Sharia in a nutshell · Sharia in the world. 48% of world proven oil and 43% of gas...
Transcript of Sharia in a nutshell · Sharia in the world. 48% of world proven oil and 43% of gas...
Sharia in a nutshell
Quran – Holy book of Muslims Hadith – the “by-laws” Sunnah – the “jurisprudence”
Sharia in the world
Influence of Sharia
UAE Constitution Article 7: Islam is the official state religion Islamic Sharia the primary source of legislation
In absence of UAE law provision UAE courts will pass judgment according to Sharia
Influence of Sharia
Personal Status Marriage Divorce Child – custody Inheritance
We need to talk…
Married, two minor children (a boy & a girl) Hindu religion Assets in Abu Dhabi, Dubai and abroad Parents alive, one brother
…lets talk about Akshay
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Probate Procedure in the UAE Local Courts in Charge (Civil – Family Law Section) Which Law governs the Estate?
• High Courts Jurisprudence vs• Lower Courts practice
UAE assets temporarily frozen
What if Akshay passes away in the UAE?
Father Mother
Brother Akshay Wife
Son Daughter
16.67% 16.67%
None(Son blocks
brother)12.5%
18.06%(Half of the son’s
share)36.11%
Know your Sharia heirs
Local Needs International Ambitions
The Middle East Legacy Planning (R)Evolution
Local Needs International Ambitions
Same Goal
The Middle East Legacy Planning (R)Evolution
Middle East holds 48% of the oil reserves
Natural gasOil
Middle East holds 43% of the natural gas reserves
Oil & gas make up about 1/3 of GDP of GCC economies. GCC economies must diversify further if they want to be able to create more jobs for their nationals.
Distribution of proved reserves in 2015
Distribution of proved reserves in 2015
(Source: BP Statistical review 2015)
GCC: Oil and Gas Powerhouse
“USD 1 trillion to pass from second generation business families to millennials within 10 years”
(Source: The Gulf Family Business Council)
Local needs
not accounting offshore assets!
(Source: The Gulf Family Business Council)
“USD 1 trillion to pass from second generation business families to millennials within 10 years”
Local needs
ADGMConsolidated Accounting, tax & estate
Family Unity
Family Education
Philanthropy
Europe65% North
America52%
DEVEC81%
ASIAPacific
71%
(Source: UBS/ Campden Wealth Global Family Office Report)
Local needs
Business-Owning Families
Merchant families under attack!
Demographic Economic Financial Educational
Local needs
“Only 15-20 percent of family businesses are planning their succession”
(Source: The Gulf Family Business Council)
Local needs
Western tool
VS
Regional assets
Local needs
ADGMConsolidated Accounting, tax & estate
Family Unity
Family Education
Philanthropy
Europe65% North
America52%
DEVEC81%
ASIAPacific71%
(Source: The Global Financial Centres Index 20)
International Ambitions
ADGMConsolidated Accounting, tax & estate
Family Unity
Family Education
Philanthropy
Europe65% North
America52%
DEVEC81%
ASIAPacific71%
(Source: The Global Financial Centres Index 20)
Financial Centers on the Rise
Shanghai
Qingdao
UAE
Hong Kong
Casablanca
Singapore
Shenzhen
Luxemburg
Toronto
Gibraltar
International Ambitions
Most Competitive Centres
UK
Hong Kong
BVI
US
Singapore
Switzerland
Cayman Islands
Luxemburg
Jersey
Guernsey
Netherlands
UAE
International Ambitions
Centres on the rise
UK
Hong Kong
US
UAE
Most Competitive Centres
UK
Hong Kong
BVI
US
Singapore
Switzerland
Cayman Islands
Luxemburg
Jersey
Guernsey
Netherlands
UAE
International Ambitions
ADGMDIFCVS
To become regional hub for wealth management and succession planning
Regional assets
International Ambitions
Independent regulatory framework Independent Courts “Sharia compliance”
• Horizontal • Vertical
Regional assets
ADGMDIFCVS
Common Law
International Ambitions
Europe1995 North
America1994
DEVEC1999
ASIAPacific2001
(Source: UBS/Campden Wealth Family Office Report)
Targeting SFOs
Europe52% North
America57%
DEVEC65%
ASIAPacific
76%
(Source: UBS/Campden Wealth Family Office Report)
Targeting SFOs
Europe52% North
America57%
DEVEC65%
ASIAPacific
76%
(Source: UBS/Campden Wealth Family Office Report)
Solutions as of today
1. ADGM SPV2. Foundation Regime (AGDM -> DIFC to come)3. DIFC WPR4. Trusts (DIFC and ADGM) and PTCs
Europe52% North
America57%
DEVEC65%
ADGM SPV
IBC within tier 1 financial center sophisticated framework / light requirement flexible – shelf cos permitted, ability to “morph” portable – migration regime available
ADGMConsolidated Accounting, tax & estate
Family Unity
Family Education
Philanthropy
Bank account
ADGM SPV: Bringing SPVs closer to home
ADGMConsolidated Accounting, tax & estate
Family Unity
Family Education
Philanthropy
ADGM SPV: Bringing SPVs closer to home
ADGMConsolidated Accounting, tax & estate
Family Unity
Family Education
Philanthropy
ADGM SPV: Bringing SPVs closer to home
ADGMConsolidated Accounting, tax & estate
Family Unity
Family Education
Philanthropy
ADGM SPV: Bringing SPVs closer to home
ADGMConsolidated Accounting, tax & estate
Family Unity
Family Education
Philanthropy
ADGM SPV: Bringing SPVs closer to home
ADGMConsolidated Accounting, tax & estate
Family Unity
Family Education
Philanthropy
Bank account
ADGM Hold Co
Bank account
SubsidiariesContracts
Substance (onshore jurisdiction) Physical premises DTT Benefits
IBC Co ADGM SPV
Family Education
No substance (offshore jurisdiction) No physical premises No DTT benefits
Bank account ContractsSubsidiaries
Bank Bank
ADGM SPV: Bringing SPVs closer to home
ADGMConsolidated Accounting, tax & estate
No Shareholders Independent legal personality Assets donated are owned by the Foundation in its own name Parties:
• Founder• Foundation Council• Guardian • Beneficiaries
Perception matters: cosmetically more acceptable?
ADGM Foundation Regime: Model
ADGMConsolidated Accounting, tax & estate
ADGM Foundation Regime: Model (cont’d)
BeneficiariesFounderAssets in Distributions
Guardian
Foundation Council
ADGM FOUNDATION(constituted by charter and by-
laws)
ADGMConsolidated Accounting, tax & estate
Legacy planning and asset protection mechanisms to protect the founder’s wishes
Robust governance structure Founder maintains control Additional security through Guardian supervision High level of discretion and flexibility Fully digitalized and efficient registration process Reputable, tier 1 financial center
ADGM Foundation: Key Features
ADGMConsolidated Accounting, tax & estate
GCC families:• strengthen control over assets that are key to the GCC economy• facilitate succession – no involvement of foreign entities• income protection
International families:• alternative to current foundation and trust arrangements• foundation acting as PTC in local and international trust structures
ADGM Foundation Regime
ADGMConsolidated Accounting, tax & estate
Key policy considerations:
Client confidentiality Governance controls Asset protection
Philanthropy
ADGM Foundation Regime
ADGMConsolidated Accounting, tax & estate
Documents: Charter & By-laws Minimum Assets : USD 100
• Any assets Reservation of power Portable: Redomiciliation allowed Registration Fee : USD 200
ADGM Foundation Regime
ADGMConsolidated Accounting, tax & estate
Philanthropy
Any disposition of property determined under the law of its incorporation (ADGM)
Foreign law not recognizing foundation do not affect foundation’s validity
Rights asserted under foreign heirship law or other claims do not affect foundation
Foreign judgement purporting to give rights to heirship rights or claims not recognized
Express Firewall provision
ADGMConsolidated Accounting, tax & estate
Philanthropy
Required• Founder, Council, Beneficiaries
Optional• Registered agent • Guardian
Parties
ADGMConsolidated Accounting, tax & estate
Philanthropy
No charitable purpose But useful in active philanthropy
• e.g. foundation in combination with company limited by guarantee
Purpose
ADGMConsolidated Accounting, tax & estate
Philanthropy
Part A
Charter Name and Registered Number Date of Establishment Registered address Name/Address of Councilors
Publicly available information
ADGMConsolidated Accounting, tax & estate
Philanthropy
Part A Part B
By-laws Name/address of
• Beneficiaries• Guardian• Founder/UBO
KYC
Charter Name and Registered Number Date of Establishment Registered address Name/Address of Councilors
Publicly available information
ADGMConsolidated Accounting, tax & estate
Philanthropy
Restricted vs available No, unless Charter or By-laws provide otherwise
Publicly available information
Set of rules relating to inheritance issues of non-Muslims Clear mechanism to pass on “Dubai” and “Ras Al Khaimah (RAK)”
estate DIFC rules to complement existing UAE laws
The DIFC WPR
(Source: DIFC Wills and Probate Registry - www.difcprobate.ae)
Over 2,600 wills have been registered
Approximately 30 wills registered each week
70% of registered wills are mirror wills
39.10% of registrants are women & 60.90% are male
31.67% of all wills registered are for Indian passport holders
60% are Europeans
Youngest registrant was 23 years old, oldest was 94
8 probate cases – 6 granted
Facts and Figures
When? fully operational since 30th April 2015
Who? non-Muslims over age of 21; residency is not relevant
What Form? standard
What Law? DIFC Laws
Which Estate? Dubai and RAK located assets
What Assets? movable and immovable
The DIFC WPR
Custodian? DIFC Registry
Executor? TBD by Testator
Witness? any capable individual
Guardians of minor children? TBD by Testator
Supporting Documents? per DIFC Practice Directions
Authority? DIFC Court to issue grants/orders for assets distribution
Fees? USD 2,800 for a Standard Will and USD 4,200 for Mirror Wills
The DIFC WPR
Abroad • Shortcut to devolution of “Dubai” and “RAK” assets• No involvement of local (civil) courts
In the UAE• No involvement of local courts • No risk of application of Sharia Law• Faster & cheaper
If Akshay passes away
ADGMConsolidated Accounting, tax & estate
Philanthropy
ADGMConsolidated Accounting, tax & estate
Philanthropy
To be released any time Based on the Dutch model
Up in the air: DIFC Foundation Regime
ADGMConsolidated Accounting, tax & estate
Family Unity
Family Education
Philanthropy
Europe65% North
America52%
DEVEC81%
UAE new tools in practice
ADGMConsolidated Accounting, tax & estate
Family Unity
Family Education
Philanthropy
Europe65% North
America52%
DEVEC81%
BVI Co.
JAFZA Co.
100%
100%
UAE new tools in practice
ADGMConsolidated Accounting, tax & estate
Family Education
Philanthropy
Europe65% North
America52%
DEVEC81%
ASIAPacific71%
BVI Co.
JAFZA Co.
100%
100%
JAFZA Co.
100%
DIFC will
UAE new tools in practice
ADGMConsolidated Accounting, tax & estate
Family Unity
Family Education
Philanthropy
Europe65% North
America52%
DEVEC81%
ASIAPacific71%
100%
DIFC will
JAFZA Co.
100%
DIFC willBVI Co.
JAFZA Co.
100%
100%
UAE new tools in practice
ADGMConsolidated Accounting, tax & estate
Family Unity
Family Education
Philanthropy
Europe65% North
America52%
DEVEC81%
ASIAPacific71%
Founder
ADGMConsolidated Accounting, tax & estate
Family Unity
Family Education
Philanthropy
Europe65% North
America52%
DEVEC81%
ASIAPacific71%
100%
JAFZA Co.
BVI Co.
JAFZA Co.
100%
100%
JAFZA Co.
100%
DIFC will
Foundation
Beneficiary(ies)
UAE new tools in practice
ADGMConsolidated Accounting, tax & estate
Family Unity
Family Education
Philanthropy
Europe65% North
America52%
DEVEC81%
ASIAPacific71%
Hold Co.
DIFC will
Foundation
Hold Co.
DomesticOperating Co.
ForeignOperating
Co.
DomesticOperating Co.
Bank Bank Bank
Bank
UAE new tools in practice
ADGMConsolidated Accounting, tax & estate
Family Unity
Europe65%
Bank accountBank account
Founder
100%
Beneficiary(ies)
Bank account
Hold Co.
OpCosUAE &
worldwide.
IP rights etc.
Bank
UAE new tools in practice
Founder
100%
Beneficiary(ies)
Provision of services by
SFO
Hold Co.
OpCosUAE &
worldwide.
SFOUAE
IP rights etc.
Bank
UAE new tools in practice
100%
Bank account
Provision of services by SFO
Settlor Beneficiary(ies)
Hold Co.
SFO/Trust CoUAE
OpCosUAE &
worldwide.
IP rights etc.
Bank
UAE new tools in practice
ADGMConsolidated Accounting, tax & estate
Family Unity
Family Education
Philanthropy
Europe65% North
America52%
DEVEC81%
ASIAPacific71%
What will you take home?
ADGMConsolidated Accounting, tax & estate
Family Unity
Family Education
Philanthropy
Europe65% North
America52%
DEVEC81%
ASIAPacific71%
See you in Dubai!
ADGMConsolidated Accounting, tax & estate
Family Unity
Family Education
Philanthropy
Europe65% North
America52%
DEVEC81%
ASIAPacific71%
See you in Dubai!
5th of November 2017
ADGM
Family Unity
Family Education
Philanthropy
Europe65%
DEVEC81%
See you in Dubai!
Aline von Düring
www.m-hq.com