Single Family Offices (SFO) in the UAE: understanding your options

Single Family Offices (SFOs) are specialised entities designed to manage the investments and affairs of a single family. These offices handle the family's own wealth, often accumulated over several generations, and offer a range of services beyond investment management, including family governance, financial education, and philanthropic coordination.

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Benefits of an SFO

Establishing a Single Family Office offers numerous advantages:

1. Governance and Management: A well-structured SFO ensures transparency, minimises conflicts, and maximises investment opportunities.
2. Expert Advice: Advisors employed by the family entity provide impartial investment advice, ensuring privacy and confidentiality.
3. Professional Asset Management: Centralising asset management helps formalise investment procedures and enhance family involvement.
4. Performance Reporting: Consolidated reporting aids in effective decision-making.
5. Operational Distinction: Separates family operational assets from surplus holdings.
6. Customised Services: Tailored services for high-net-worth families, including philanthropy, concierge services, and educational programs.
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Key Considerations for Setting Up an SFO

1. Capital vs. Costs: The initial investment must justify the setup costs, which can be substantial depending on the in-house advisory team.
2. Ecosystem: SFOs thrive in environments with sophisticated markets, legal frameworks, and access to skilled professionals.
3. Make-or-Buy Decision: Balancing outsourced services and in-house operations is crucial for maintaining confidentiality and independence.
4. Governance and Management Strategy: A flexible yet well-thought-out strategy is essential to adapt to changing family needs and objectives.
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SFO Options in the UAE

The UAE offers several regimes for setting up an SFO, each with unique regulations and benefits. Here are the primary options:

1. 1. Abu Dhabi Global Market (ADGM):
     - Regulations: Governed by the ADGM Companies Regulations 2015.
     - Legal System: Common law (England and Wales).
     - Ownership: Can be wholly owned by an individual or a group of persons.
     - Capital Requirements: No minimum share capital or investible funds required.
     - Scope of Services: Wealth and asset management, concierge services, legal and corporate governance.
     - Restrictions: Can only manage assets of a single family; cannot offer securities to the public.
     - Compliance: Limited to filing accounts and reporting to the Registrar.
     - Taxation: No corporate, personal, capital gain, or withholding taxes.
     - Time Frame: Approval within 3-5 days upon receipt of complete information.
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2. Dubai International Financial Centre (DIFC):
     - Regulations: Governed by the DIFC Single Family Office Regulations 2011 and other DIFC laws.
     - Legal System: Common law.
     - Ownership: Must be owned by individual family members.
     - Capital Requirements: Minimum share capital of USD 50,000 and investible assets of USD 10 million.
     - Scope of Services: Similar to ADGM, including wealth and asset management.
     - Restrictions: Services limited to the single family; no third-party services.
     - Compliance: Annual return filing required.
     - Taxation: Same tax benefits as ADGM.
     - Time Frame: 1-2 months for approval.
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3. Dubai Multi Commodities Centre (DMCC):
     - Regulations: Governed by DMCC Company Regulations 2003.
     - Legal System: Civil law.
     - Ownership: Can be owned by individuals, corporate bodies, or trusts, provided they belong to the same family.
     - Capital Requirements: Minimum AED 50,000 per SFO and investible assets of USD 1 million.
     - Scope of Services: Includes wealth and asset management, similar to ADGM and DIFC.
     - Restrictions: Services limited to the single family; cannot act as a trustee but can coordinate with offshore trustees.
     - Compliance: Assure DMCC management of continued service to the family and report any changes.
     - Taxation: Same tax benefits as ADGM and DIFC.
     - Time Frame: Approximately 2 months for approval.

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Conclusion

Setting up an SFO in the UAE offers significant benefits for managing and preserving family wealth. With multiple regulatory frameworks available, families can choose the jurisdiction that best fits their needs and objectives. The UAE's favourable tax environment, robust legal systems, and professional service infrastructure make it an attractive destination for establishing a Single Family Office.

If you need assistance in selecting the best jurisdiction for your SFO, reach out to our team.

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