14. Creation

(1) The Founder(s) may apply for the establishment of a Foundation by signing and filing with the Registrar an application for its establishment in the manner prescribed by the Registrar.

(2) The application filed with the Registrar under subsection (1) shall be signed by each Founder and shall include:

1. (a) the name of the proposed Foundation;
2. (b) the address of the proposed Foundation’s registered office in the AIFC;
3. (c) the full name, nationality and address of each Founder;
4. (d) the full name, nationality and address of each of the proposed members of the Council of the proposed Foundation;
5. (e) the Charter of the proposed Foundation (subject to subsections 16(7) and 16(7-1) (Charter);
6. (f) the By-laws of the proposed Foundation (subject to subsections 17 (5) and 17(5-1) (By laws);
7. (g) the particulars required by Part 16 (Ultimate Beneficial Owners) of the AIFC Companies Regulations; and
8. (h) such other particulars as the Registrar may require.

(3) The provisions of section 21 (Prohibition against use of misleading, deceptive or conflicting Company names) of the AIFC Companies Regulations shall apply to a Foundation in respect of the use of misleading, deceptive or conflicting names.

(4) Upon lodgment of the application and payment of the prescribed fee, the Registrar shall either:

1. (a) register the Foundation;
2. (b) seek further information in respect of the proposed Foundation; or
3. (c) refuse the application.

(5) On the registration of a Foundation, the Registrar shall:

1. (a) issue a certificate that the Foundation is established and such certificate shall expressly set out its status as a Foundation;
2. (b) assign to the Foundation a number, which shall be the Foundation’s registered number; and
3. (c) [intentionally omitted]

(6) The provisions of section 8 (Certificates) of the AIFC Companies Regulations apply to a certificate issued to a Foundation.

(7) A Person must not conduct business in or from the AIFC as a Foundation unless the Person is incorporated or registered under these Regulations as a Foundation.

(8) Contravention of this section is punishable by a fine.

15. Constitution

(1) The constitution of a Foundation comprises:

• (a) its Charter; and
• (b) subject to subsection 17(4) (By-Laws), its By-laws.

16. Charter

(1) A Foundation must have a Charter which shall be in the English language.

(2) The Charter must contain the following:

1. (a) its name;
2. (b) the object(s);
3. (c) a description of the initial property;
4. (d) the duration of the Foundation (if it is to subsist for a limited period only); and
5. (e) a declaration by each Founder requesting the Council to comply with the terms of the Charter.

(3) The Charter may contain any matter:

1. (a) that is otherwise required or permitted to be in the By-laws in accordance with section 17 (By-Laws); or
2. (b) that the Founder(s) think fit,

provided that there is no provision which is contrary to or inconsistent with these Regulations.

(4) The Charter may be amended only if:

1. (a) the Charter so provides; or
2. (b) the Court so orders under section 40 (Power of the Court to order amendment of Charter or By-Laws).

(5) Where a Charter specifies an exclusively charitable object, it may not provide for the amendment of the Charter so as to specify a non-charitable object in place of the charitable object.

(6) Each Founder must subscribe to the Charter, if a Founder is:

1. (a) an individual, by signing the Charter in his own name; or
2. (b) a body corporate, by an authorised signatory signing the Charter.

(7) A Foundation may adopt, as its Charter, the whole or any part of the Standard Charter as is applicable to the Foundation.

(7-1) If the Standard Charter is not adopted by a Foundation in its entirety, the Foundation must submit to the Registrar of Companies, before the charter is adopted by the Foundation, a statement by the Founder(s) that the Charter proposed to be adopted by the Foundation complies with the requirements of these Regulations and all other applicable AIFC Regulations and AIFC Rules.

(7-2) If any change to these Regulations or any other applicable AIFC Regulations or AIFC Rules results in an inconsistency between the provisions of a Foundation’s Charter and the provisions of these Regulations or any other applicable AIFC Regulations or AIFC Rules:

1. (a) the provisions of these Regulations and any other applicable AIFC Regulations and AIFC Rules prevail; and
2. (b) the Foundation is not required to amend its Charter, unless these Regulations or any other applicable AIFC Regulations expressly require it to do so.

(8) If a Foundation proposes to amend its Charter, it must after completing its internal processes necessary to amend the Charter, lodge the amended Charter with the Registrar within a period of thirty (30) days after such amendment.

(9) The amended Charter shall come into force upon it being registered by the Registrar, and, if the change involves a change of name, upon the issue of a certificate by the Registrar pursuant to subsection 30(1) (Change of name).

(10) The Charter may provide that if at any time the property of the Foundation includes any property which by reason of the law of the Republic of Kazakhstan or any other jurisdiction may be held only by a national of that country, the only Persons who may be members of the Council of the Foundation or Qualified Recipients under the Foundation are nationals of that jurisdiction at that time, and may further provide that such provision may not be amended or revoked.

(11) If the Charter contains an irrevocable provision of the type referred to in subsection (10) then notwithstanding any other provision of these Regulations, that provision may not be amended or revoked.

17. By-laws

(1) The By-laws must:

1. (a) prescribe the functions of the Council;
2. (b) detail the procedures for the appointment, resignation and removal of members of the Council and any Guardian;
3. (c) if the members of the Council or any Guardian are to be remunerated, the details in respect thereof;
4. (d) set out how the decisions of the Council are to be made and, if any decision requires the approval of any other Person, specify the decisions and that Person;
5. (e) if the functions of the Council must or may be delegated or exercised in conjunction with any other Person, the extent to which this must or may be done; and
6. (f) specify what is to happen to any property of the Foundation that remain should the Foundation be wound up and dissolved.

(2) The By-laws may:

1. (a) prescribe the manner in which the property of the Foundation may be distributed, accumulated or applied;
2. (b) detail whether, and if so how, further property may be endowed upon the Foundation;
3. (c) provide for the addition or removal of a Person or class of Persons as recipients or for the exclusion from the category of recipient of a Person or class of Persons, either revocably or irrevocably;
4. (d) detail any Person’s powers in relation to the Foundation (including, but not limited to, the power to appoint or remove any member of the Council, to take investment decisions or to approve the use of property);
5. (e) impose obligations upon recipients as a condition of receipt of any amount from the Foundation;
6. (f) make the potential right of a recipient in relation to a receipt of any amount from the Foundation:
7. (i) liable to termination;

(ii) subject to a restriction on alienation or dealing; or

(iii) subject to diminution or termination in the event of the recipient becoming bankrupt;

1. (g) detail the name and address of a default recipient, failing which the default recipient shall be an AIFC Body or its organisation to be prescribed by AIFC Acts; and
2. (h) contain any other matter that the Founder(s) deem fit.

(3) The By-laws may be amended only if:

1. (a) the Charter so provides, or
2. (b) the Court so orders under section 40 (Power of the Court to order amendment of Charter or By-Laws).

(4) To the extent to which matters required or authorised to be in the By-laws under subsection (1) are contained within the Charter, such matters need not also be in the By-laws, and if all of the matters in subsections (1) and (2) are contained in the Charter, a Foundation need not have any By-laws.

(5) A Foundation may adopt, as its By laws, the whole or any part of the Standard By laws as are applicable to the Foundation.

(5-1) If the Standard By laws are not adopted by a Foundation in its entirety, the Foundation must submit to the Registrar of Companies, before the By laws are adopted by the Foundation, a statement by the Founder(s) that the By laws proposed to be adopted by the Foundation comply with the requirements of these Regulations and all other applicable AIFC Regulations and AIFC Rules.

(5-2) If any change to these Regulations or any other applicable AIFC Regulations or AIFC Rules results in an inconsistency between the provisions of a Foundation’s By laws and the provisions of these Regulations or any other applicable AIFC Regulations or AIFC Rules:

1. (a) the provisions of these Regulations and any other applicable AIFC Regulations and AIFC Rules prevail; and
2. (b) the Foundation is not required to amend its By laws, unless these Regulations or any other applicable AIFC Regulations expressly require it to do so.

(6) The Registrar shall be notified of any change to the By-laws and a copy of the amended By-laws shall be filed with the Registrar within thirty (30) days of such change. A Foundation which fails to comply with this requirement is liable to a fine, as set out in Schedule 3 (Fines).

18. Default recipient

(1) The Charter or By-laws may identify a default recipient to whom all property of a Foundation for which provision has not otherwise been made shall pass in the event of the termination thereof.

(2) Unless otherwise provided in the Charter or By-laws, a default recipient is not entitled to information about the Foundation, and has no rights in respect of it.

(3) If:

• (a) no default recipient is named in the Charter or By-laws; or
• (b) any such default recipient no longer exists, any property of a Foundation existing at its termination shall, unless the Charter or By-laws provide otherwise, become property of an AIFC Body or its organisation as designated by the AIFC.

19. Council

(1) A Foundation must have a Council to administer its property and to carry out its objects.

(2) The Council shall comprise at least two (2) members.

(3) A Founder or a body corporate may be appointed as a member of the Council.

(4) A member of the Council:

1. (a) must be so named in the Register;
2. (b) must ensure that the Council keeps accurate Accounting Records for the Foundation; and
3. (c) must comply with the provisions of these Regulations, the Charter and By-laws.

(5) A Person must not be appointed as a member of a Council, or be so referred to in the Register, unless he has consented in writing to being a member of the Council.

(6) The appointment of a Person as a member of a Council is void and will have no effect if that Person is also a Guardian of the Foundation.

(7) The members of a Council must conduct the Foundation's affairs in accordance with its Charter and By-laws, these Regulations and any other applicable law.

(8) A Council member must:

1. (a) act honestly and in good faith with a view to the best interests of the Foundation;
2. (b) exercise the care, diligence and skill that a reasonably prudent Person would exercise in comparable circumstances; and
3. (c) declare any interest in a transaction of the Foundation at any Council meeting at which such transaction is considered.

(9) The duty under subsection (8)(a) is fiduciary in nature.

(10) An act of a member of the Council is valid despite any defect that may afterwards be found in:

1. (a) the appointment of the member; or
2. (b) the member’s qualifications.

(11) The Registrar must be notified of the details of any change in the membership of a Foundation’s Council within thirty (30) days of the occurrence of the change. A Foundation which fails to comply with this requirement is liable to a fine, as set out in Schedule 3 (Fines).

20. Guardian

(1) If a Foundation has a charitable object, or a specified non-charitable object, the Foundation must have a Guardian in relation to that object.

(2) A Foundation may, but need not, have a Guardian:

1. (a) in respect of an object to provide some or all of its property to a Person or class of Persons:
2. (i) whether or not immediately ascertainable; or

(ii) ascertained by reference to a Personal Relationship; or

1. (b) if its Charter provides, pursuant to subsection 9(2) (Nature of objects of a Foundation), that the Foundation is to hold property that has been selected in accordance with its By-laws.

(3) A Founder or a body corporate may be appointed as Guardian of a Foundation.

(4) A Guardian:

1. (a) must be so named in the Register;
2. (b) must keep and retain accurate accounts and records of his guardianship for so long as his guardianship subsists and for a period of six (6) years thereafter; and
3. (c) must comply with the provisions of these Regulations, the Charter and the By-laws.

(5) A Person must not be appointed as a Guardian, or be so referred to in the Register, unless he has consented in writing to being the Guardian of the Foundation.

(6) The appointment of a Person as Guardian is void and shall have no effect if the Person is also a member of the Council of the Foundation.

(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 Council member 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.

(8) The Guardian must take reasonable steps to ensure that the Council of the Foundation carries out its functions.

(9) Accordingly, the Guardian may require the Council to account to the Guardian for the way in which it has:

1. (a) administered the Foundation’s property; and
2. (b) acted to further the Foundation’s objects.

(10) The By-laws may give a Guardian the power to approve or disapprove any specified actions of the Council.

(11) Except to the extent that the By-laws provide otherwise, a Guardian may sanction or authorise any action taken or to be taken by the Council that would not otherwise be permitted by the By-laws if the Guardian considers that it is appropriate to do so.

(12) However, the Guardian must not sanction or authorise any action taken or to be taken by the Council unless he is satisfied:

1. (a) that it is in the best interests of the Foundation; and
2. (b) that the Council has acted, or will be acting, in good faith.

(13) If a Guardian sanctions or authorises any action of the Council under subsection 20(11), the Council, in taking that action, may be presumed by third parties to have acted in good faith.

(14) Nothing in subsection (11) is to be construed as permitting a Guardian to sanction or to authorise any action taken or to be taken by the Council that would be inconsistent with these Regulations or any other applicable law.

21. Liability of Council members and others

(1) This section applies to a Person appointed under the Charter or By-laws of a Foundation when acting or purporting to be acting in the course of that appointment.

(2) Nothing:

• (a) in the Charter or By-laws; or
• (b) in a contract between the Foundation and a Person to whom this section applies, relieves, releases or excuses that Person from any liability for fraud, wilful misconduct or gross negligence.

(3) Any insurance purchased and maintained by the Foundation in respect of a Person to whom this section applies must not include insurance in respect of:

• (a) any liability the Person may incur:

(i) to the Foundation;

(ii) to pay a fine in respect of a Contravention of these Regulations; or

• (b) any costs the Person may incur:

(i) in defending criminal proceedings in which the Person is convicted; or

(ii) in defending civil proceedings brought by the Foundation in which judgment is given against the Person.

22. Reservation to Founder of powers to amend, revoke, vary or terminate

(1) Subject to subsection (2), a Founder may not reserve to himself any powers to amend, revoke or vary the Charter or By-laws or to terminate the Foundation.

(2) A Founder may reserve the following powers:

1. (a) a power to amend, revoke or vary the terms of the Charter or By-laws, or both of them, in whole or in part;
2. (b) subject to subsection 9(1) (Nature of objects of a Foundation), a power to amend, revoke or vary the objects of the Foundation, in whole or in part; and
3. (c) a power to terminate the Foundation, provided that the power to amend, revoke, vary or terminate, as the case may be, is detailed in full in the Charter, and provided that these powers are only reserved:
4. (a) for a period not exceeding the duration of a Founder’s life, if he is a natural Person; or
5. (b) for a period not exceeding fifty (50) years from the date of establishment of the Foundation, if the Founder is a legal Person, and thereafter any such powers so reserved shall lapse, notwithstanding the terms of the Charter.

(3) If, at any time in respect of a Foundation:

1. (a) any power has been reserved or granted under subsection (1) to more than one Founder; and
2. (b) more than one Founder is capable of exercising it at that time, then such power must be exercised by those Founders unanimously unless the Charter provides otherwise.