The UAE Ministry of Finance said that its trusts law will help increase the “competitiveness” and “attractiveness” of the country’s financial services sector.
The Decree-Law No (19) of 2020 supports the advice sector and provides mechanisms to manage wealth and funds, as well as encouraging the allocation of charitable trusts.
It also establishes a section for ‘private trusts,’ which are set up for performing different forms of securities trading, as well as to establish pension funds or guarantee availability of benefits for the beneficiaries in return for regular contributions paid to the trust.
This comes months after the UAE allowed foreign investors to own the entirety of a business and changed laws to inheritance.
‘Attractiveness’
Younis Haji Al Khoori, undersecretary of the UAE Ministry of Finance, said: “The Ministry of Finance issued the trust law to create legal tools that enable companies or people who own various capital and financial rights to hand over these wealth and rights as a financial trust to a trustee who is entrusted with managing and developing said funds.
“This is done through a special document called a trust deed, and it is recorded electronically to reflect the assets – whether movable or property. After that, the existence of trust rights is indicated in the official records of those assets.
“The Ministry of Finance continues to work and cooperate with all relevant authorities to devise appropriate financial and monetary policies.
“This is in line with our endeavour to create an advanced and integrated legislative and legal structure and framework to protect investors. This, in turn, will enhance the UAE’s competitiveness and its investment attractiveness.”
‘Hugely important tool’
Tom Bicknell, partner at Pinsent Masons, added: “The ability to recognise the separation of legal and beneficial ownership – by the creation of a trust – is an age-old concept of common law. It is also one that is not generally part of most civil law jurisdictions such as the UAE.
“The new trust law is not only a hugely important tool for wealth management it is also represents a great legal innovation on the part of the Ministry of Finance for establishing a trusts regime within a civil law market.
“Practically speaking, it means investors in the UAE have a new structure in which to hold their assets efficiently and with full legal recognition.”
