SAFEGUARDING YOUR LEGACY: SETTING UP A HONG KONG AND MAINLAND CHINESE COMPANY (INC. FAMILY OFFICE) INTO UAE MAINLAND AND FREEZONE

This article has been researched and written by the Business Development team at Creation Business Consultants. AI has not been used in generating this article.

The family office model, focused on establishing a structure for the long-term management of a family’s wealth, is becoming increasingly popular in the United Arab Emirates (UAE). With a wealth of benefits for high-net-worth individuals and families for a safe, wealth-preserving, and growth-focused jurisdiction, the UAE is attracting a lot of attention from families.

The key considerations for establishing a family office in the UAE, with a particular focus on leveraging a pre-existing company structure from Hong Kong or mainland China. This model can often provide families with additional advantages from the regions above, including potential tax benefits and streamlined operations.

Whether you are a family from Hong Kong seeking international expansion or a mainland Chinese family looking for a safe haven for your wealth, this guide will provide you with the knowledge you need to work through the process. We will look at factors to think about when deciding on a location in the UAE, the specific benefits of setting up as a family office in Dubai International Financial Centre (DIFC) or Abu Dhabi Global Market (ADGM), and compliance obligations in order to operate successfully. With high-level guidance and strategic thinking, you can set up a family office in the UAE to help support the sustainability and success over the long-term of your family legacy.

IDEAL JURISDICTION FOR FAMILY OFFICE SET UP IN DUBAI

For Hong Kong and Chinese family offices looking for their base in the UAE, the DIFC and the ADGM aren’t exactly hot options to choose from. Each free zone has its specific propositions.

• TAX EFFICIENCY:

Being competitive tax jurisdictions, DIFC and ADGM provide some really enticing opportunities from the point of view of wealth management planning for family offices.

• EASE OF DOING BUSINESS:

DIFC and ADGM are very efficient in establishing a family office, considering the streamlined registration process and the availability of support services. That, for instance, is held in stark comparison to the rather labyrinthine registration system in mainland China.

• GLOBAL CONNECTIVITY:

DIFC and ADGM offer strong networks, both local and international, spanning various financial institutions and providers of professional services. The international reach also assists family offices with diversifying assets across different geographical areas.

• PLATFORM FOR GROWTH:

DIFC and ADGM are set up for family offices and provide specific regulations and direct infrastructure for wealth management activities. This can give family offices reassurance in their trading.

• COMMON LAW FRAMEWORK:

Unlike other free zones in the UAE, DIFC and ADGM operate under a common law framework, offering a familiar legal system for families from Hong Kong and other common law jurisdictions. This consistency can streamline legal processes, reduce potential complexities, and provide greater certainty for family office operations.

PROTECTING YOUR FAMILY OFFICE LEGACY: MANAGING RISKS EFFECTIVELY

Managing multiple risks that may fundamentally alter the family office over generations requires protecting your family legacy from the unpredictable risks associated with family leadership transition, volatile financial markets, privacy threats, and cybersecurity impacts.

Historically, family offices have been able to closely manage different types of risk management, neglecting any number of other domains: they have been exposed to risk gaps and may not have moved the family office toward its overall business aim. Finding a way to balance the complexity of different types of risk for family offices has required careful consideration as to how to offer strategic risk tolerance and employ its resources effectively, whilst managing the various moving parts of impenetrably addressing risk.

To safeguard the longevity of your family office, contact our experienced advisors for a risk management strategy which is unique to your family office. We can work with you to look holistically at your family office to protect your legacy from multifaceted risks.

LEVERAGING YOUR EXISTING STRUCTURE: BENEFITS OF A HONG KONG/MAINLAND CHINA COMPANY

For families in Hong Kong or mainland China, utilising an existing commercial entity to establish a UAE family office has some advantages. It lets you:

• SIMPLIFY THE SETUP PROCESS:

Using an existing legal entity may enable easier options to set up a family office in the UAE than if you were in a startup frenzy to create a new company.

• POTENTIAL TAX BENEFITS:

There could be implications under the existing tax structure of your Hong Kong or mainland China company when instituting a family office in the UAE related to available tax exemptions and tax rates based on which free zone you choose.

• ENHANCE EFFICIENCY:

Using an entity that already has a structure can help the operation of your family office. In addition, you can rely on procedures and existing company knowledge from your Hong Kong or mainland China company and use this to help organise the UAE family office and ongoing management.

Building up your family office is an elaborate process and entails more than just the initial setup. You need to understand the ongoing compliance requirements if you are setting up in the UAE mainland or a free zone for the day-to-day operations. Also, keep in mind that after establishing your office, you will need to explore corporate bank account options and other financial services essential for managing your wealth. Given so many variables, it is strongly advisable to retain the services of lawyers, accountants, and financial advisors who understand the UAE. They will make your family office comply with all laws and regulations of the land and work into the financial framework of the UAE without any glitches.

TAKEAWAY

Creating a family office means implementing a strategic investment with a long-term focus that wisely uses ongoing planning and professional support. In addition to creating a family office and making compliance-related implementations, accessing ongoing professional services and professional advice is vital to the continued operation of a family office.