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 concept of a family office, a dedicated structure for managing a family’s wealth across generations, is gaining significant traction in the United Arab Emirates (UAE). This strategic jurisdiction offers a wealth of advantages for high-net-worth individuals and families seeking a stable and business-friendly environment to preserve and grow their assets.

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 approach can unlock additional benefits for families from these regions, such as potential tax advantages and streamlined processes. 

Whether you’re a Hong Kong family seeking a global expansion or a mainland Chinese family looking for a secure haven for your wealth, this guide will equip you with the knowledge to navigate the process effectively. We’ll explore the key factors to consider when choosing a location within the UAE, the specific advantages offered by Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM) for family offices, and the ongoing compliance requirements for successful operation. With expert guidance and a strategic approach, you can establish a robust family office in the UAE, ensuring the long-term sustainability and prosperity of your family’s legacy.

IDEAL JURISDICTION FOR FAMILY OFFICE SET UP IN DUBAI

Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM) are particularly attractive options for Hong Kong and Chinese family offices seeking a UAE base. Both free zones offer a unique blend of benefits:

• TAX EFFICIENCY: DIFC and ADGM provide competitive tax regimes. This is especially appealing for family offices looking to optimize their wealth management strategies.
• EASE OF DOING BUSINESS: Streamlined registration processes and readily available support services make setting up a family office in these free zones swift and efficient. This can be a significant advantage compared to the potentially more complex procedures in mainland China.
• GLOBAL CONNECTIVITY: Both DIFC and ADGM boast strong international connections, offering access to a network of financial institutions and professional service providers. This global reach is ideal for family offices managing assets across multiple geographies.
• PLATFORM FOR GROWTH: DIFC and ADGM cater specifically to the needs of family offices, offering specialized regulations and infrastructure tailored to wealth management activities. This allows family offices to operate with confidence and potentially expand their investment strategies within the UAE.
• 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

Securing the future of your family office involves managing various risks that can impact its legacy across generations. These risks include challenges in passing on leadership within the family, disruptions in financial markets, privacy issues, and cybersecurity threats. 

In the past, family offices often focused narrowly on managing specific risks, which sometimes meant overlooking other critical areas. This approach could lead to gaps in protection and hinder the office from achieving its broader business goals. To address these challenges effectively, family offices need a tailored strategy that matches their risk tolerance, utilizes available resources wisely, and coordinates efforts across all aspects of risk management. 

Ensure the long-term stability and success of your family office by consulting with our specialized advisors in comprehensive risk management. Contact us today for personalized guidance and solutions. We specialize in setting up family offices, ensuring tailored strategies to protect your legacy effectively against complex risks.

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

For families from Hong Kong or mainland China, setting up a UAE family office using a pre-existing company structure offers several compelling advantages. This approach can:

• SIMPLIFY THE SETUP PROCESS: By leveraging an existing legal entity, you can potentially streamline the process of establishing your family office within the UAE. This can save time and resources compared to forming a new company from scratch.
• POTENTIAL TAX BENEFITS: The existing tax structure of your Hong Kong or mainland China company may offer advantages when establishing a family office in the UAE. Depending on the specific free zone you choose, you might be eligible for tax exemptions or reduced tax rates.
• ENHANCE EFFICIENCY: Utilizing a familiar company structure can improve operational efficiency for your family office. You can leverage existing processes and knowledge from your Hong Kong or mainland China company, ensuring a smoother transition and ongoing management of your UAE family office.

Establishing your family office requires careful planning beyond the initial setup. Understanding the ongoing compliance obligations, whether you choose the UAE mainland or a free zone, is crucial for smooth operation. You will also need to explore options for opening corporate bank accounts and accessing the financial services necessary for managing your wealth. To navigate these complexities effectively, seeking guidance from lawyers, accountants, and advisors familiar with UAE regulations is highly recommended. Their expertise can ensure your family office adheres to all legal requirements and operates efficiently within the UAE’s financial landscape.

TAKEAWAY

Setting a family office is a strategic, ongoing commitment requiring careful planning & expert support. Beyond the initial setup, adhering to compliance requirements, securing access to financial services, and seeking expert guidance are all crucial for successful operation. With careful planning and the right support system, you can leverage the UAE’s advantages to build a legacy for generations to come.

Ka-Ying Leung,
Business Development Consultants