ADGM Foundations: Structure, Governance, Charter & By-laws

An ADGM foundation, under the Foundations Regulations 2017, is an orphan legal entity – it has its own legal personality but no shareholders or members. It blends the civil-law foundation with the common-law trust, and is used for succession, asset protection and the long-term holding of wealth. It is run by a Council (at least two councillors), with a Guardian that is optional while a founder is alive and compulsory thereafter, under a public Charter and private By-laws – and getting that documentation and the balance of control right is the heart of a sound foundation. The minimum initial endowment is just US$100. ADGM applies English common law directly. (This is the private-wealth foundation – distinct from the ADGM DLT Foundation.) Verify specifics at the time of use.

What an ADGM foundation is, who runs it, and how the charter and by-laws are built.

At a glance

• Governing law: ADGM Foundations Regulations 2017 (English common-law framework)
• Nature: orphan legal entity – separate legal personality, no shareholders
• Organs: Council (min. two councillors); Guardian (optional in life, compulsory after the last founder)
• Documents: Charter (public) and By-laws (private)
• Minimum assets: initial assets of US$100 (or equivalent)
• Typical uses: succession, family governance, asset protection, holding, philanthropy

1. What an ADGM foundation is

A foundation is a self-owning legal entity established under the ADGM Foundations Regulations 2017. Unlike a company it has no shareholders; unlike a trust it has its own legal personality, so it can hold assets and contract in its own name, and sue and be sued. It blends the civil-law foundation with common-law flexibility and – because ADGM applies English common law directly – is read against principles international families and their advisers already understand. It has become an increasingly common alternative to a trust for holding and passing on wealth, particularly for founders from civil-law backgrounds for whom the trust is unfamiliar.

2. Who is involved

3. The two constitutional documents – charter and by-laws

A foundation is constituted by two documents, and the division between them is deliberate. The Charter is the public face – filed with the Registrar and kept high-level. The By-laws are the private rulebook that actually governs who benefits and how the foundation runs; they are disclosed to the Registrar only on request. The two must be internally consistent – the By-laws cannot contradict the Charter – and together they should carry out the founder’s intentions within the Regulations.

The Charter should address the foundation’s name and objects (charitable, non-charitable, for named persons, or a combination), its initial assets (the modest US$100 minimum), the first councillors and the ADGM registered office, its duration (which may be perpetual), and how it may be amended or wound up. The By-laws should address the beneficiaries or purpose and any classes or conditions, how and when distributions are made, the appointment, powers and removal of councillors and the guardian, any reserved powers of the founder, succession of control, and amendment and dispute-resolution mechanics.

4. The balance of control – founder, council, guardian

This is the heart of the drafting. A founder can reserve powers – over investment, distributions or the appointment of councillors, for example – but reserving too much can undermine the structure and invite a “sham” challenge, while reserving too little can leave the founder’s intentions unprotected. The Council (at least two members) runs the foundation; the Guardian supervises it and, under the ADGM regime, becomes compulsory after the last founder dies. Setting that balance – and how it shifts on the founder’s death or incapacity – is the single decision that most shapes how the foundation behaves, and a foundation that is silent on succession of control is the one most likely to end in dispute.

5. Endowment, registered office and administration

The minimum initial assets are modest – the Charter must commit the foundation to assets of US$100 (or equivalent) – so the real threshold is governance, not capital. A foundation must maintain a registered office in ADGM; appointing a registered agent is optional, but a non-exempt foundation must engage a licensed Company Service Provider (a requirement introduced in 2021), which handles filings and compliance. Beneficial-ownership obligations apply and must be kept current.

6. Firewall and asset protection

The Foundations Regulations contain firewall provisions (Part 5) designed to insulate a foundation’s property from certain foreign claims – including founder bankruptcy, divorce claims and forced-heirship rules that might otherwise apply under a founder’s home law – and to channel questions about the foundation to ADGM law and the ADGM Courts. These protections are valuable for succession planning but are not absolute, and they operate alongside beneficial-ownership transparency – a foundation is a governance and succession tool, not a secrecy device. Drafting that is vague about governing law, the council’s discretion or the treatment of contributions can weaken the firewall, so the asset-protection logic should be built in deliberately rather than assumed.

7. Migration, amendment and succession of control

The regime is deliberately portable. A foreign foundation can migrate (continue) into ADGM, and an ADGM foundation can continue out again (Part 6) – useful where a family consolidates structures in ADGM or relocates, and preserving the entity’s continuity rather than requiring it to be wound up and re-established. The documents should state clearly how they can be amended, by whom and with what consents, and – above all – provide for succession of control: what happens to the council, the guardian and the founder’s reserved powers on death or incapacity.

8. Fitting into the wider structure – and common pitfalls

A foundation rarely stands alone. Its Charter and By-laws should work with the holding tier beneath it – the SPVs that hold the operating businesses, investments and real estate – and with any wills, trusts or other foundations in the family’s plan, so that distribution provisions, reserved powers and succession of control align across the structure. A by-law sound in isolation can still fail if it contradicts a shareholders’ agreement or a will elsewhere. The recurring drafting problems are: vague objects; an unworkable balance of powers between founder, council and guardian; unclear or challengeable distribution rules; by-laws inconsistent with the charter or the wider structure; over-reserving control to the point of a sham risk; and failing to plan for succession – each avoidable with deliberate drafting.

9. Foundation, trust or company – and not a DLT Foundation

Families wanting a recognisable entity to own and govern assets – and those from civil-law backgrounds for whom the trust is unfamiliar – often prefer a foundation; a trust suits those wanting a classic settlor-trustee relationship. Separately, the private-wealth ADGM foundation (Foundations Regulations 2017) should not be confused with the ADGM DLT Foundation (Distributed Ledger Technology Foundations Regulations 2023), a distinct regime for blockchain/token projects and DAOs with different requirements, including a higher minimum capital.

10. The legal angle: governance and disputes

A foundation is not “set and forget.” Council duties, the exercise of founder and guardian powers, distributions and the rights of beneficiaries can all be contested, and those questions are determined under ADGM law before the ADGM Courts. The documents are tested at exactly those moments – which is why the charter, the by-laws and the balance of control are worth getting right at the outset, and why they should be drafted to anticipate the disputes that foundations actually generate.

Frequently asked questions