The foundation was registered, the holding company was licensed and the bank accounts were open. Then two siblings disagreed about selling a stake, and nobody could say who had the power to decide. The entity chart shows who owns. This article is about the other chart: who controls, and how the next generation gets there.
The call came from a daughter, not the founder. Her father had built a DIFC foundation in 2021 that owned a holding company, which in turn held a hotel stake in Muscat, a logistics business in Jebel Ali and a portfolio account in Geneva. Every box on the chart was properly registered. Then an offer arrived for the hotel stake. She wanted to sell. Her brother did not. Their father had moved back to Beirut and said, reasonably enough, that it was their decision now.
Nobody could say whose decision it actually was. The holding company board was the founder and both children. The foundation council was the founder and his accountant of thirty years. The by-laws said the council approved "material disposals". A family charter, signed over dinner in 2022, said major decisions required "family consensus". The buyer's lawyers asked for a council resolution, the bank asked for a board resolution, and the siblings spent five months arguing about which document governed before anyone signed either.
The entity chart was fine. There was no decision chart.
Owning and deciding are separate questions
Most of the work on UAE family office structuring goes into the entities: which centre, which vehicle, how many layers. We have written about that at length, including why most structures carry too many boxes in our piece on the minimum viable structure, and how the two centres compare in DIFC vs ADGM for a family office. This article assumes those choices are made.
What it covers is the layer above. A family office structure in the UAE typically has three or four decision-making bodies, each with its own document, and they overlap in ways nobody notices while the founder is in the room.
Four documents, and only some of them bind anyone
The family charter (some families call it a constitution) sets out values, who counts as family, how the family meets and how it expects to decide. It is the document families care about most. In general it is also the least enforceable. A family charter is usually treated as a statement of intent rather than a contract, and whether any part of it binds anyone depends on its drafting and governing law, so take legal advice before relying on it.
The documents that do bind are the foundation charter and by-laws, the holding company's articles and, where family members hold shares directly, a shareholders' agreement. The DIFC Foundations Law is specific about what by-laws must contain: the council's functions, how council members and any guardian are appointed and removed, how council decisions are made, and which decisions need someone else's approval.
In our experience, the fix for the Muscat problem is a clause map. Every decision rule in the family charter points to the clause in a binding document that gives it effect. "Family consensus on major disposals" becomes a by-law requiring guardian consent for any disposal above a defined threshold, plus a matching reserved matter in the holding company's articles. If a rule cannot be mapped, it stays aspirational, and everyone should know that.
Privacy matters for where you put things. In the DIFC, the public register holds the foundation's name, registered office, founders, council members and any registered agent. The charter is lodged with the Registrar. By-laws go to the registered agent where one is appointed, and are filed with the Registrar only where there is none. ADGM describes its regime as having limited public disclosure, with no individuals' names on the public register. Either way, the sensitive detail (who benefits, and what triggers a change) belongs in the by-laws. Confirm what each Registrar currently makes available for inspection before you settle the drafting.
Who sits where
| Body | Who sits on it | What it decides | Legally binding? |
|---|---|---|---|
| Family assembly | All adult family members, sometimes spouses | Elects the family council, approves changes to the family charter | Not usually, unless its role is written into binding documents |
| Family council | A small elected group, often one per branch | Family policy, education, nominations to other bodies | Not on its own; its nominations bind only if the by-laws or articles say so |
| Foundation council | At least two members; founder, family and professionals | Administers the foundation's assets, votes its shares in the holding company, makes distributions | Yes, acting under the law, charter and by-laws |
| Guardian | One person or a body corporate, not a council member | Supervises the council; approves or vetoes actions specified in the by-laws | Yes, within powers given by law and the by-laws |
| Holding company board | Directors appointed by the shareholder, i.e. the foundation council | Runs the holding company and its investments day to day | Yes, under the articles and company law |
| Investment committee | Family members and external investment professionals | Asset allocation and manager selection within an investment policy | Only to the extent authority is delegated to it in writing |
The collisions happen at the joins. The foundation council appoints the holding company board, so a sibling who loses a board vote can try again at council level. Draft the reserved matters so each decision has exactly one home.
The guardian is not a family representative
The regulation requires a guardian in some cases and not others. Under Article 23 of the DIFC Foundations Law, a foundation with a charitable object or a specified non-charitable object must have one. A family foundation set up to benefit descendants may have one but does not have to. In ADGM, the Registration Authority's guidance says a guardian is optional while any founder is alive and compulsory once the last founder dies. In both centres, a guardian cannot also sit on the council.
Families often choose the eldest child as guardian. I would not. The guardian's job is to hold the council to the charter and by-laws, and a guardian who is also a beneficiary with a view on every distribution is supervising decisions they have a stake in. A trusted professional, with a right for the family council to nominate a successor, tends to age better.
Reserved powers come with an expiry date
In the DIFC, Article 26 lets a founder reserve the power to amend the charter or by-laws, vary the objects or terminate the foundation. Those powers must be set out in full in the charter, and they last only for the founder's lifetime if the founder is an individual, or up to 50 years for a corporate founder. With more than one founder, reserved powers are exercised unanimously unless the charter says otherwise.
So control shifts by law on the founder's death, whether the family is ready or not. The question to settle now is who can amend the by-laws afterwards, and with whose consent. A foundation where nobody can amend anything is stable, and brittle. For ADGM, confirm the equivalent position against the Foundations Regulations 2017.
The investment committee advises unless you say otherwise
Legal authority over the foundation's assets sits with the council. An investment committee has exactly as much power as the by-laws or a board resolution delegates to it, and DIFC by-laws must state how far council functions may be delegated. Without that, the committee's decisions are recommendations the council still has to adopt and minute. Atlas does not manage investments; the committee usually includes external professionals the family appoints, working to a written investment policy.
When the family changes shape
Structures are drafted for the family at the table. They have to work for the family twenty years later.
Marriage and divorce
Decide whether spouses are beneficiaries, and say so. DIFC by-laws can make a recipient's rights terminable, restrict dealing with them, or cut them back on bankruptcy. ADGM markets firewall provisions aimed at divorce and forced heirship claims. How a foreign divorce court treats those provisions is a separate question, and it needs a family lawyer in the country where the divorce would be heard. Where a child holds holding company shares directly, transfer restrictions and pre-emption rights in the shareholders' agreement do the work.
Moving abroad
A council member or director who relocates to London or Toronto can change where decisions are effectively taken, and a beneficiary resident abroad may have reporting obligations there. Neither is fatal. Both need looking at before the move, not at the next board meeting. There is a practical point too: the bank will re-run due diligence on a council member whose residence changes, and it will want the new proof of address before it processes the next instruction.
Wanting out
Someone always does. A foundation beneficiary owns nothing to sell, so exit means distributions under the by-laws, or ceasing to be a beneficiary. Where shares are held directly, the shareholders' agreement should fix the process rather than the price: how an independent valuer is appointed, whether payment is phased over several years, and an annual cap so one exit does not strip the liquidity everyone else relies on. Atlas does not value businesses; we draft the mechanism that appoints the person who does.
Disputes
The DIFC Foundations Law lets a founder set dispute resolution in the charter or by-laws, with the DIFC Arbitration Law applied to foundation disputes. We suggest a ladder: family council discussion, then mediation, then arbitration. In our experience the mediation rung does most of the work. Confirm the ADGM position with counsel.
Bringing the next generation in, in stages
None of the ages or conditions below come from any regulation. They are the pattern families often choose, and each step should be written into a binding document at the point it takes effect.
- From about 18: attend the family assembly, read the family charter, see the entity chart and a summary of the accounts.
- After education or early career: an observer seat on the investment committee or holding company board, with access to papers and no vote.
- Next: election to the family council for a fixed term, with a real remit such as philanthropy or education.
- After several years' outside work: a holding company directorship, usually alongside at least one independent director.
- Last: a seat on the foundation council, once the founder's reserved powers and the post-founder amendment power have been settled.
The minimum of two council members is the only hard rule in that list. Everything else is judgement.
Review it before it hurts
We suggest reviewing the governance documents every three to five years and on any trigger: a birth, a marriage, a death, a relocation, a sale. In the DIFC, changes to the council or guardian must be notified to the Registrar within 30 days, and by-law amendments go to the registered agent or the Registrar within the same period. Our guide to DIFC and ADGM governance records covers the minutes and registers that should sit behind every decision, and our page on structures for succession planning sets out why a foundation often sits at the top.
If you are still testing the shape itself, the structure decision tree is a quick first pass.
Where we fit
Atlas Corporate Services establishes and administers foundations and holding companies in both centres, and drafts the governance documents alongside the family's own lawyers; our DIFC foundation service covers the charter, by-laws and appointments. Tax questions raised by a relocating family member are handled with GTAG, our sister company within the GTAG/Assetica group, which provides tax advisory services. Private bankers, lawyers and accountants working with a family can find how we work together on our page for advisers.
If your structure has an entity chart and no decision chart, bring both documents, the binding ones and the family charter. We will show you where they disagree.
Frequently Asked Questions
Is a family constitution legally binding in the UAE?
Usually not on its own. A family constitution or family charter is generally treated as a statement of shared intent rather than an enforceable contract, although the position depends on how it is drafted and which law governs it. Its decision rules become binding when they are written into the foundation's charter or by-laws, the holding company's articles or a shareholders' agreement. Take legal advice on the drafting if you want any part of it to be enforceable.
Does a DIFC foundation need a guardian?
It depends on the foundation's objects. Under Article 23 of the DIFC Foundations Law, a foundation with a charitable object or a specified non-charitable object must have a guardian in relation to that object. A foundation set up to benefit named people or a class of people, such as a founder's descendants, may have a guardian but is not required to. Many family foundations appoint one anyway, because the guardian is the main check on the council.
Does an ADGM foundation need a guardian?
ADGM Registration Authority guidance states that appointing a guardian is optional while any founder is alive and becomes compulsory on the death of the last surviving founder. The same guidance says a guardian may not be a founder or a councillor. Because the requirement is triggered by a death, the replacement mechanism should be drafted at the outset. Confirm the current position against the Foundations Regulations 2017 and ADGM guidance.
How many council members does a DIFC or ADGM foundation need?
At least two in both centres. The DIFC Foundations Law requires a council of at least two members, and ADGM guidance says the council must consist of at least two councillors. A founder can sit on the council in either centre. Whether the council should be all family, all professional or mixed is a family choice, not a regulatory one.
Can the same person be a council member and the guardian of a foundation?
No. In the DIFC, the appointment of a guardian who is also a council member is void, and the reverse applies too. ADGM guidance likewise says a guardian may not be a councillor or a founder. The separation exists because the guardian's job is to supervise the council.
What happens to a founder's reserved powers in a DIFC foundation when the founder dies?
They lapse. Under Article 26 of the DIFC Foundations Law, a founder who is an individual can reserve powers to amend the charter or by-laws, vary the objects or terminate the foundation only for the founder's lifetime, and a corporate founder for no more than 50 years. The powers must be set out in full in the charter. Families should decide in advance who, if anyone, holds an amendment power once the founder's powers fall away.
How does a family member exit a structure owned by a foundation?
A beneficiary of a foundation does not own shares, so there is nothing to sell. Exit usually means the council making a distribution or a series of distributions under the by-laws, or the family member ceasing to be a beneficiary. Where a family member holds shares directly in a holding company, the shareholders' agreement should set the buy-back process, including how an independent valuer is appointed and how payment is phased.