New regulations issued for endowment companies in Abu Dhabi

The Abu Dhabi Department of Economic Development (ADDED), in collaboration with the Abu Dhabi Awqaf and Minors Affairs Foundation (Awqaf Abu Dhabi), has announced a new resolution regarding the establishment and licensing of endowment institutions in Abu Dhabi. This resolution marks a transformative step in strengthening the endowment structure, supporting the sustainable development of family businesses, and promoting best practices in endowment management. It further solidifies Abu Dhabi's leadership in endowment governance and expands the contribution of non-profit organizations and associations (the third sector) to the domestic gross domestic product (GDP).

This resolution introduces a comprehensive regulatory framework, formally establishing the role of the endowment sector in promoting sustainable socio-economic development. It aligns with the theme of the UAE's 2025 Community Year, "Hand in Hand," reflecting the vision of His Highness Sheikh Mohamed bin Zayed Al Nahyan, President of the UAE, to promote sustainable growth, a knowledge-based economy, and social solidarity. Building upon existing laws regarding family endowments, the resolution introduces structured governance models for these entities. It provides a framework for the creation and management of endowment companies, covering essential elements such as legal status, permitted activities, and licensing requirements.

By establishing clear legal and regulatory guidelines, the resolution empowers companies, institutions, and individuals to contribute to long-term social and economic progress. All applications must be approved by Awqaf Abu Dhabi to ensure compliance with current regulations, the wishes of the donors, and the broader objectives of the endowment. Under the new framework, endowment companies will be able to manage private endowments while engaging in commercial activities to support the sustainability and growth of endowment assets, thereby maximizing financial returns and social impact. The resolution also establishes robust monitoring and oversight mechanisms to enhance governance and accountability within the sector.

His Excellency Rashed Abdulkarim Al Blooshi, Undersecretary of the Abu Dhabi Department of Economic Development, stated, "Endowments have played a vital role in socio-economic development for decades. The issuance of this resolution to establish and license endowment companies in Abu Dhabi aims to provide a suitable framework for them to grow and thrive. This aligns with the UAE's vision, which places human development, sustainability, and economic inclusion at the heart of its strategic plans to accelerate economic growth and diversification, and to further strengthen a knowledge-based, innovation-driven economy."

His Excellency Al Blooshi added, "Our collaboration with Awqaf Abu Dhabi is to ensure the objectives of this step are achieved, focusing on the robust management, sustainability, and adherence to the highest standards of governance and transparency for endowment companies. Providing the right ecosystem for establishing endowment companies paves the way for enhancing their role and contribution across various economic sectors, while focusing on achieving the social development goals of these unique investments."

As detailed guidelines and manuals will be introduced for endowment institutions later, the resolution presents a regulatory framework that guarantees the highest standards of governance and transparency for founders and their beneficiaries. It encourages investment in several strategic areas, including manufacturing, education, trade, healthcare, agriculture, culture, and innovation. Furthermore, it promotes collaboration between the public and private sectors to achieve sustainable development goals and optimize resource utilization.

His Excellency Fahad Abdulqader Al Qasim, Director General of Awqaf Abu Dhabi, emphasized the resolution's role in balancing sustainable investments with prudent risk management across various asset classes. He stated, "This resolution reflects the strategic partnership between Awqaf Abu Dhabi and ADDED, establishing a regulatory framework that promotes endowment investments and maximizes their social and economic impact. It enhances the sustainability of family businesses and ensures the perpetuation of donors' philanthropic legacies for generations to come. This embodies the vision of the UAE leadership to ensure a dignified quality of life and promote solidarity, in line with the UAE's 2025 Community Year."

"The introduction of endowment companies represents an innovative evolution in endowment governance, allowing for greater flexibility and adaptability in responding to changing economic conditions. The resolution provides donors with the ability to establish independent, legally recognized entities under corporate law, adhering to the highest standards of governance and best practices."

The resolution covers various types of endowment institutions, including private (family) endowments, charitable endowments, and joint endowments. It also allows for the management of endowed shares and equity in commercial enterprises, provided that these terms are explicitly included in the company's articles of association and comply with applicable laws. Furthermore, the resolution aims to attract more investment into the endowment sector. This will strengthen its contribution to Abu Dhabi's sustainable economic and social development agenda. It supports the UAE's broader economic diversification strategy, solidifying the UAE's position as a leading hub for philanthropy and responsible investment.

Leveraging Abu Dhabi's strategic position as a global investment gateway, Awqaf Abu Dhabi launched its dedicated investment arm, Awqaf Capital, in December 2024. This initiative aims to deploy capital across various asset classes, further establishing Abu Dhabi as a hub for sustainable endowment management and international investment.