Introduction
The concept of a family office in UAE has been around for centuries, with the Medici family in Renaissance Italy often credited as the pioneers. However, the modern family office, as we know it today, has seen substantial growth over the past several decades. This growth is particularly noticeable in the United Arab Emirates (UAE), and more specifically, in the bustling city of Dubai.
Dubai, known for its luxury lifestyle and high-end business environment, has become a hub for family offices. The city’s strategic location, robust infrastructure, and favourable business regulations make it an attractive destination for wealthy families looking to manage their wealth and ensure its succession.
Are you considering establishing a Family Office in Dubai? As the city continues to grow as a global financial hub, more high-net-worth individuals and families are choosing Dubai as their preferred location for setting up a Family Office. Let’s embark on this journey with Dubai Business Advisors, your trusted partner in business setup and advisory services.
Meaning and Importance of Family Office
A family office is a private wealth management advisory firm that serves ultra-high-net-worth (UHNW) individuals or families. The main goal of a family office is to effectively grow and transfer wealth across generations.
Benefits Family Offices Provides
Family offices provide a wide range of benefits that can manage, preserve, and grow the wealth of high-net-worth families. These services are tailored to the unique needs and goals of each family. Here are some of the key services that family offices typically provide:
- Investment Management: This includes the development of a strategic asset allocation strategy, selection of investments, and ongoing monitoring and rebalancing of the portfolio. Family offices may invest in a wide range of asset classes, including equities, bonds, real estate, private equity, and hedge funds.
- Wealth Planning: Family offices help families plan for the long-term management and preservation of their wealth. This includes estate planning, tax planning, and succession planning.
- Risk Management: Family offices identify and manage the various risks that could impact the family’s wealth. This includes investment risk, operational risk, and reputational risk.
- Philanthropy: Many wealthy families are active in philanthropy. Family offices can help manage the family’s philanthropic activities, including the establishment and management of charitable foundations.
- Family Governance: Family offices often assist with the establishment of family governance structures, such as family councils or boards, to facilitate decision-making and communication among family members.
- Education and Mentoring: Family offices often provide education and mentoring to younger family members to prepare them for their future roles as stewards of the family wealth.
- Lifestyle Management: Some family offices also provide lifestyle management services, such as travel planning, property management, and concierge services.
- Legal and Compliance Support: Family offices often work with legal experts to ensure compliance with all relevant laws and regulations, and to handle any legal issues that may arise.
- Financial Administration: This includes day-to-day financial management tasks such as bill paying, budgeting, financial reporting, and record keeping.
- Coordination of Professional Advisors: Family offices often serve as the central point of contact for the various professional advisors that the family works with, such as lawyers, accountants, and investment advisors.
Remember, the specific services offered can vary greatly from one family office to another, depending on the needs and preferences of the family.
Family offices are important as they offer a holistic approach to wealth management. They consider the family’s financial goals, values, and legacy, and create a comprehensive plan to manage and preserve the family’s wealth.
The Two Types of Family Offices
There are two main types of family offices: Single Family Office (SFO) and Multi-Family Office (MFO). An SFO serves one wealthy family, while an MFO serves multiple families who pool their resources together. This pooling of resources allows families who may not individually have the wealth of $100 million or higher to enjoy the benefits of a family office.
Single Family Office (SFO): An SFO is a private organization that manages the affairs of one wealthy family. It offers personalized services including wealth management, estate planning, and other financial services. The SFO is wholly owned and controlled by the family, providing a high degree of customization and privacy.
Multi-Family Office (MFO): An MFO provides similar services to an SFO but serves multiple families or high-net-worth individuals. It allows clients to share the costs and benefits of professional wealth management, offering a broader range of expertise and resources, but with potentially less customization than an SFO.
Steps To Establish a Family Office in Dubai, UAE
Initial Consultation:
Strategic Planning:
Feasibility Planning:
Choosing the Jurisdiction:
Establishing the Legal Structure:
Obtaining Licenses and Permits:
Setting Up Operations:
Ongoing Support:
Remember, every family’s needs are unique, and the process of setting up a Family Office can vary accordingly. It’s important to work closely with your business setup expert to ensure that your Family Office is set up in a way that best serves your family’s needs and objectives.
Scope And Costs of a Family Office Setup in Dubai, UAE
The scope of a family office setup in Dubai or UAE can vary greatly depending on the size of the family’s wealth and its specific needs. The costs associated with running a family office can also vary.
Here are some of the main costs to consider:
- Setup Costs: These include the costs of incorporating the family office, obtaining necessary license, and all other necessities which can approximately cost around 15000$ – 20000$ for single family office and 40000$ – 47000$ for multifamily offices.
- Operational Costs: These include the costs of hiring and maintaining staff, technology and infrastructure costs, and other day-to-day expenses. Salaries for staff can vary widely, but a small family office might employ a team of 5-10 people, with annual salaries.
- Professional Fees: Family offices often work with a range of professional advisors, including lawyers, accountants, and investment advisors. The fees for these services can add to the overall cost.
- Regulatory Costs: These include the costs of complying with regulatory requirements, such as audit fees, regulatory filing fees, and compliance costs.
- Office Space: The cost of office space in Dubai can vary widely depending on the location and size of the office.
- Other Costs: These can include costs for insurance, travel, and other miscellaneous expenses.
It’s important to note that these are rough estimates, and the actual costs can vary based on the specific needs and circumstances of the family. It’s recommended to consult with a professional advisor to get a more accurate estimate of the costs.
How to Select the Potential Jurisdiction for Family Office Setup in Dubai
Selecting the right jurisdiction for setting up a Family Office is a crucial decision that can have significant implications for wealth management, tax planning, and succession planning. Here are some factors to consider when choosing a jurisdiction for your Family Office in Dubai, UAE:
- Regulatory Environment: The jurisdiction should have a favourable regulatory environment that supports the activities of Family Offices. This includes clear and stable laws and regulations, a strong legal system, and a respect for privacy and confidentiality.
- Tax Considerations: The jurisdiction should offer favourable tax conditions, including low or zero taxes on income, capital gains, and inheritances. It should also have a network of tax treaties to avoid double taxation.
- Political and Economic Stability: The jurisdiction should be politically and economically stable, providing a safe and secure environment for managing family wealth.
- Access to Financial Services: The jurisdiction should have a robust financial sector, providing access to a wide range of financial services and professionals.
- Lifestyle and Quality of Life: The jurisdiction should offer a high quality of life, including good healthcare, education, and lifestyle options. This is particularly important if family members plan to live in the jurisdiction.
In Dubai, UAE, there are four jurisdictions that are particularly attractive for setting up Family Offices: DMCC, ADGM, DWTC, and DIFC. Here’s a brief overview of each:
- DMCC (Dubai Multi Commodities Centre): DMCC offers a simple company structure with a specific business license for Single Family Offices (SFO). It allows you to oversee and handle assets, financial resources, legal and business affairs, as well as provide admin or concierge services under one roof to a single family. The benefits include access to all services under one roof, business continuity and intergenerational wealth transfer through corporate succession planning, and an easy setup process with no Central Bank or SCA approval requirements.
- ADGM (Abu Dhabi Global Market): ADGM provides a conducive environment for the operation of Single-Family Offices, Foundations, and Special Purpose Vehicles (SPVs), each offering unique advantages depending on the specific needs and objectives of the family. These structures provide a high degree of flexibility and control, enabling families to effectively manage their wealth, plan for succession, and engage in philanthropic activities.
- DWTC (Dubai World Trade Centre): DWTC Authority offers an attractive business-friendly regulatory environment for Single and Multi-Family Offices to set up in Dubai. It provides a new platform for families to set up their respective holding companies with DWTC Authority to manage their private family wealth and family structures from Dubai. The benefits include minimal capital requirement, flexibility to allow up to 49% of SFO’s control with non-family members, and 100% foreign ownership.
- DIFC (Dubai International Financial Centre): DIFC is a leading financial hub in Dubai that allows the establishment of Family Offices. These offices can serve one or more families, offering services like investment management, fiduciary services, and more. To set up a Family Office in DIFC, an application must be submitted to the Registrar, accompanied by a detailed statement from a DFSA-registered auditor or law firm. The family served must have net assets of at least USD 50 million. While Family Offices in DIFC must maintain accounting records, they are exempt from filing these accounts with the Registrar or having them audited.
Each of these jurisdictions has its own unique advantages and requirements, so it’s important to carefully consider your family’s specific needs and circumstances when choosing a jurisdiction for your Family Office. Consulting with a professional advisor can be very helpful in making this decision.
Single Family Office Setup vs. Multiple Families Office Setup
The choice between a single-family office and a multi-family office depends on the family’s needs and circumstances.
| Single Family Office (SFO) | Multi-Family Office (MFO) | |
| Definition | A private organization that manages the affairs of one wealthy family. | An organization that provides similar services to an SFO but serves multiple families or high-net-worth individuals. |
| Control | The family has direct control over the operations and decisions of the SFO. | Control is shared among the families served by the MFO. |
| Customization | Services are highly customized to the needs and preferences of the family. | Services are standardized to some extent, although customization is possible. |
| Cost | The cost of operating an SFO can be high, as all expenses are borne by one family. | The cost of operating an MFO is shared among the families, potentially making it more cost-effective. |
| Privacy | SFOs offer a high degree of privacy, as all information is kept within the family. | While MFOs also prioritize privacy, information is necessarily shared with the MFO provider and potentially other families. |
| Access to Services | SFOs may have access to a wide range of services, but the breadth and depth of expertise may be limited by the resources of the family. | MFOs can offer a broader range of services and expertise due to their larger scale and shared resources. |
| Regulatory Complexity | SFOs may face less regulatory complexity as they deal with the affairs of one family. | MFOs may face greater regulatory complexity due to serving multiple families and potentially operating across jurisdictions. |
How Family Offices Help Manage Global Private Wealth Portfolios
Family offices play a crucial role in managing global private wealth portfolios. They provide a range of services including investment management, risk management, tax planning, estate planning, and family governance. These services help wealthy families preserve and grow their wealth, manage risks, and plan.
Benefits of Legacy Businesses
Legacy businesses, often family-owned and passed down through generations, come with a host of benefits. Here are some of the key advantages:
- Long-term Vision: Legacy businesses often prioritize long-term growth and stability over short-term profits. This can lead to more sustainable business practices and strategies.
- Deep-rooted Values: Legacy businesses often have a strong set of core values that guide their decision-making process. These values can foster a strong company culture and customer loyalty.
- Strong Relationships: Legacy businesses tend to have strong relationships with their customers, suppliers, and community. These relationships, built over many years or even decades, can provide a competitive advantage.
- Institutional Knowledge: Legacy businesses often have a deep institutional knowledge and expertise in their industry. This knowledge, accumulated over many years, can be an asset.
- Stability: Legacy businesses often provide more stability for employees and stakeholders. This can lead to lower employee turnover and higher stakeholder confidence.
- Succession Planning: Legacy businesses often have clear succession plans in place, ensuring a smooth transition of leadership and continuity of the business.
- Brand Reputation: Legacy businesses often have a strong brand reputation built over many years. This can be a powerful marketing tool and can help to attract and retain customers.
- Community Impact: Legacy businesses often play a significant role in their local communities. They can contribute to the local economy, provide jobs, and support local causes.
- Resilience: Legacy businesses have often survived numerous economic cycles and market changes, demonstrating their resilience and adaptability.
- Wealth Preservation: For family-owned legacy businesses, they offer a means of preserving and growing family wealth over the long term, while also providing a sense of purpose and identity for family members.
Documents Required for Single and Multi-Family Office Business Setup in UAE
For Single Family Office (SFO): A detailed business plan, signed by the applicant, is crucial. This document should outline the strategic objectives of the Family Office, the proposed investment strategies, governance structure, risk management procedures, and other key operational details. Documentation proving the familial relationships between all members who will be served by the Family Office is required. This typically includes attested birth certificates for children and marriage certificates if the family head is married. Depending on the jurisdiction, permits from the Ministry of Foreign Affairs and the UAE Embassy may be required. These permits help to ensure that the Family Office is compliant with all relevant laws and regulations. A bank reference letter from the family head is often required. This letter serves as a testament to the financial standing and credibility of the family head.
For Multi-Family Office (MFO):For a Multi-Family Office, proof of the family tree is often required. This helps to establish the relationships between the different families that will be served by the MFO. A detailed plan outlining the proposed structure of the MFO is necessary. This should include information on how the MFO will be organized, the roles and responsibilities of key personnel, and the governance structure. Similar to an SFO, a signed business plan is required for an MFO. This should detail the strategic objectives, investment strategies, and operational details of the MFO. Attested documents proving the familial relationships between all members who will be served by the MFO are required. This typically includes birth certificates and marriage certificates. Please note that these are general guidelines, and the exact requirements can vary depending on the specific jurisdiction and the nature of the Family Office. It’s always a good idea to consult with a business setup expert, who can provide tailored advice based on your specific circumstances and ensure that you have all the necessary documentation in order.
Millionaires around the World Who Have Set up Family Offices in Dubai, UAE
Several millionaires and billionaires around the world have set up family offices in Dubai. For instance, Mukesh Ambani, Asia’s second-richest man and chairman of Reliance Industries, is reportedly setting up his family office in Singapore and Dubai. Other business tycoons like Krishna Kumar Bangur, the chairman of Graphite India, and Micky Jagtiani from the Landmark group have also set up their family offices in Dubai.
How Adam Global Can Help You Open a Family Office in Dubai
Adam Global, a leading corporate services firm, can assist you in setting up a family office in Dubai. We offer a range of services including company formation, legal and tax advisory, and wealth management. Our team of experts will guide you through the entire process, ensuring that your family office is set up in compliance with all local regulations and that it meets your family’s unique needs and goals.
Conclusion
Establishing a family office in Dubai, UAE, can be a strategic move for wealth and succession management. With its favourable business environment, strategic location, and high-quality professional services, Dubai offers an ideal setting for family offices. However, setting up a family office is a complex process that requires careful planning and expert guidance. By working with a trusted partner like Adam Global, you can navigate this process smoothly and ensure the long-term success of your family office.
