below. Guardians
The role of a guardian is to supervise the foundation council and ensure
that it acts in accordance with the foundation’s By-Laws. To this end, we propose to include the appointment of a guardian as part of the governance controls that are being proposed. A guardian must be a fit and ISSUES FOR CONSIDERATION Q1: DO YOU AGREE WITH THIS APPROACH IN ORDER TO BALANCE THE CLIENTS’ NEED FOR CONFIDENTIALITY AND ADGM’S NEED TO MEET ITS FUNCTIONS AND OBJECTIVES?

proper person, in accordance with the criteria that the Registrar will prescribe.
19. Whilst a founder will usually appoint the first councillors (who are often
professional service providers), a guardian provides a measure of reassurance that the administrative actions of the council are subject to review. This is of particular importance upon the founder’s death, and is the basis of our proposed approach, namely that the appointment of a guardian be at the founder’s discretion during the founder’s lifetime and mandatory upon the founder’s death.
20. The role of a guardian and the supervision that it offers exists in most
foundations models, including both Jersey and Guernsey.
Annual Accounts
21. The key considerations in relation to a foundation’s annual accounts are
whether these should be mandatory, audited and whether they ought to be filed with the Registrar.
22. Currently, Restricted Scope Companies can be used by Single Family Offices
and are not required to file or audit their accounts unless requested by the Registrar.
23. We are proposing that, consistent with this regime, a foundation be
required to maintain accounts, but not be required to audit or file those accounts with the Registrar on an annual basis. Instead, the accounts are simply required to be made available on the Registrar’s request. We recognise that this may be the preferred option for those seeking confidentiality around family financial dealings. Statutory Duties ISSUES FOR CONSIDERATION Q2: DO YOU AGREE WITH THE APPROACH OF APPOINTING A GUARDIAN TO SUPERVISE THE FOUNDATION COUNCIL?

The proposed Foundations Regulations follow international best practice
and set a legislative standard for the foundation council. This standard includes, among other things, a number of statutory duties, including a duty to act in good faith, maintain books and records, perform their role with due care and skill, and provide information to the guardian, and a statutory liability for negligence. Involvement of ADGM Courts
Many jurisdictions, including Guernsey and Jersey, have explicitly given
their courts jurisdiction over foundations and broad powers. These powers include the power to intervene to compel compliance by the council, enforce the rights of the guardian, enforce beneficiaries’ rights and give directions, where requested by the council or the guardian.
We propose that ADGM Courts are given similar powers and discretions.
Beneficiaries’ Rights to Information
It is important for ADGM’s regime to strike a balance between the
beneficiaries’ right to information (in respect of their interests) and other beneficiaries’ rights to confidentiality.
We propose that ADGM’s foundation regime provide the beneficiaries the
right to some information – for example, copies of the constitution, disclosure of records and accounts and the right to make an application to the ADGM Court. These rights are similarly reflected in Guernsey foundations regime.
We propose to clearly set out the extent of beneficiaries’ rights and
differentiate between what is accessible and what is restricted.
ISSUES FOR CONSIDERATION
Q3: ARE THE PROPOSED STATUTORY DUTIES FOR FOUNDATION COUNCIL APPROPRIATE? ARE FURTHER SAFEGUARDS WARRANTED?

Local representation of foundations in ADGM
30. All ADGM foundations are required to have a physical presence (through a
registered office) in ADGM, either itself or through its registered agent.
31. Other jurisdictions that have established foundation regimes have adopted
different approaches in respect of the requirement for a registered agent. For example, Guernsey requires that ‘resident agent’ (as they are known) must be appointed where neither a councillor nor a guardian are Guernseylicensed fiduciaries; Jersey requires at least one member of the council to be licensed to conduct foundations business under the Jersey Financial Services Commission (Jersey) law; while Seychelles makes it a requirement for a registered agent to be appointed at all times.
32. We are proposing to leave it to the discretion of the founder whether to
appoint a registered agent.
Asset protection mechanisms
33. An important function of a foundation is asset protection, including
protection from bankruptcy claims, from personal claims in the event of divorce and from the effect of forced heirship rules.
34. Whilst the property of a foundation is separate from the property of the
founder, in the same way as the assets of the company are separate from those of its shareholders, many jurisdictions have laws which purport to ISSUES FOR CONSIDERATION Q4: DOES BENEFICIARY ACCESS TO CERTAIN INFORMATION RAISE ANY CONCERNS? WHAT INFORMATION SHOULD BE ACCESSIBLE OR RESTRICTED? ISSUES FOR CONSIDERATION Q5: DO YOU AGREE WITH THE APPROACH OF MAKING THE APPOINTMENT OF A REGISTERED AGENT VOLUNTARY, OR DO YOU BELIEVE THAT A REGISTERED AGENT SHOULD BE MANDATORY? BALANCING THE CLIENTS’ NEED FOR CONFIDENTIALITY AND ADGM’S NEED TO FUNFIL ITS FUNCTIONS, OBJECTIVES AND OBLIGATIONS?

retroactively set aside transactions which defeat the claims of creditors, former spouses or heirs.
35. Most common law jurisdictions have addressed this by incorporating what
is known as ‘firewall’ provisions - which are a familiar feature in common law trust jurisdictions - into their foundations laws.
36. Firewall provisions encompass the following elements:
a) that all matters relating to the legal validity of a foundation and any dispositions of property are determined exclusively under the law of its jurisdiction of incorporation (in this case ADGM); b) that foreign laws that do not recognize foundations will not affect the validity of a foundation; c) that rights asserted under foreign heirship laws or other claims derived from a personal relationship to the founder will not affect the foundation; and d) that foreign judgements purporting to give effect to heirship rights or claims arising from a personal relationship to the founder will not be recognized or enforced.
37. ADGM recognises the importance of protecting the rights of beneficiaries
and preserving the foundation’s assets, provided that this does not compromise ADGM Courts’ ability to maintain its standing internationally. We therefore propose to include firewall provisions into ADGM’s Foundations Regulations, notwithstanding the limitations to their effectiveness where the assets are located in a foreign jurisdiction. In doing so, we believe ADGM’s foundations framework is comparable to and competitive with other leading jurisdictions.

ANNEX A: PROPOSED FOUNDATIONS REGULATIONS

Annex A – Proposed Foundations Regulations

FOUNDATIONS REGULATIONS 2017

TABLE OF CONTENTS
PART 1 – FORMATION OF FOUNDATIONS

Establishing and Registering a Foundation
Foundation Charter
Powers of the Registrar
Registration
Certificate of Registration
Registered Office
Amendment of Charter or Revision of Confidential Disclosure
Objects of a Foundation
Minimum Initial Asset Value
Undertakings to Endow a Foundation
Assets of a Foundation
Management of Foundation Assets
By-laws of a Foundation
Amendment of By-laws
Names of Foundation
PART 2 – RESERVATION OF POWERS TO FOUNDER
Reserved Powers
PART 3 – FOUNDATION OFFICIALS
Registered Agent of Foundations
Foundation Council
Accounting Records
Maintaining Records
Appointment of Councillors
Persons Disqualified from Being Councillors
Notice of Appointment of Councillor
Liability for Breach of Duty
Guardian
Powers of the Guardian
Guardian Ceasing to Act
PART 4 - BENEFICIARIES
Beneficiaries of Foundations
PART 5 – FOUNDATION ASSETS AND FOREIGN LAWS
Foundation Property
Bankruptcy of a Founder or Subsequent Transferor
Restriction on Alienation of Foundation Property
PART 6 – MIGRATION, REVOCATION AND DISSOLUTION
Overseas Foundation Migrating to the Abu Dhabi Global Market
Requirements for an Overseas Foundation to Register in Abu Dhabi
Global Market
Prohibition on Registration of Overseas Foundations
Registration of an Overseas Foundation
Facility to Transfer Registration
Dissolution of Foundations
Petition to the Court for Dissolution
Striking off for Default
Consequences of Striking Off
Reinstatement on the Foundations Register
PART 7 – CITATION, ENTRY INTO FORCE AND INTERPRETATION
Citation
Entry into Force
Interpretation
SCHEDULES
Schedule 1 – Fees

FOUNDATION REGULATIONS 2017
Regulations to make provision for the establishment and registration of foundations in the Abu Dhabi Global Market. Date of Enactment […] The Board of Directors of the Abu Dhabi Global Market, in exercise of its powers under Article 6(1) of Law No. 4 of 2013 concerning the Abu Dhabi Global Market issued by His Highness the Ruler of the Emirate of Abu Dhabi, hereby enacts the following Regulations –
PART 1 – ESTABLISHMENT AND REGISTRATION OF
FOUNDATIONS
Requirements for establishment and registration

Establishing and Registering a Foundation
(1) A Foundation is established and registered under these Regulations when:
(a) the Registrar receives each of the following (together, the “Registration Application”):

i. a written Charter signed by one or more of the Founders;
ii. the registration fee specified in Schedule 1;
iii. a declaration of compliance signed by the applicant affirming that all
requirements of these Regulations relating to registration have been fulfilled;
iv. an application for any license(s) required by the Commercial Licensing
Regulations 2015; and
v. information comprising Confidential Disclosure; and
(b) the Registrar issues a certificate of registration.
(2) At any time after the Registration Application is received and before the Registrar issues a certificate of registration, the Registrar may require the applicant to provide it with such further information as it reasonably considers necessary to enable it to make its determination. (3) All license-related matters, including the determination by the Registrar whether to grant a license to the applicant and, if granted, the period of time during which such license shall be valid, shall be governed by the Commercial Licensing Regulations 2015.
2. Foundation Charter
(1) A Foundation shall have a Charter that complies with the provisions of these Regulations. For the avoidance of doubt, any provisions, duties, powers, functions and

rights set forth in a Charter are for internal governance purposes only and shall in no way replace or limit the processes, restrictions, oversight or other terms set forth in these Regulations. (2) The Charter shall contain the following information – (a) the name of the Foundation; (b) the name and address of the Founder or each of the Founders; (c) the objects of the Foundation; (d) if the Foundation has been established for a specific purpose, the purpose for which the Foundation has been established; (e) a description of the Initial Assets; (f) provisions for the establishment of a Council; (g) the name of a natural person or Legal Person who shall become a Beneficiary only in circumstances where a Foundation has no other Beneficiary (the “Designee”); (h) the name and address (in the Abu Dhabi Global Market) of the Foundation’s Registered Agent, if any; (i) the address of the Foundation’s registered office in the Abu Dhabi Global Market; and (j) the term for which the Foundation is established, if any, or the details of any contingent event which will trigger the dissolution of the Foundation.

(3) The Charter may contain the following information in addition to the details set out in subsection (2) – (a) provisions for the Foundation to be endowed with Supplementary Assets; (b) the name and address of each of the initial Councillors; (c) provisions governing the appointment and removal of a Councillor; (d) description of the manner in which decisions of the Council are to be made; (e) provisions for the designation of any initial Beneficiaries or any Beneficiaries to be designated at a later date; (f) the names and addresses of any Beneficiaries; (g) provisions for identifying any remaining Beneficiaries upon dissolution of the Foundation; (h) provisions for the addition or removal of a Beneficiary; (i) provisions for the appointment of one or more Persons to act as Guardian or Guardians respectively; (j) the duties, powers, functions and rights, including the rights to remuneration, of a Guardian; (k) provisions for the removal of a Guardian; (l) provisions for the making of By-laws;

(m)provisions for the appointment of a Person, whether by power of attorney or otherwise, to carry out particular duties on behalf of the Foundation; (n) provisions for the appointment, term of office and removal of an auditor, if any, of the Foundation; (o) provisions for amending the Charter or By-laws; (p) provisions for the circumstances, if any, in which the Foundation may be continued in or outside the Abu Dhabi Global Market and the conditions to be satisfied in respect of such continuation in or outside the Abu Dhabi Global Market; (q) provisions for the reservation of rights or powers to the Founder or Founders, as the case may be; (r) provisions for the appointment, term of office and removal of any other supervisory Person to the Foundation; and (s) provisions for any other lawful matter in respect of the Foundation. (4) The Charter shall not contain the provisions referenced in section 24(3).

The Registrar
3. Powers of the Registrar
(1) The Registrar shall administer these Regulations and perform the functions and exercise the powers set out in these Regulations or any other applicable law or regulation (including but not limited to the Companies Regulations 2015 and the Commercial Licensing Regulations 2015). (2) The Registrar has the authority to approve such forms as it considers necessary for the purpose of these Regulations and may issue such guideline or directions as are required for the proper administration of these Regulations. (3) The Registrar shall utilize the official seal referenced in Section 937 (The Registrar’s official seal) of the Companies Regulations 2015 in authenticating or issuing official documents in connection with the registration of Foundations under these Regulations. (4) The Registrar may give directions to the Foundation requiring it− (a) to produce such documents (or documents of such description) as may be specified in the directions, (b) to provide such information (or information of such description) as may be so specified, at such time and place as may be specified in the directions.

(5) The production of a document in pursuance of sub-section (4) does not affect any lien which a person has on the document. (6) The Registrar may take copies of or extracts from a document produced in pursuance of this section. (7) The power under this section to require production of a document includes power, in the case of a document not in hard copy form, to require the production of a copy of the document− (a) in hard copy form, or (b) in a form from which a hard copy can be readily obtained. (8) Any person who fails without reasonable excuse to comply with any requirement imposed in accordance with this section commits a contravention of these Regulations and shall be liable to a fine of up to level 7. (9) In this section “document” includes information recorded in any form. (10)The Registrar may disclose any material held where such disclosure is– (a) is permitted or required to be made under the laws, regulations or rules of the Abu Dhabi Global Market, (b) is made to–
i. the Financial Services Regulator;

ii. a governmental or regulatory authority exercising powers and performing
functions relating to anti-money laundering,
iii. a self-regulatory body or organization exercising and performing powers
and functions in relation to financial services,
iv. a civil or criminal law enforcement agency, or
v. a governmental or other regulatory authority including a self-regulatory
body or organisation exercising powers and performing functions in relation to the regulation of auditors, accountants or lawyers, for the purpose of assisting the performance by any such person of its regulatory functions, or (c) is made in good faith for the purposes of performance and exercise of the functions and powers of the Registrar. (11)The Registrar shall maintain a Foundations Register established under these Regulations which will contain the following information in respect of each Foundation – (a) name and registration number; (b) name and address (in the Abu Dhabi Global Market) of its Registered Agent, if any; (c) name and address of each Councillor; (d) date of establishment under these Regulations; and

(e) record of payment of annual fees.
(12)The Foundations Register shall be in such form as the Registrar may determine, but shall be separate and apart from the register established and maintained pursuant to Companies Regulations 2015. (13)For the avoidance of doubt, Section 939 (Public notice of issue of certificate of incorporation) and Section 952 (Documents subject to enhanced disclosure requirements) of Companies Regulations 2015 do not apply in respect of Foundations. Registration and its effect
4. Registration
(1) In order to register a Foundation pursuant to these Regulations, the Registrar must receive a Charter, the registration fee specified in Schedule 1 and a signed declaration of compliance that all requirements of these Regulations relating to registration have been fulfilled . (2) Before registering a Foundation the Registrar shall satisfy itself that the Charter is in compliance with these Regulations. A Foundation may not be so formed for an unlawful purpose. (3) If the Registrar is satisfied that the requirements of these Regulations as to registration are complied with, the Registrar may accept the documents delivered to it, allocate a

registered number to the Foundation and include the Foundation in the Foundations Register. (4) If the Registrar is not satisfied that a Charter complies with subsection (2) it shall inform the applicant of its decision, together with its reasons, within one month of submission of the Charter. (5) With effect from the date of registration stated in the certificate of registration, the Foundation shall be a legal entity having separate legal personality and may sue and be sued. (6) On each anniversary of registration the Registrar must be paid the annual fee set out in
Schedule 1.
5. Certificate of Registration
(1) On the registration of a Foundation, the Registrar shall give a certificate that the Foundation is duly registered. (2) The certificate must state – (a) the name and registered number of the Foundation; (b) the date of its registration; (c) the address of its registered office in the Abu Dhabi Global Market; and, if different,

(d) the name and address (in the Abu Dhabi Global Market) of its Registered Agent, if any. (3) Sections 12(3) and 12(4) of the Companies Regulations 2015 shall apply mutatis mutandis to certificates of registration for Foundations. (4) Upon registration, the Registrar shall allocate a registration number to the Foundation. Registered Office
6. Registered office
(1) A Foundation must at all times have a registered office in the Abu Dhabi Global Market to which all communications and notices may be addressed and which may be the same address as that of its Registered Agent. (2) A Foundation may change the address of its registered office by giving notice to the Registrar. The change takes effect upon the notice being registered by the Registrar, but until the end of the period of 14 days beginning with the date on which it is registered a Person may validly serve any document on the Foundation at the address previously registered.

Facility to Amend Charter and Confidential Disclosure
7. Amendment of Charter or Revision of Confidential Disclosure
(1) The Charter may make provision permitting its amendment.
(2) Where no provision is made for the amendment of the Charter, the Charter may still be amended in writing by the Founder during the Founder’s lifetime/existence or in the case of multiple Founders, by the Founders jointly during their joint lifetimes/existences or by the surviving Founder or Founders jointly. (3) In the event that there is no surviving Founder at the time of a proposed amendment under subsection (2) the Council may approve the proposed amendment by a Resolution of Councillors if the amendment is in their opinion necessary for the furtherance of the objects of the Foundation. (4) A Resolution of Councillors approving an amendment to the Charter must be confirmed by the Court under subsection (5). (5) An application must be made by the Foundation Council to the Court requesting the confirmation of the amendment to the Charter. The Court may confirm, reject or modify the amendment or make such other order as it thinks fit for carrying into effect an amendment. (6) Amendment to the Charter shall be executed by or on behalf of each Founder or in the case of an amendment under subsection (3) by each Councillor.

(7) Any changes to the information contained in a Foundation’s Confidential Disclosure shall be in accordance with these Regulations. (8) Where a Foundation amends its Charter or changes the information contained in its Confidential Disclosure, it must send to the Registrar a copy of the updated document not later than 14 days after the amendment takes effect or the information changes, as applicable. If a Foundation fails to comply with this subsection a contravention of these Regulations is committed by the Foundation and every Councillor of the Foundation who is in default. A Person who commits the contravention referred to in this subsection is liable for a level 2 fine. Objects
8. Objects of a Foundation
(1) A Foundation may have any objects, provided that they do not contravene this section 8. (2) The objects of a Foundation shall include the management of its Assets and income and the distribution of such Assets and income by the Foundation Council in accordance with its Charter, but shall not include a charitable purpose. (3) The objects of a Foundation shall not include the carrying on of any activity which is unlawful, contrary to any public policy of the Abu Dhabi Global Market or the United Arab Emirates or prohibited under Article 17 of the ADGM Founding Law.

Assets
9. Minimum Initial Asset Value
In order to be registered by the Registrar the Charter must require the Foundation to have Initial Assets with a value of 100 US dollars or its equivalent in any other currency.
10. Undertakings to Endow a Foundation
Where a Charter or other legal documents record an undertaking by a Founder or any other Person to endow Assets to a Foundation, the Foundation may enforce that undertaking against the Founder or such other Person.
11. Assets of a Foundation
The Assets of a Foundation may comprise any property.
12. Management of Foundation Assets
The Assets of a Foundation must be managed in accordance with the Charter, By-laws and the provisions of these Regulations and solely for the attainment of the objects specified in the Charter and authorized by these Regulations.

By-laws
13. By-laws of a Foundation
(1) A Foundation shall have By-laws that comply with the provisions of these Regulations. For the avoidance of doubt, any provisions, duties, powers, functions and rights set forth in By-laws are for internal governance purposes only and shall in no way replace or limit the processes, restrictions, oversight or other terms set forth in these Regulations. (2) If the following matters are not included in the Charter, they must be set out in the Bylaws - (a) the functions of the Council (including the nature of any powers to delegate its responsibilities); and (b) the procedures for the appointment, registration and removal of Councillors and any Guardian and details of any remuneration payable to the Councillors and any Guardian. (3) The By-laws may - (a) detail the circumstances in which Assets of a Foundation may be distributed, accumulated or applied; (b) describe whether, and if so how, Supplementary Assets may be endowed upon the Foundation;

(c) provide the names and addresses of each of the initial Councillors and the Beneficiaries; (d) provide for additions or removals of Beneficiaries, either revocably or irrevocably; (e) make the interests of Beneficiaries conditional, liable to termination or subject to a restriction; and (f) provide for any other matter in respect of the Foundation in addition to the matters required to be set out in the By-laws or in these Regulations. (4) The By-laws shall not contain the provisions referenced in section 24(3). (5) The By-laws shall be in writing and signed and executed by each Founder or each Councillor if there is no surviving Founder. (6) To the extent of any conflict between the Charter and the By-laws, the Charter shall control.
14. Amendment of By-laws
Subject to the provisions of the Charter or By-laws, the Council may amend or replace the By-laws by a unanimous resolution of the Councillors.
15. Names of Foundations
(1) The name of a Foundation shall end with the word “Foundation”.

(2) The name of a Foundation shall comply with the Business and Company Names Rules 2016, as modified from time to time.
PART 2 – RESERVATION OF POWERS TO FOUNDER
Reserved Powers
16. Reserved Powers
(1) The Charter or By-laws may reserve, for the Founder or any other Person, the following powers:
(a) the power to amend, revoke or vary the terms of the Charter or By-laws; (b) the power to change the objects of the Foundation and to dissolve the Foundation; (c) the power to direct or approve the investment activities of the Foundation; (d) the power to appoint and remove any Councillor; (e) the power to appoint or remove any Guardian; (f) the power to add or exclude any Beneficiary; (g) the power to amend the rights, entitlements or restrictions of a Beneficiary; (h) the power to effect the continuation of an Overseas Foundation,

provided that any disposition of any Assets of a Foundation must be made through a Resolution of Councillors which shall give effect to the exercise of reserved powers as provided in the Charter or By-laws.
PART 3 – FOUNDATION OFFICIALS
Registered Agent
17. Registered Agent of Foundations
(1) A Foundation may have a Registered Agent.
(2) Prior to the registration of a Foundation, the Founder or Founders may appoint a Registered Agent by including the name and address (in the Abu Dhabi Global Market) of such Person in the Charter forming part of the Foundation’s Registration Application. (3) The Councillors may effect an appointment or change of Registered Agent by - (a) passing a Resolution of Councillors; (b) giving the relevant contractual notice; and (c) within 14 days after the change, providing the Registrar with notice of the change and with the name and address (in the Abu Dhabi Global Market) of the new Registered Agent.

(4) If default is made in complying with subsection (3), a contravention of these Regulations is committed by - (a) the Foundation; and (b) every Councillor who is in default. (5) A Registered Agent may resign by giving notice in accordance with the relevant contractual obligations or, in the absence of any express contractual notice provision, by - (a) giving a minimum of 30 business days’ notice of its intention to resign; and (b) filing a copy of such notice with the Registrar within 14 days of its delivery. (6) If default is made in complying with subsection (5), a contravention of these Regulations is committed by the Registered Agent. (7) A Person who commits the contravention referred to in subsection (4) or subsection (6) is liable to a level 1 fine. Foundation Council
18. Foundation Council
(1) A Foundation is required to have a Council which consists of at least two Councillors. (2) The Founder or a Legal Body may be appointed as Councillor.

(3) The duties of a Council are –
(a) to carry out the objects of the Foundation; (b) to manage and administer the Assets of the Foundation; and (c) to do any other acts which may be required by the Charter, By-laws or under these Regulations. (4) The duties of the Councillors are – (a) to act in accordance with the Foundation’s Charter; (b) to only exercise powers for the purposes for which they are conferred; (c) to act honestly and in good faith with a view to the best interests of the Foundation; (d) to exercise independent judgment. This duty is not infringed by a Councillor acting in accordance with an agreement duly entered into by the Foundation that restricts the future exercise of discretion by its Councillors, or in a way authorised by the Foundation’s Charter; (e) to exercise reasonable care, skill and diligence. This means the care, skill and diligence that would be exercised by a reasonably diligent Person with the general knowledge, skill and experience that may reasonably be expected of a Person carrying out the functions carried out by the Councillor in relation to the Foundation, and the general knowledge, skill and experience that the Councillor has;

(f) to not act on behalf of a Foundation, or exercise any of his powers as a Councillor, in relation to any matter in which he has, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with the interests of the Foundation;
i. This applies in particular to the exploitation of any property, information or
opportunity (and it is immaterial whether the Foundation could take advantage of the property, information or opportunity).
ii. This duty does not apply to a conflict of interest arising in relation to a
transaction or arrangement with the Foundation.
iii. This duty is not infringed if the situation cannot reasonably be regarded as
likely to give rise to a conflict of interest, or if the matter has been authorised by the Councillors who do not have a direct or indirect interest that conflicts with the interests of the Foundation in such matter (“Nonconflicted Councillors”).
iv. Where nothing in the Foundation’s Charter invalidates such authorisation,
authorisation may be given by the matter being proposed to and authorised by the Non-conflicted Councillors. Where the Foundation’s Charter includes a provision enabling the Non-conflicted Councillors to authorise the matter, authorisation may be given by the matter being proposed to and authorised by the Non-conflicted Councillors in accordance with the Charter.

v. Any reference in this subsection (f) to a conflict of interest includes a
conflict of interest and duty and a conflict of duties; (g) to not accept a benefit from a third party conferred by reason of his being a Councillor, or his doing (or not doing) anything as Councillor;
i. A “third party” means a Person other than the Foundation or a Person acting
on behalf of the Foundation.
ii. Benefits received by a Councillor from a Person by whom his services (as a
Councillor or otherwise) are provided to the Foundation are not regarded as conferred by a third party.
iii. This duty is not infringed if the acceptance of the benefit cannot reasonably
be regarded as likely to give rise to a conflict of interest.
iv. Any reference in this subsection (g) to a conflict of interest includes a
conflict of interest and duty and a conflict of duties; (h) to declare to the other Councillors the nature and extent of any direct or indirect interest in a proposed transaction or arrangement with the Foundation;
i. The declaration may (but need not) be made at a meeting of the
Councillors.
ii. If a declaration of interest under this subsection (h) proves to be, or
becomes, inaccurate or incomplete, a further declaration must be made.

iii. Any declaration required by this subsection (h) must be made before the
Foundation enters into the transaction or arrangement.
iv. This subsection (h) does not require a declaration of an interest of which the
Councillor is not aware or where the Councillor is not aware of the transaction or arrangement in question. For this purpose a Councillor is treated as being aware of matters of which he ought reasonably to be aware.
v. A Councillor need not declare an interest if it cannot reasonably be regarded
as likely to give rise to a conflict of interest; if, or to the extent that, the other Councillors are already aware of it (and for this purpose the other Councillors are treated as aware of anything of which they ought reasonably to be aware); or if, or to the extent that, it concerns terms of his service contract that have been or are to be considered by a meeting of the Councillors, or by a committee of the Councillors appointed for the purpose under the Foundation’s Charter; and (i) to ensure compliance with section 19.
19. Accounting Records
(1) Every Foundation must keep adequate Accounting Records.
(2) If a Foundation fails to comply with subsection (1), a contravention of these Regulations is committed by every Councillor of the Foundation who is in default.

(3) A Person does not commit the contravention referred to in subsection (2) if he shows that he acted honestly and that in the circumstances in which the Foundation’s activities were carried on the default was excusable. (4) A Person who commits the contravention referred to in subsection (2) shall be liable to a fine of up to level 5. (5) A Foundation’s Accounting Records– (a) must be kept at its registered office or such other place as the Councillors think fit, and (b) must at all times be open to inspection by the Foundation’s Councillors and any Guardian. (6) If Accounting Records are kept at a place outside the Abu Dhabi Global Market, accounts and returns with respect to the activities dealt with in the Accounting Records so kept must be sent to, and kept at, a place in the Abu Dhabi Global Market, and must at all times be open to such inspection. (7) If a Foundation fails to comply with any provision of subsections (5) or (6), a contravention of these Regulations is committed by every Councillor of the Foundation who is in default. (8) A Person does not commit the contravention referred to in subsection (7) if he shows that he acted honestly and that in the circumstances in which the Foundation’s activities were carried on the default was excusable.

(9) Subject to subsection (8), a Person who commits the contraventions referred to in subsection (7) shall be liable to a level 2 fine.
20. Maintaining Records
(1) Accounting Records that a Foundation is required by subsection 19(1) to keep must be preserved by it for ten years from the date on which they are made. (2) Subsection (1) is subject to any provision contained in other regulation or law applicable in the Abu Dhabi Global Market. (3) If a Foundation fails to comply with subsection (1), a contravention of these Regulations is committed by every Councillor of the Foundation who is in default. (4) A Person does not commit the contravention referred to in subsection (3) if he shows that he acted honestly and that in the circumstances in which the Foundation’s activities were carried on the default was excusable. (5) A Councillor of a Foundation commits a contravention of these Regulations if he– (a) fails to take all reasonable steps for securing compliance by the Foundation with subsection (1), or (b) intentionally causes any default by the Foundation under that subsection. (6) Subject to subsection (4), a Person who commits the contraventions referred to in subsection (3) shall be liable to a level 2 fine.

(7) A Person who commits the contraventions referred to in subsection (5) shall be liable to a fine of up to level 5. (8) Not later than 14 days after the Registrar sends a written request to the Foundation’s registered office, the Foundation must deliver to the Registrar a copy of all requested Accounting Records and/or accounts and returns. (9) Upon the written request of the Registrar delivered to the Foundation’s registered office, the Foundation must obtain an audit of such Accounting Records and/or accounts and returns as the Registrar may request. The results of such audit shall be delivered to the Registrar within such time period as the Registrar may specify. (10) If the requirements of subsections (8) or (9) are not complied with, the Foundation and every Councillor commits a contravention of these Regulations. (11) A person does not commit the contravention referred to in subsection (10) if he proves that he took all reasonable steps for securing that those requirements would be complied with, and for this purpose, it is not enough to prove that the documents in question were not in fact prepared as required by this section. (12) A person who commits the contravention referred to in subsection (10) shall be liable to a fine of up to level 5. (13) The Accounting Records and accounts and returns of a Foundation will not be subject to public disclosure by the Registrar.
21. Appointment of Councillors

(1) Prior to registration of a Foundation, a Councillor shall be appointed by the Founder or Founders. Following registration, a Councillor shall be appointed in accordance with the relevant provisions of the Charter or By-laws. (2) In circumstances where the number of Councillors falls below the number required in subsection 18(1) or required in the Charter or By-laws, the necessary additional Councillors shall be appointed as soon as practicable as provided for in the Charter or By-laws, or, in the absence of any express provisions in the Charter or By-laws, in accordance with subsection (3) below. (3) Where the Charter or By-laws of a Foundation contain no provision for the appointment of a new or additional Councillor, or such provision has lapsed or failed, or the Person or Persons required to exercise such power fail to do so for whatever reason, the Founder, a Guardian or a Beneficiary may make an application to the Court for the appointment of one or more Councillors in order that the Foundation complies with the requirements of the Charter or By-laws or these Regulations. (4) The appointment of a Person as a Councillor is personal to that Person and may not be assigned or delegated, except that a Councillor that is a Legal Person may act through its authorized officers or agents. (5) Every Person appointed, or is to be appointed, as a Councillor shall be a fit and proper Person to hold that position. (a) In determining whether a Person is a fit and proper Person to be appointed as a Councillor, regard shall be had to –

i. his probity, competence, solvency and soundness of judgement for fulfilling
the responsibilities of that position;
ii. the diligence with which he is fulfilling or likely to fulfil those
responsibilities;
iii. whether the interests of the Founder or any Beneficiaries are, or are likely to
be, in any way threatened by his holding that position;
iv. the rules, standards and guidelines of any relevant professional, governing,
regulatory or supervisory authority; and
v. his record of compliance with these Regulations in acting as a Councillor.
(b) Without prejudice to the generality of the foregoing subsections, regard may be had to the previous conduct and activities in business or financial matters of the Person in question. Disqualification
22. Persons Disqualified from Being Councillors
(1) No Person shall be appointed or be permitted to remain as a Councillor – (a) in the case of a natural person, if the Person is a Minor or mentally incapacitated or has an undischarged bankruptcy; (b) in the case of a Legal Person, if the Person is dissolved.

Notice of Appointment of Councillor
(1) A Foundation must give written notice of the appointment of a Councillor, including the full name and address of the Councillor, to its Registered Agent, if any, and the Registrar within 14 days of such appointment. (2) A Foundation that contravenes subsection (1) is liable for a level 1 fine. Councillors
Liability for Breach of Duty
(1) Subject to the provisions of these Regulations and the provision of the Charter and Bylaws, a Councillor who commits a breach of duty is liable for any loss in value of the Foundation Assets resulting from the breach. (2) A Councillor is not liable for breach of duty committed by another Councillor unless – (a) he becomes or ought to have become aware of the breach or of the intention to commit a breach; and (b) he actively conceals the breach or intention, or fails within a reasonable time to take proper steps to protect or restore the Foundation Assets or to prevent the breach.

(3) The provisions of the Charter or By-laws of a Foundation may not – (a) relieve a Councillor of liability for a breach of duty arising from his own fraud, wilful misconduct or gross negligence; or (b) grant him any indemnity against the Foundation Assets in respect of any such liability. Guardian
25. Guardian
(1) The Charter or By-laws of a Foundation may provide for the appointment of a Guardian. (2) A Guardian may be a Founder or Beneficiary, but neither a Councillor nor a sole Beneficiary may be appointed as a Guardian. (3) A Guardian may be appointed by the Founder or any other Person empowered to do so in the Charter or By-laws or otherwise in writing. (4) Where the Charter or By-laws provide for the appointment of a Guardian and no such appointment is made, a Founder or Councillor may make application to the Court for the appointment of a Person to be the Guardian and in circumstances where the Court determined the application is justified it may duly appoint a consenting Person to act as a Guardian.

(5) The appointment of a Person to act as a Guardian is personal to that Person and may not be assigned or delegated except that a Guardian that is a Legal Person may act through its authorized officers or agents. (6) Every Person appointed, or is to be appointed, as a Guardian shall be a fit and proper Person to hold that position. (a) In determining whether a Person is a fit and proper Person to be appointed as a Guardian, regard shall be had to –
i. his probity, competence, solvency and soundness of judgement for fulfilling
the responsibilities of that position;
ii. the diligence with which he is fulfilling or likely to fulfil those
responsibilities;
iii. whether the interests of the Founder or any Beneficiaries are, or are likely to
be, in any way threatened by his holding that position;
iv. the rules, standards and guidelines of any relevant professional, governing,
regulatory or supervisory authority; and
v. his record of compliance with these Regulations in acting as a Guardian.
(b) Without prejudice to the generality of the foregoing subsections, regard may be had to the previous conduct and activities in business or financial matters of the Person in question.

(7) In the event that there is no surviving Founder, a Guardian shall be appointed by any Person empowered to do so in the Charter or By-laws or otherwise in writing, and if there is no such Person, a Councillor shall make application to the Court for the appointment of a Person to be the Guardian and the Court shall duly appoint a consenting Person to act as a Guardian. Guardian Powers
26. Powers of the Guardian
(1) The powers of a Guardian may be set out in the Charter or By-laws of a Foundation and may be greater or more limited than those set out in these Regulations. (2) Subject to the terms of the Charter or By-laws a Guardian shall – (a) be responsible for ensuring compliance by the Foundation and its counsel with the Charter, By-laws and the provisions of these Regulations; and (b) supervise the activities of the Council in managing the Foundation. (3) The Guardian shall have access to all information necessary for the exercise of its powers, in particular to the Accounting Records, accounts and returns of the Foundation. (4) The Guardian should be given due notice of meetings of the Foundation Council in order that he may table business, attend and participate in such meetings (although he

will not have any entitlement to vote) and receive all papers circulated to Councillors including any copies of written resolutions of Councillors. (5) Circumstances in which a Guardian Ceases to Act
27. Guardian Ceasing to Act
(1) A Guardian shall cease to act as the Guardian in the event of – (a) the Guardian’s resignation; (b) the proper removal of the Guardian in accordance with the Charter, By-laws or the provisions of these Regulations; (c) the dissolution of the Foundation; or (d) the death, incapacity or bankruptcy of the Guardian where the Guardian is a natural person and, in the case of a Legal Person, the dissolution of such Person. (2) Removal of a Guardian must be notified to the Registrar in accordance with section 7(8). (3) A Foundation that contravenes subsection (2) is liable for a level 1 fine. (4) Subject to the Charter or By-laws, a Founder or Councillor may apply to the Court to seek the removal of a Guardian for failure to properly carry out the duties required of a Guardian in the Charter, By-laws or the provisions of these Regulations and the Court

may, if it deems fit, order the removal of the Guardian and the appointment of a fit and proper Person to act as Guardian. (5) In the absence of bad faith, a Guardian shall not be liable in damages for anything done or omitted to be done in the discharge of the duties of a Guardian under the Charter, By-laws or the provisions of these Regulations.
PART 4 – BENEFICIARIES
Beneficiaries
28. Beneficiaries of Foundations
(1) A Beneficiary is a natural person or Legal Person who may benefit from a Foundation who is – (a) identified in the Charter or By-laws by name; or (b) whose identity is ascertainable by reference to a class or a relationship to another Person, whether or not living, at the time that the Foundation is established or at the time, according to the terms of the Charter or By-laws, members of a class are to be determined. (2) A Founder may be a Beneficiary, but may be the sole Beneficiary only during his lifetime.

(3) The By-laws may provide for the addition or removal of a Person as a Beneficiary or the exclusion of a Beneficiary from benefit, either revocably or irrevocably. (4) The By-laws may impose an obligation on a Beneficiary as a condition of benefit. (5) The By-laws may provide that some or all of the Beneficiaries are entitled to information about the Foundation, including copies of the Charter and By-laws, Accounting Records, accounts and returns of the Foundation upon written request to the Council or the Registered Agent, if any. (6) The By-laws may further provide some or all of the Beneficiaries with the right to petition the Court to prohibit a change to the purpose of the Foundation or its dissolution.
PART 5 – FOUNDATION ASSETS AND FOREIGN LAWS
Foundation Property
29. Foundation Property
(1) Subject to sections 29 and 30, Assets transferred to a Foundation or otherwise vested in it shall be the Assets of the Foundation with full legal and beneficial title and such Assets are no longer the property of the Founder or Subsequent Transferor and are not the Assets of any Beneficiary until such time as the Assets are distributed to such Beneficiary in accordance with the Charter or By-laws or these Regulations.

(2) A transfer or other disposition of property to a Foundation registered under these Regulations shall not be void, voidable or liable to be set aside by reference to a foreign role of forced heirship or any other law of a foreign jurisdiction. (3) In this section, “foreign role of forced heirship” means any rule of any jurisdiction other than the Abu Dhabi Global Market which, in order to protect the rights of any Person or class of Persons to inherit, succeed or share in the property of a Founder, Subsequent Transferor or Beneficiary in the event of their death, purports to remove or restrict the Founder, Subsequent Transferor or Beneficiary’s right to transfer, dispose of, encumber or otherwise deal in property belonging to such Founder, Subsequent Transferor or Beneficiary during their lifetime and includes any judicial or administrative order or directive of a jurisdiction other than the Abu Dhabi Global Market seeking to implement or enforce such a role. (4) A transfer of property to or the vesting of property in a Foundation, or the making of a distribution to a Beneficiary of a Foundation in accordance with the Charter, By-laws or the provisions of these Regulations, shall not be set aside or rendered void or voidable as a result of - (a) a foreign statute that prohibits or does not recognize the concept of a Foundation; or (b) a transfer of property to a Foundation or any term of its Charter or By-laws avoids or defeats rights, claims or any interest in property conferred by a foreign statute on any Person by reason of any personal relationship to the Founder or Subsequent Transferor or by way of heirship rights; or

(c) the transfer of property to the Foundation or any term of its Charter or By-laws contravenes any foreign statute, foreign rule of heirship or foreign judicial or administrative order or action intended to recognise, protect, enforce or give effect to any such rights, claims or interest. (5) A judgement of a foreign court shall not be recognised or enforced insofar as it is inconsistent with subsections (3) and (4).
30. Bankruptcy of a Founder or Subsequent Transferor
(1) Subject to subsection (2), a Foundation or a transfer of property to a Foundation shall not be void, voidable or liable to be set aside by reason of a Founder or Subsequent Transferor’s bankruptcy, the liquidation of a Founder or Subsequent Transferor’s property or any action or claims made against a Founder or Subsequent Transferor by any creditor, notwithstanding any foreign statute providing otherwise. (2) Notwithstanding subsection (1), where the Court determines that, at the time when the property was transferred to the Foundation, the Founder or Subsequent Transferor, as applicable, was insolvent or intended to defraud any creditor of the Founder or Subsequent Transferor, as applicable, it may declare that the transfer of property was void to the extent of the creditor’s claim. (3) In making claims to set aside transfers of property to a Foundation under subsection (2), the burden of proof shall rest with the creditor.

Alienation of Property
31. Restriction on Alienation of Foundation Property
(1) No Beneficiary or object of a Foundation shall have any rights in specie against the Assets of the Foundation, notwithstanding any foreign statute or law to the contrary, and, subject to the terms of the Charter or By-laws, any Assets of the Foundation available for distribution to a Beneficiary shall not be – (a) capable of being alienated in the bankruptcy, insolvency or liquidation of a Beneficiary; or (b) liable to be seized, sold, attached or otherwise taken in execution by process of law.
PART 6 – MIGRATION, REVOCATION AND DISSOLUTION
Registration of Overseas Foundation as an Abu Dhabi Global Market Foundation
32. Overseas Foundation Migrating to the Abu Dhabi Global Market
(1) If its charter or by-laws so permit, a Foundation having legal personality and property established under the laws of a jurisdiction other than the Abu Dhabi Global Market (an “Overseas Foundation”) may apply to the Registrar to be registered as an Abu

Dhabi Global Market Foundation in accordance with the provision of these Regulations. (2) Upon registration in the Abu Dhabi Global Market the Overseas Foundation must cease to be registered in the jurisdiction in which it was established or where it is currently registered, if different.
33. Requirements for an Overseas Foundation to Register in Abu Dhabi Global
Market
(1) In order to register as a Foundation in Abu Dhabi Global Market the Overseas Foundation must be able to migrate under the law of the place in which it is currently established and must comply with the requirements of that law in relation to its registration in Abu Dhabi Global Market.
34. Prohibition on Registration of Overseas Foundations
(1) No Overseas Foundation may be registered as an Abu Dhabi Global Market Foundation if – (a) the Foundation is bankrupt or in the process of being dissolved, or a liquidator, receiver or administrator has been appointed in respect of any of its property; or (b) any application has been made to any court to commence insolvency proceedings, to approve any arrangement with creditors or for the appointment of any liquidator, receiver or administrator.

Registration of an Overseas Foundation
(1) An application for registration as an Abu Dhabi Global Market Foundation shall be made to the Registrar. (2) The applicant shall provide the Registrar with the following documents:
(a) A copy of the Foundation’s certificate of establishment (if any) in its current place of establishment; (b) a copy of the Foundation’s existing Charter and, if different, a copy of the amended Charter which will apply immediately upon its registration in the Abu Dhabi Global Market and which must comply with section 2 of these Regulations; (c) the names and addresses of the Foundation Councillors and Guardian (if any); (d) the name of the Foundation, which must comply with section 15 of these Regulations; (e) the address of the Foundation’s registered office in the Abu Dhabi Global Market; (f) the name and address (in the Abu Dhabi Global Market) of the Registered Agent of the Foundation, if any; (g) all other information and documents included in the Registration Application;

(h) evidence that migration is permitted under the law in which the Foundation is established and that the Foundation is in compliance with section 34 of these Regulations; (i) confirmation that, on the date of registration, the Foundation will cease to be established and registered under the law of any place other than the Abu Dhabi Global Market; (j) a statement of solvency; (k) evidence that the Foundation has legal personality in the place in which it was established or registered; (l) a declaration of compliance signed by the applicant that all requirements of these Regulations relating to registration have been fulfilled; (m)such other information as the Registrar would require on an application to transfer registration under these Regulations; and (n) such other documents and information as the Registrar may require in respect of a particular application under this section. (3) On receipt of the documents and information set out in subsection (2) and the relevant fee the Registrar shall register the Foundation by inscribing its name in the Foundations Register and issuing a certificate of registration.

Transfer of Registration
36. Facility to Transfer Registration
(1) If the Charter or By-laws of a Foundation so permit, a Foundation representative may submit to the Registrar an application on behalf of a Foundation to remove the Foundation from the Foundations Register in order to become established as a foundation with legal personality under the law of a jurisdiction outside the Abu Dhabi Global Market. (2) A Foundation cannot be removed from the Foundations Register if - (a) it is bankrupt or in the process of being dissolved, or a liquidator, receiver or administrator has been appointed in respect of any of its Assets; or (b) an application has been made to any court to commence insolvency proceedings, to approve any arrangement with creditors or for the appointment of any liquidator, receiver or administrator. (3) A Foundation must give written notice to its creditors of its intention to be removed from the Foundations Register at least 31 days before making an application to the Registrar for removal. (a) The notice–

i. shall state that the Foundation intends to make the application to the
Registrar, and shall specify the jurisdiction in which it proposes to become established as a foundation with legal personality;
ii. shall be sent in writing to each creditor of the Foundation;
iii. shall be published once in a national newspaper or in such other manner as
the Court may on application direct; and
iv. shall state that any creditor of the Foundation who objects to the application
may within 30 days of the date of the advertisement give notice of his or her objection to the Foundation. (b) A creditor who gives notice in accordance with subsection 35(3)(a)(iv) and whose claim against the Foundation has not been discharged may, within 30 days after the date of the notice, apply to the Court for an order restraining the application by the Foundation under this section 36. (c) On the creditor’s application the Court, if satisfied that the interests of the creditor would be unfairly prejudiced by the proposed transfer, may make an order (subject to such terms, if any, as it may think fit) restraining the application by the Foundation under this section 36. (4) An application to the Registrar must be accompanied by - (a) evidence that the removal from the Foundations Register is not prohibited by the provisions of subsection (2) and that subsection (3) has been complied with;

(b) evidence that on the date of removal from the Foundations Register the Foundation will be established under the law of the place to which it intends to migrate; (c) confirmation that the Foundation will continue to have legal personality in accordance with the law of the place to which it intends to migrate; and (d) a declaration of compliance signed by the registration agent certifying that all the requirements of these Regulations relation to removal from the Foundations Register have been fulfilled. (5) On receipt of the documents and information set out in subsection (4), the Registrar shall remove the name of the Foundation from the Foundations Register, giving such notice as it thinks fit and the Foundation shall cease to be an Abu Dhabi Global Market Foundation and the Registrar shall publish the fact of the removal of the Foundation from the Foundations Register in such manner as it thinks fit. Dissolution
37. Dissolution of Foundations
(1) A Foundation shall be dissolved and removed from the Foundations Register in the following circumstances – (a) it is established for a fixed term and such term expires;

(b) its object is fulfilled or becomes incapable of fulfilment; (c) the Charter or By-laws require dissolution; (d) it is unable to pay its debts as they fall due; (e) any provision of these Regulations requires that it be dissolved; or (f) the Court orders dissolution. (2) Where a Foundation is dissolved under subsection (1) a liquidator must be appointed by Resolution of Councillors. (3) A liquidator appointed under subsection (2) shall – (a) identify the Assets and liabilities of the Foundation; (b) discharge all liabilities of the Foundation; (c) prepare a statement of account in respect of all actions of the liquidation; and (d) distribute the Surplus Assets, if any, to any Remaining Beneficiary in accordance with the Charter or By-laws (and in the absence of any such express provision, equally between the remaining Beneficiaries if more than one) or in the case of a Foundation established to carry on a specified purpose, the Surplus Assets shall be applied to the furtherance of that purpose, and in a case where the Beneficiaries disclaim their entitlement or there is no specified purpose in the Charter or By-laws, the Surplus Assets shall vest in the Abu Dhabi Global Market.

(4) During the period of appointment a liquidator may exercise all the powers of a Foundation under these Regulations or in the Charter and may act in the name of the Foundation in the discharge of its duties under subsection (3). (5) On completion of the dissolution of the Foundation, the liquidator shall provide written confirmation to the Foundation’s registered office that the dissolution is complete and the Foundation shall file a certified copy of the confirmation with the Registrar together with the stipulated fee. (6) Upon receipt of the written confirmation referred to in subsection (5) and subject to all the requirements of these Regulations in respect of dissolution being satisfied, the Registrar will strike the Foundation off the Foundations Register and issue a certificate that the Foundation has been dissolved, such dissolution having effect from the date that the Foundation is struck from the Foundations Register.
38. Petition to the Court for Dissolution
(1) A Foundation, a Councillor, a Founder, a Guardian, Remaining Beneficiary or creditor may apply to the Court for an order for the dissolution of a Foundation. (2) The Court may make an order for dissolution if it believes it is just and equitable to do so. (3) If the Court makes an order for the dissolution of a Foundation it shall appoint a liquidator and the provisions of section 37 subsections (3)-(5) shall apply to the appointment of the liquidator as if it had been appointed pursuant to a dissolution under section 37.

Striking off
39. Striking off for Default
(1) If the Registrar has reasonable cause to believe that any Foundation registered under these Regulations is in breach of or no longer satisfies the requirements prescribed under these Regulations, or engages in activities which are or may be contrary to the rules and regulations of the Abu Dhabi Global Market or may have a negative effect on its reputation as a financial centre, the Registrar may send to the Foundation a communication inquiring as to the area of concern. (2) If the Registrar does not within one month of sending the communication receive any answer to it, the Registrar must within 14 days after the expiration of that month send to the Foundation a second communication referring to the first communication and stating– (a) that no answer to it has been received; and (b) that if an answer is not received to the second communication within one month from its date, a notice will be published on the Registrar’s website with a view to striking the Foundation’s name off the Foundations Register. (3) If, within one month after sending the second communication, the Registrar– (a) receives an answer to the effect that the Foundation is in breach of or no longer satisfies the requirements prescribed under these Regulations, or engages in

activities which are or may be contrary to the rules and regulations of the Abu Dhabi Global Market or may have a negative effect on its reputation as a financial centre; or (b) does not receive any answer. the Registrar may publish on the Registrar’s website and send to the Foundation, a notice that at the expiration of three months from the date of the notice the name of the Foundation mentioned in it will, unless cause is shown to the contrary, be struck off the Foundations Register and the Foundation will be dissolved. (4) At the expiration of the time mentioned in the notice the Registrar may, unless cause to the contrary is previously shown by the Foundation, strike its name off the Foundations Register. (5) The Registrar must publish notice on the Registrar’s website of the Foundation’s name having been struck off the Foundations Register. (6) On the publication of the notice on the Registrar’s website the Foundation is dissolved. (7) However – (a) the liability (if any) of every Founder, Councillor and Guardian of the Foundation continues and may be enforced as if the Foundation had not been dissolved; and (b) nothing in this section affects the power of the Court.

(8) A Foundation may also be struck off of the Foundations Register if its annual fees or any penalty amounts are not paid within 180 days of the date on which they fell due. Effect of Dissolution
40. Consequences of Striking Off
(1) In the event that the Foundation is struck off the Foundations Register – (a) the Foundation remains liable for all of its liabilities and the liabilities of the Councillors is unaffected; (b) the Foundation, the Council and the Guardian must cease to continue to act in any way with respect to the affairs of the Foundation. Restoration of Name
41. Reinstatement on the Foundations Register
(1) When a Foundation has been struck off the Foundations Register under section 39(3) of these Regulations, the Foundation or its liquidator may apply to have the name of the Foundation reinstated on the Foundations Register, provided such application is made prior to the sixth anniversary of the removal from the Foundations Register.

(2) Upon payment of all outstanding annual fees and penalties to the Registrar, the Registrar may reinstate the Foundation on the Foundations Register. (3) Where the Foundation is reinstated on the Foundations Register under subsection (2), the Foundation is deemed to have continued in existence as if it had not been dissolved or struck off the Foundations Register.
PART 7 – CITATION, ENTRY INTO FORCE AND INTERPRETATION
Citation, commencement and interpretation
42. These Regulations may be cited as the Foundation Regulations 2017.
43. These Regulations shall come into force on the date of their publication.
44. In these Regulations –
(1) “Accounting Records” is defined as follows:
(a) Accounting Records means records that are sufficient–
i. to show and explain the Foundation’s transactions,
ii. to disclose with reasonable accuracy, at any time, the financial position of
the Foundation at that time, and
iii. to enable the Councillors to ensure that any accounts required to be prepared
comply with the requirements of these Regulations.

(b) Accounting Records must, in particular, contain records and underlying documents comprising initial and other accounting entries and associated supporting documents such as:–
i. cheques;
ii. records of electronic fund transfers;
iii. invoices;
iv. contracts;
v. the general and subsidiary ledgers, journal entries and other adjustments to
the financial statements that are not reflected in journal entries;
vi. work sheets and spread sheets supporting cost allocations, computations,
reconciliations and disclosures; and
vii. a record of the Assets and liabilities of the Foundation.
(2) “ADGM Founding Law” has the meaning set forth in the Interpretation Regulations 2015; (3) “Assets” means any property in which a Foundation has any interest or over which it has any rights; (4) “Beneficiary” has the meaning set forth in section 28; (5) “By-laws” means the by-laws of a Foundation, if any, adopted under section 13, as may be amended from time to time under section 14;

(6) “Charter” means the charter of a Foundation adopted under section 2, as may be amended from time to time under section 7; (7) “Confidential Disclosure” means the following information, whether or not this information is also included in the Charter:
(a) the name and address of each of the Councillors; (b) the names and addresses of any Beneficiaries; (c) the names and addresses of the Guardian (if any); and (d) the name and address of each beneficial owner of each Founder which is a Legal Person (if any), to be held confidentially by the Registrar, subject to any requirement to disclose such information to public authorities as set out in subection 3(5), or in any other applicable law or regulations. (8) “Council” means the council of a Foundation referred to under section 18; (9) “Councillor” means a natural person or Legal Person appointed as a member of a Council under section 21; (10) “Court” has the meaning set forth in the Interpretation Regulations 2015; (11) “Designee” has the meaning set forth in section 2(2)(g); (12) “Foundation” means a foundation established under section 1;

(13) “Foundations Register” means the register of Foundations kept by the Registrar under section 3; (14) “Founder” means each natural person or Legal Person who subscribes their name to the Charter establishing a Foundation acting on their own account or on behalf of another, and who endows the Foundation with a portion of its Initial Assets; (15) “Guardian”, in relation to a Foundation, means a natural person or Legal Person, if any, appointed under section 25; (16) “Initial Assets”, in relation to a Foundation, means the initial Assets endowed by a Founder which become the property of a Foundation; (17) “Legal Person” means a company, a corporation or any other entity having separate legal personality; (18) “Minor” means an individual who is less than 18 years of age; (19) “Non-conflicted Councillors” has the meaning set forth in section 18(4)(f)(iii); (20) “Overseas Foundation” has the meaning set forth in section 32(1); (21) “Person” means a natural person or Legal Person; (22) “registered”, in relation to a Foundation, means registered as a Foundation under these Regulations; (23) “Registered Agent”, in relation to a Foundation registered under these Regulations, means the registered agent of a Foundation holding such office under section 17;

(24) “Registrar” has the meaning set forth in the Interpretation Regulations 2015; (25) “Registration Application” has the meaning set forth in section 1(1)(a). (26) “Remaining Beneficiary”, in relation to the Surplus Assets, means a natural person or Legal Person who, according to the Charter or By-laws, is entitled to receive any Surplus Assets; (27) “Resolution of Councillors”, in relation to a Foundation, means – (a) a resolution approved at a duly convened and constituted meeting of the Councillors by a simple majority (which in the case of a Foundation with only two Councillors shall mean that both Councillors must assent), or a larger majority as may be specified in the Charter or By-laws, of the Councillors present at the meeting, in person or by alternate or proxy, who voted; or (b) a resolution agreed to in writing by a simple majority (which in the case of a Foundation with only two Councillors shall mean that both Councillors must assent), or by such larger majority as may be specified in the Charter or By-laws, of the Councillors; (28) “Subsequent Transferor” means a natural person or Legal Person who endows a Foundation with Supplementary Assets; (29) “Supplementary Assets” means Assets endowed to a Foundation other than the Initial Assets;

(30) “Surplus Assets” means the Assets of a Foundation, if any, remaining after its dissolution; (31) “to endow” means to transfer or covenant to transfer, the title in property, absolutely, with or without consideration, to a Foundation so that the property becomes an Asset of the Foundation; (32) “Unanimous Resolution of Councillors” with respect to a Foundation, means – (a) a resolution approved at a duly convened and constituted meeting of the Councillors by a vote of all the Councillors present at the meeting, in person or by alternate or proxy, who voted; or (b) a resolution agreed to in writing by all of the Councillors; (33) any reference to a level of fine shall be interpreted as a reference to the applicable level set forth in the Commercial Licensing Regulations 2015 (Fines) Rules 2015; and (34) any reference to a regulation, rule or section shall be interpreted as a reference to such regulation, rule or section as may be amended, supplemented and replaced from time to time.

SCHEDULE 1 - FEES
The following fees are payable in respect of applications and notifications made in accordance with the RegulationsApplication or notification Fee Payable (USD) Application for registration of a Foundation 200 Application for renewal of a Foundation 200 Notification of a change in registered office address 100 Notification of appointment and cessation of a Registered Agent (if appointed) Notification of change of particulars of the appointed Registered Agent Notification of an appointment and cessation of a Councillor 100 Notification of change of particulars of a Councillor 100 Notification of an appointment and cessation of a Guardian 100 Notification of change of particulars of a Guardian 100 Notification of a change of name of a Foundation 100 Amendment of the Charter by the Founder(s) or in the event of Founder’s death by Court Order

Beneficiary request for information from the Registrar 100 Continuation to ADGM 500 Continuation from ADGM 500 Application to strike off 100 Reinstatement of a Foundation on the Register Nil

ADGM Consultation Paper No. 3 of 2017: Foundations Regime

Annex A – Proposed Foundations Regulations

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