Foundations, Companies, and Trusts: Why the Middle East is Turning Toward Foundations

In the boardrooms of Dubai and the family majlis of Abu Dhabi, conversations about succession planning, wealth protection, and cross-border structuring are becoming more urgent than ever. Families who built their wealth in trade, real estate, or energy now face a modern question: what is the safest, most enduring way to secure assets for future generations?

Traditionally, three legal vehicles dominate these discussions: the company, the trust, and the foundation. On paper, each offers a solution. But in practice, especially in the Middle East, the foundation has emerged as the most resilient and culturally compatible choice in the last 5 years with over a thousands already registered in the UAE.

Quick Snapshot: Foundation vs. Company vs. Trust

Key Feature Company Trust Foundation

Legal Personality Yes, but tied to shareholders No, trustees hold ownership Yes, independent legal person

Control &

Governance Directors & shareholders Trustees (fiduciary duty) Foundation council (can include family & advisors)

Continuity on Death Interrupted – probate applies Continues, but trustee-dependent Perpetual, unaffected by individual death

Privacy Limited, shareholder records often public High, private deed, but recognition varies High, confidential, legally recognized

Cross-Border

Recognition Strong, but corporate purpose driven Moderate, depends on jurisdiction Strong, recognized like a company

Best Suited For Trading, operating businesses Wealth transfer in common-law systems Succession, wealth holding, philanthropy

Elaboration and Benefits of a Foundation

Legal Personality

Unlike a trust, a foundation has its own independent legal personality. This means it can enter into contracts, own property, and sue or be sued in its own name, similar to a company. For clients, this provides greater certainty and reduced dependence on third parties (such as trustees). It eliminates ownership risks tied to individuals.

Ownership of Assets

Assets contributed to a foundation are fully separated from the founder’s personal estate and belong to the foundation itself. Unlike a company, there are no shareholders whose interests could shift or conflict. And unlike a trust, where assets are legally held by trustees, in a foundation, the council safeguards them for the foundation’s purpose or beneficiaries, ensuring independence and protection.

Control & Management

The governance of a foundation is carried out by a council or board, often guided by a charter and by-laws. This system allows founders to set clear rules in advance while still permitting flexibility. In comparison, companies must balance shareholders’ and directors’ interests, while trusts depend heavily on the trustee’s discretion and sometimes creating uncertainty for beneficiaries.

Beneficiaries

Foundations provide flexibility: they may exist solely for a defined purpose or to benefit specific individuals. This hybrid nature makes them more versatile than trusts, which always require beneficiaries, and companies, where profits go to shareholders. For families, a foundation offers a long-term solution to manage wealth for multiple generations.

Succession Planning

A foundation is particularly powerful for succession planning. Once assets are placed into the structure, they no longer form part of the founder’s personal estate—avoiding probate, inheritance disputes, and forced-heirship risks. By contrast, company shares may be subject to probate, and trust validity can sometimes be challenged in court. Foundations thus ensure continuity.

Privacy & Confidentiality

In many jurisdictions, foundations are not required to publicly disclose their beneficiaries or full governance details, providing a higher level of confidentiality than companies, whose registers are often accessible. Compared to trusts, which may offer privacy but lack formal legal personality, foundations strike a balance of legitimacy and discretion.

Flexibility

A foundation combines the operational capacity of a company (it can hold shares, own real estate, and even carry out activities) with the protective qualities of a trust (safeguarding assets, managing wealth, and serving family needs). This dual capacity makes it especially attractive for cross-border asset planning.

Regulatory Oversight

While companies are typically bound by stricter reporting, accounting, and compliance obligations, foundations often benefit from lighter regulatory oversight, especially if they are not engaged in commercial activity. Trusts vary widely depending on jurisdiction, but they may be harder to enforce in cross-border matters. Foundations thus offer a strong balance between governance and efficiency.

Best Use and Case studies

Overall, a foundation is the most adaptable structure, suitable for wealth preservation, succession planning, philanthropy, and family governance. Companies remain the best choice for active business operations, while trusts are most effective for private asset protection in certain common-law jurisdictions.

Case Study 1: The Trading Family

A Dubai-based family, owners of a regional logistics company, held their shares in a classic corporate structure. When the patriarch passed away, the shares became subject to probate and inheritance proceedings, delaying decision-making and creating disputes among heirs.

Had the family established a foundation, ownership of the company shares would have been transferred outside the patriarch’s estate. The foundation itself, is not an individual and would own the shares, ensuring continuity of operations and avoiding costly probate procedures. Unlike a trust, which would have placed decision-making power in the hands of foreign trustees, the foundation’s council could include family members alongside professional advisors, preserving both control and cultural alignment.

Case Study 2: The Real Estate Investor

Consider a Kuwaiti investor with a growing real estate portfolio across Dubai, London, and Paris. Initially, he held properties through multiple offshore companies. But this created two challenges:

1. Complex ownership – Each property was tied to company shares that had to be individually managed and transferred.

2. Transparency risks – Corporate structures often require disclosure of shareholders and directors, reducing confidentiality.

By consolidating under a Dubai foundation, the investor shifted ownership of all properties to a single entity with clear governance rules. Unlike a trust, where legal ownership rests with trustees, the foundation itself became the independent owner, offering both privacy and the comfort of a legal personality recognized by global institutions.

Why Foundations Resonate in the Middle East

The Middle East context makes the foundation especially attractive:

· Shari’a considerations – Foundations provide a neutral, flexible vehicle that can be designed to respect Islamic inheritance rules while still achieving international structuring goals.

· Cross-border recognition – Global banks, regulators, and counterparties often prefer dealing with a legal person (a foundation) rather than a private arrangement (a trust).

· Governance with family involvement – Unlike trusts, which rely on external trustees, foundations allow families to sit on the council and remain actively involved.

· Privacy and continuity – Foundations’ beneficieries are often shielded from public registers, yet provide perpetual existence, avoiding the sudden interruptions that affect companies upon shareholder death.

In today’s Middle East, where family businesses account for more than 60% of GDP and where intergenerational wealth transfer is accelerating, the choice of structure is more than legal. It is existential for legacy planning.

Companies remain indispensable for trading activities, and trusts retain their niche role in certain jurisdictions. But for families seeking continuity, confidentiality, and cultural fit, the foundation has quietly become the gold standard.

The modern Gulf story is no longer just about building wealth. It is about protecting it, passing it on, and ensuring that what was built endures. And in that story, the foundation is not a company or a trust, it has proven to be the most reliable structure for wealth planning and succession. If you wish to learn more or get a free consultation feel free to get in touch with our expert team for a call.