The Board of Directors of Ras Al Khaimah International Corporate Centre recently introduced amendments to its Foundation Regulations of 2019.
Some of the changes include clarifying that the Foundation has the capacity, rights and privileges of a natural person. The validity of an act done by a Foundation cannot be called into question on the ground of lack of capacity by reason of anything in its Charter or By-Laws.
Furthermore, the amendment clarifies that any property held in trust is not to be considered Foundation Property.
Firewall provisions
The new amendment specifically bars enforcement of any foreign judgment if the application of law in such judgment is inconsistent with the provisions of the Foundation Regulations. This protection applies to the Foundation itself, as well as concerned individuals connected to the Foundation or its property.
Disqualifications of Foundation Officer
The new amendment also provide that in cases where an action is brought against a Foundation Officer in a foreign court and such court orders the Foundation Officer to take an action in regards to the Foundation, then such Officer shall cease in all respects to act in their capacity as a Foundation Officer or to have any authority in respect of the Foundation.
Foundation Officer has been authorized to ignore the directives of any individual, authority or court that is not authorized by the Foundation Regulations, the Charter or the Bye Laws of the Foundation.
Enhanced protection against Credit Recovery
For a creditor to satisfy their claim out of a Foundation property, the Court has to determine two elements:
– at the time when the property was transferred to the Foundation, the Founder or Contributor, as applicable, intended to defraud a creditor
– at the time such transfer took place, the transfer of the property rendered the Founder or Contributor, as applicable, insolvent or without property from which, if that creditor’s claim had been successful, it could have been satisfied,
Once the above two elements are satisfied, a creditor’s claim can only be satisfied to the extent of the interest the Founder or Contributor had in the property prior to such transfer of property.
Three-Year Statute of Limitations
The amended regulations bar any action of the following nature:
– To set aside the establishment of the Foundation if brought after 3 years of the establishment of the Foundation,
– To set aside any disposition of the Foundation if brought after 3 years of such disposition,
– For any other matter, if the proceedings are not commenced within 3 years of the right to commence such action.
Conclusion
With these amendments, the RAK ICC continues to serve as a wealth structuring vehicle with legal robustness, flexibility for multigenerational planning, and secure and confidential dispute resolution. These amendments shall act as clarities for the individuals and institutions interested in using RAK ICC for forming foundations in the future.
For more information, you may contact:
Thomas Paoletti
Fauzia Khan
