6. Nature of a Foundation

(1) A Foundation is a body corporate with a legal personality separate from that of its Founder(s) and any other Person.

(2) A Foundation has the capacity, rights and privileges of a natural person. The validity of an act done by a Foundation shall not be called into question on the ground of lack of capacity by reason of anything in its Charter or By-laws.

(3) The property of a Foundation is not held by it upon Trust for any other Person.

(4) A Founder has such rights (if any) in respect of a Foundation as provided for in its By-laws.

(5) A Person specified in the By-laws (other than a Founder, a member of the Council, and any Guardian) has such rights (if any) in respect of a Foundation as provided for in its By-laws.

(6) Any rights a Person may have in respect of a Foundation may be assigned to some other Person, if its By-laws so provide.

(7) If rights are assigned under subsection (6), the Person assigning the rights must within a period of thirty (30) days provide a copy of the assignment to the Registrar. A Person who fails to comply with this requirement is liable to a fine, as set out in Schedule 3 (Fines).

7. Duration of a Foundation

(1) A Foundation may, but need not, be established for a fixed period or for a specified limited period, provided that it may be dissolved at an earlier time in accordance with the provisions of these Regulations.

(2) Subject to section 55 (Application of insolvency rules in winding up), if a Foundation is to be wound up and dissolved upon:

• (a) the happening of some event; or
• (b) the expiration of a fixed period of time, the details of the event or period must be specified in its By-laws.

(3) If a Person is to have the right to wind up and dissolve a Foundation, the details of such right must be specified in its By-laws, subject to any right arising under any applicable law.

8. Objects of Foundations

A Foundation's objects:

• (a) must be certain, reasonable and possible; and
• (b) must not be violating the Acting Law of the AIFC or contrary to public policy in the AIFC.

9. Nature of objects of a Foundation

(1) A Foundation may be established for:

• (a) objects which are exclusively charitable; and/or
• (b) one or more of the following:

(i) objects which are not exclusively charitable; or

(ii) objects to benefit Persons by name, category or class.

(2) It is sufficient, for purposes of subsection (1)(b)(i), for the Charter to provide that a Foundation is to hold property that has been selected in accordance with its By-laws.

(3) It is sufficient, for purposes of subsection (1)(b)(ii), for the Charter to provide that a Person or class of Persons to receive benefits may be determined in accordance with the By-laws.

(4) A Foundation may not carry out any commercial activities, except those necessary for, and ancillary or incidental to, its objects.

(5) The objects of a Foundation may only be amended:

• (a) where there is an express power to do so in the Charter; or
• (b) by order of the Court.

(6) If there is no express power to amend the objects in a Foundation’s Charter then, subject to subsections (1) and (2), an object may be amended by order of the Court on an application made by or on behalf of a Founder, the Foundation or a Guardian where:

• (a) the object has been, as far as may be, fulfilled;
• (b) the object cannot be carried out or cannot be carried out in accordance with the original intention or spirit in which the Foundation was established;
• (c) the object provides a use for only part of the property of the Foundation;
• (d) the object was laid down by reference to a class of Persons or to a matter which has for any reason since ceased to be:

(i) suitable; or

(ii) practicable in administering the Foundation;

• (e) in the case of a charitable object, the object has ceased to be charitable (by being useless or harmful to the community or otherwise); or
• (f) the object has ceased in any other way to provide a suitable and effective method of using the property of the Foundation, and, in these cases, the property, or the remainder of the property, as the case may be, shall be held for such other charitable or non-charitable object as the Court may order to be consistent with the original intention of the Founder(s), or the spirit in which the Foundation was established.

(7) An application to the Court pursuant to subsection (6) may be brought by any one of:

• (a) the AFSA;
• (b) the Council of the Foundation; or
• (c) any other Person with Sufficient Interest, upon notice to the Founder(s) (if still alive), the Guardian (if any), the Council and (if applicable) any other Person with Sufficient Interest.

10. Matters determined by the Acting Law of the AIFC

(1) Subject to subsection (2), all matters arising in regard to a Foundation or in regard to any disposition of property to or by a Foundation, including questions as to:

1. (a) the capacity of a Founder or Contributor;
2. (b) any aspect of the validity of the disposition or the interpretation or effect thereof;
3. (c) the administration of the Foundation (whether the administration is conducted in the AIFC or elsewhere), including questions as to the powers, obligations, liabilities and rights of the members of the Council of the Foundation and their appointment and removal; or
4. (d) the existence and extent of powers, conferred or retained, including powers of variation of the Charter or By-laws or dissolution of the Foundation, and the validity of any exercise thereof, shall be determined in accordance with the Acting Law of the AIFC without reference to the laws of any other jurisdictions with which the Foundation or disposition may be connected.

(2) Subject to sections 11 (Limitations in Foreign Law), 12 (Heirship Rights) and 13 (Foreign Judgments), subsection (1) shall:

1. (a) not validate any disposition of property which is neither owned by a Founder or Contributor, nor is the subject of a power vested in a Founder or Contributor;
2. (b) not validate any trust or disposition of immovable property situated in a jurisdiction other than the AIFC in which such trust or disposition is invalid according to the laws of such jurisdiction;
3. (c) not validate any testamentary trust or disposition which is invalid according to the laws of the testator’s last domicile;
4. (d) not affect the recognition of Foreign Laws in determining whether a Founder or Contributor is or was the owner of any property transferred to the Foundation or is or was the holder of a power to dispose of such property;
5. (e) not affect the recognition of the laws of its place of incorporation in relation to the capacity of a corporation; or
6. (f) not affect the recognition of Foreign Laws prescribing generally, without reference to the existence or the establishment of the Foundation, the formalities for the disposition of property within the jurisdiction of those Foreign Laws.

11. Limitations in Foreign Law

(1) Without limiting the generality of subsection 10(1) (Matters determined by the Acting Law of the AIFC), no disposition of property to a Foundation that is valid under the Acting Law of the AIFC is void, voidable, liable to be set aside or defective in any manner by reference to a Foreign Law; nor is the capacity of any Founder in relation to the Foundation or disposition to be questioned nor is the Foundation or any other Person to be subjected to any liability or deprived of any power or right, by reason that:

1. (a) the laws of any foreign jurisdiction prohibit or do not recognise the concept of a foundation;
2. (b) the disposition voids or defeats any rights, claims or interests conferred by Foreign Law upon any Person by reason of a Personal Relationship to a founder or any other Person related to the foundation or by way of Heirship Rights or Contravenes any rule of Foreign Law or any foreign, judicial or administrative order, arbitration award or action intended to recognise, protect, enforce or give effect to any such rights, claims or interests; or
3. (c) the Foreign Law or foreign judicial or administrative order or arbitration award imposes any obligation or liability on a founder, foundation or any other party in relation to the foundation or the property of the foundation.

(2) Subject to subsection (3), a transfer of property to a Foundation shall not be void, voidable or liable to be set aside by reason of a Founder or a Contributor’s bankruptcy, the liquidation of a Founder or Contributor, or any action or claims made against a Founder or Contributor by any creditor, notwithstanding any foreign statute providing otherwise.

(3) Notwithstanding subsection (2), where the Court determines that, at the time when the property was transferred to a Foundation, a Founder or Contributor, as applicable, was insolvent or intended to defraud any creditor of a Founder or Contributor, as applicable, it may declare that the transfer of property was void to the extent of the creditor’s claim.

(4) In making claims to set aside transfers of property to a Foundation under subsection (3), the burden of proof shall rest with the creditor.

12. Heirship Rights

An Heirship Right conferred by Foreign Law in relation to the property of a living Person shall not be recognised as:

(1) affecting the ownership of immovable property in the AIFC and movable property wherever it is situated for the purposes of subsections 10(2)(a) and (b) (Matters determined by the Acting Law of the AIFC) or for any other purpose; or

(2) constituting an obligation or liability for any purpose.

13. Foreign judgments

A foreign judgment shall not be recognised or enforced or give rise to any estoppels insofar as it is inconsistent with sections 11 (Limitations in Foreign Law) and 12 (Heirship Rights).