In-Brief:
- The DIFC Court of First Instance in Bhanu Choudhrie v Dhairya Choudhrie and Anita Choudhrie (CFI 098/2025) drew important distinctions between the Founder, the Foundation, the Council and persons intended to benefit from Foundation assets.
- Founder status does not itself determine ownership, administrative authority or beneficiary entitlement. Rights and powers must be found in the applicable law and governing documents.
- For private wealth planning, the case reinforces the need to design governance deliberately and operate the structure consistently, particularly where family interests may diverge over time.
A recent DIFC Courts decision provides a timely reminder that ownership, governance authority and rights to benefit are distinct concepts in private wealth structures. We consider what Choudhrie means for DIFC foundations and the wider lessons for families designing governance and succession arrangements in the UAE.
Why Choudhrie matters
The proceedings concern the governance of the Stellar International Art Foundation. In an amended order reissued on 30 March 2026, H.E. Justice Sir Jeremy Cooke made final declarations on a number of issues concerning the identity and position of the Founder, Council decision making, beneficiary entitlement and the role of a Guardian or protector. The order nevertheless expressly states that it does not finally determine the underlying Part 8 claim, and a number of the declarations were reached by reference to the particular constitutional documents before the Court. The case should therefore be read and interpreted with care, but does provide a useful practical illustration of the distinctions between a Foundation, those responsible for its governance and those intended to benefit from it.
The Founder is not the Foundation
The claimant argued that Foundation Management Co Inc., which had executed the relevant documentation, had acted as a nominee and that he should instead be regarded as the “Real Founder”. The Court rejected that argument. It held, consistent with Articles 17 and 19 of the DIFC Foundations Law, that the relevant signatories constituted the Founders notwithstanding the alleged nominee relationship between the signatory and the person funding the structure.
That conclusion can be understood against the wider statutory structure. Article 10 provides that a DIFC Foundation has legal personality separate from its Founder and any other person, that Foundation property is not held on trust for another person, and that a Founder has such rights in respect of the Foundation as are provided for in its By laws. These provisions were considered by the DIFC Court of Appeal in The Dubai International Financial Centre Authority [2020] DIFC CA 002.
As a practical matter, the decision illustrates that an economic connection with a structure, or the contribution of property to it, does not necessarily determine the legal capacity in which a person participates. Founder status does not itself confer an ownership interest in the Foundation or all powers in relation to its affairs. Nor should the decision be read as establishing a universal “signature test” for Founder status: the Court’s conclusion arose from the relevant statutory establishment framework and the particular documents before it.
Founder status does not itself determine control
The Court declared that the Founder did not automatically qualify as a Beneficiary or Qualified Recipient, was not a Council member merely because it was the named Founder, and had not been granted powers in relation to the administration of this Foundation. Those powers rested with the Council, to be exercised at its discretion.
The wider statutory framework reinforces the distinction. Article 10 provides that a Founder has such rights as are provided for in the By laws, while Article 27 provides that a Founder does not acquire an interest merely by endowing the Foundation with capital or merely by being the Founder. Article 26 separately permits a Founder, subject to its requirements and time limits, to reserve powers to amend, revoke or vary the Charter or By laws or the objects of the Foundation, or to terminate the Foundation. The planning lesson is that control should be designed rather than presumed.
Governance mechanics matter
The Court declared that resolutions considered at a duly convened Council meeting could be approved by simple majority under the Foundation’s Charter of Continuance. By contrast, where no meeting was held, a circular written resolution required unanimous approval, notwithstanding that two of the three Council members might have been sufficient to execute the resolution. The case therefore illustrates that the threshold for approving a resolution and the number of signatures required to execute it may not be the same. Provisions governing meetings, quorum, voting thresholds, written resolutions, execution authority and deadlock should operate coherently.
Oversight, administration and beneficiary rights
The Court declared that, in relation to the Foundation before it, a Guardian or protector was not required. If appointed, that person could not be a Council member and could not exercise quasi judicial, arbitral or determinative powers in a dispute between Council members. These declarations should be read in the context of the applicable DIFC law and the particular Foundation, rather than as universal propositions for differently structured foundations.
The Court also distinguished beneficiary status from entitlement. It declared that the Council had full discretionary powers in relation to distributions and that no person had an automatic entitlement to Foundation assets merely because that person was named or described as a Beneficiary. This is consistent with the statutory treatment of Qualified Recipients considered in DIFCA [2020] DIFC CA 002 in the sense that Article 29 does not give a Qualified Recipient a right to or interest in Foundation property merely by reason of that status, save for rights arising under the By laws or a contract with the Foundation.
Governance must also work in practice
The Court required disclosure of details and documents concerning UK proceedings relating to the affairs or property of the Foundation and stated that the claimant had a fiduciary duty to the Foundation to disclose documents in his possession relating to its affairs. It also intervened directly in aspects of governance, including access to the DIFC portal, restrictions on unilateral changes to registered records and filings, arrangements for a Council meeting and access to the Foundation’s email account. From a planning perspective, the case reinforces the importance of administering a structure consistently with the legal relationships it creates.
A wider private wealth context
The distinctions highlighted by Choudhrie also sit within a broader private wealth context. The DIFC Family Arrangements Regulations provide a framework for family businesses and family structures concerned with wealth preservation, succession and legacy planning. Comparable distinctions between ownership, administration and benefit can arise under other private wealth structures, although the legal consequences under each regime must be considered separately. Choudhrie does not determine the legal position under those other frameworks and its wider relevance is therefore analogical.
Conclusion/Recommendation
Choudhrie highlights four useful distinctions for private wealth planning: the Founder and the Foundation have distinct legal identities and capacities, Founder status and governance authority are distinct, governance authority and administration may be allocated differently and Beneficiary status does not itself create an entitlement to Foundation property. The precise position will always depend on the applicable legal regime and governing documents. For families establishing or reviewing foundations and wider succession structures, the key is to allocate ownership, decision making, reserved powers, supervisory rights and benefit deliberately and document them clearly.
Hadef & Partners’ Private Wealth team can assist families and advisers in reviewing existing arrangements and/or designing governance structures that reflect the family’s objectives and remain workable as circumstances and relationships evolve.
For more information, please contact Ahmad Sergieh, Partner and Head of Corporate (Dubai), Private Wealth at Hadef & Partners (a.sergieh@hadefpartners.com).
This article is intended for general informational purposes only and does not constitute legal advice. Readers should seek independent legal counsel in relation to their specific circumstances.