Wealthy families are seeking advanced, more systematic, and secure ways to manage their wealth and investments. Family Office concept has emerged as a preferred solution providing structured financial services to affluent families, managing their assets, and protecting legacies for future generations. Family Offices facilitate to professionalize investment and management functions by creating investment committees, establishing governing boards, structuring family leadership succession plans, next generation education programs etc. There are manifold reasons to set up a Family Office and these dwell around the family’s vision, objectives, and ambitions. The fundamental objective would be to protect and preserve family wealth through generations, and to ensure that this objective is given a structure that caters to that family and evolves when the family grows or changes. Family offices tend to provide broadly two types of services or a combination thereof: (i) those focused on financial planning and investments; and (ii) those aimed on the family and supporting, its day-to-day needs. The first category would typically include investment and asset management, asset monitoring, trust services, tax and legal services, and under the latter category, concierge services, travel planning and administrative functions may be included.
In UAE, there are Three Robust Jurisdictions where Single Family Office may be Set Up:
(1) Dubai International Financial Centre (DIFC)
(2) Abu Dhabi Global Market (ADGM) (3) Dubai Multi Commodities Centre (DMCC)
DIFC & ADGM
DIFC and ADGM are the financial centers reputed for the presence of international financial service providers. They emerged as highly respected financial jurisdictions benchmarking globally recognized regulations and best practices. DIFC and ADGM comprise three independent authorities viz., Registration Authority, Financial Services Regulatory Authority and Court that directly apply common laws. They have created a governing framework that adheres to the highest international standards, creating a secure and stable operating environment that fosters confidence among investors and families alike. Financial Service Authorities of the respective jurisdiction ensure compliance with stringent regulations, providing a vigorous safeguard for investors’ interests and preserving the integrity of the financial ecosystem.
Setting up a Family Office in DIFC
In DIFC, a Family Office can be established as a Private Company or a Limited Liability Partnership. SFO shall be established to either serve (i) a single Family; or (ii) multiple Families. Family Office serving multiple families requires approval by the DIFC Registrar of Companies after it satisfied the Registrar regarding the shared arrangements between the Families served and the reasons for serving multiple Families. A Family to be served by a Family Office must have a minimum net asset of USD 50 million. The net asset value for this purpose is established with reference to a fair market value assessment or, where this is not possible, as determined by way of a book value assessment. The SFO structure shall have a minimum of one shareholder and a minimum of one director.
DIFC SFO may Engage the Following Services in General:
(a) Services to one or more family members
(b) Services to family fiduciary structure (c) Services to family entity
(d) Services to family businesses.
Setting Up a Family Office in ADGM
In ADGM there are no minimum investment requirements for setting up a family office. In spite of a benchmark figure is USD 10 million, the families can decide on their investment size based on their financial goals and aspirations. The accepted legal structure is Restricted Scope Companies (RSCs) and Foundations, each with distinct benefits catering to specific objectives. Eligibility to set up a SFO is based on the underlying principle that the family must have a closely related group of individuals united by blood, marriage, or adoption and share a common interest in wealth management and preservation. SFO may opt for a physical office or engage a service provider in ADGM.
ADGM SFO may Engage the Services in General:
(a) Creation of a family office structure can engage in devising investment strategies and business plans.
(b) Develop appropriate remuneration packages and strategies to attract key staff members.
(c) Developing governance structures from a corporate and family perspective.
(d) Design and develop appropriate succession planning. (e) Strategize acquisitions, re-organization and exits from investments and businesses.
(f) Cration of philanthropic strategy and designing a structure that meets social responsibility and commitments.
Setting Up a Family Office in DMCC
In DMCC, Single Family Offices are incorporated as per DMCC Company Regulations and as per the Guidelines for
Single Family Office License. SFO may accept the legal structure of a free zone limited liability company which may be owned either by individuals or a corporate entity or a registered trust (in each case wholly owned by the same family and UBOs).
It is desirable that the family has a minimum of USD 1 Million investible/liquid assets to be accepted as a SFO in DMCC. The SFO is permitted only to manage the assets of one family group and not permitted to act as trustee but might act solely as protector or as conduit with offshore regulated trustees operating the trusts or foundations. May supervise and coordinate activities amongst foreign fiduciary service providers.
The beneficiaries shall not sell shares of the SFO entity to any party, except in the case of transfer within family members. Only a family member may be a member of the board of directors; except for a consultant to the SFO who may be appointed as a director. In such a case also at least one family member must be appointed as a board member or legal representative.
DMCC SFO may Engage the Services in General:
(a) Wealth management
(b) Asset management
(c) Concierge work
(d) Day to day accounting
(e) Management of legal affairs
(f) Corporate governance issues
(g) Administrational and office affairs
