Public Benefit Organisations in the UAE: Formation, Governance, Funding, and Regulatory Oversight

Public benefit organisations occupy a distinctive legal space in the UAE. They may support education, health, culture, science, professional development, the environment, humanitarian work, family and community programmes, sport, volunteering and other activities that serve the public interest. But they are not ordinary commercial companies that simply choose not to distribute profits.

The current federal framework is centred on Federal Decree-Law No. 50 of 2023 Regarding the Regulation of Public Welfare Associations. It is implemented principally through Cabinet Resolution No. 5 of 2025, and has been supplemented by Cabinet Resolution No. 78 of 2025 on administrative violations and penalties and Cabinet Resolution No. 159 of 2025 approving the Classification Guide for Public Welfare Associations and their activities.

The official English translation uses the expression Public Welfare Associations. In business and tax discussions, the expressions “public benefit organisation”, “public benefit entity”, “NGO” and “non-profit organisation” are also used. These terms should not be assumed to be legally interchangeable. In particular, being licensed as a public welfare organisation under the 2023 law is different from being recognised as a Qualifying Public Benefit Entity for UAE Corporate Tax purposes.

The regulatory model is based on four ideas: approved public-benefit purposes, formal legal personality, controlled governance and funding, and continuing public supervision.

What is a Public Welfare Association?

The 2023 Decree-Law defines a Public Welfare Association broadly as a private legal person licensed under UAE law, established to conduct one or more public-welfare activities in one of the permitted legal forms and without primarily aiming to achieve profit.

The legislation therefore does not treat “non-profit” as meaning an entity that is free from economic activity. A public welfare organisation may receive membership fees, earn revenue from activities and services, receive donations and grants and, with approval, invest surplus funds. The defining feature is that the organisation is established for public-welfare purposes rather than primarily for private profit distribution.

The federal law recognises several legal forms

Article 3 identifies four principal forms:

• Association — a group of natural persons established for one or more public-welfare activities and not aiming to make a profit;
• National Society — a legal person created by one or more natural-person founders through allocation of money for public-welfare activities;
• Union — a grouping of at least five associations or national societies conducting similar public-welfare activities; and
• Social Solidarity Fund — a fund created by legal persons to promote solidarity and interdependence among persons affiliated with the fund.

The Executive Regulation may recognise additional forms.

The correct structure depends on the founders, funding model, intended membership, governance and purpose. A membership-based professional body may fit naturally as an association, while a founder-led institution capitalised with dedicated assets may be better analysed as a National Society.

The permitted activities are now classified under a formal national guide

Article 4 identifies broad public-welfare fields including social, cultural, scientific, educational, professional, creative, artistic, recreational and environmental activities, humanitarian services and purposes of charitable work or social solidarity.

Cabinet Resolution No. 159 of 2025 now provides the current Classification Guide. The Guide is intended to standardise classification across the country and identify the precise fields and activities in which public welfare organisations may operate.

The Guide includes fields and activities such as:

• culture and creative arts;
• scientific research;
• education;
• professional development;
• entertainment and sport;
• environmental activity;
• charitable work;
• family and community empowerment;
• health;
• animal welfare;
• volunteering;
• youth and senior-citizen programmes;
• people of determination;
• national identity and citizenship; and
• support for vulnerable groups.

The classification is not merely descriptive. The organisation should operate within the field and activities approved in its licence and constitutional documents.

No organisation may simply begin carrying out public-welfare activity

Article 5 establishes a licensing principle: a group or entity may not practise public-welfare activities until the applicable licensing process has been completed, Ministry approval obtained, registration completed and any additional sector-specific approvals secured.

The same Article prevents an owner from knowingly making premises available to an unlicensed public welfare organisation and states that branches of foreign public welfare associations are not granted under this federal structure.

This means that incorporating an ordinary company, civil company or free-zone vehicle and describing it as “non-profit” does not automatically authorise it to conduct regulated public-welfare activities.

Formation of an Association requires a qualifying founder group

Article 8 contains the core federal formation requirements for an Association.

The Association must have at least seven founding members. At least 70% of the founding members must be UAE nationals.

Non-UAE nationals may participate within the permitted 30% limit, subject to statutory conditions that include absence of diplomatic status and a valid UAE residence permit for at least three years. Founders must also satisfy the applicable age, conduct and reputation requirements.

The Cabinet may create exceptions to some establishment conditions on the proposal of the Minister and in coordination with the Local Authority.

The by-laws are a core governance document

The founders must prepare by-laws using the framework established by the Ministry in coordination with the Local Authority.

Cabinet Resolution No. 5 of 2025 requires the by-laws to address matters including:

• the organisation's bodies and their respective powers;
• the Board, General Assembly, director and administrative structure;
• membership rules;
• meeting and voting procedures;
• board elections and terms;
• activities and external relationships;
• branches and merger arrangements;
• financial resources and their management;
• financial controls and fiscal year;
• employment and staffing rules;
• appointment and role of the auditor; and
• voluntary liquidation and destination of remaining assets.

A public benefit organisation should therefore not treat the by-laws as a short incorporation template. They are the operating constitution against which the regulator, members and governing bodies can test later decisions.

The establishment application is document-heavy

Under Article 3 of the 2025 Executive Regulation, the authorised member of the provisional committee files the establishment application with the Competent Authority.

The filing includes the founders' approval, draft by-laws, detailed founder information and identification documents. For a non-UAE founder, evidence of the qualifying UAE residence period is also required.

Where the Ministry itself is the competent licensing authority, the Executive Regulation provides for a decision on the completed application within the prescribed review period. Where a Local Authority licenses the entity, its approval operates together with the required Ministry involvement.

Legal personality does not arise merely from the founders' agreement

Article 14 provides that an Association acquires legal personality upon issuance of the resolution declaring it, with publication of that resolution in the Official Gazette.

Before that point, founders should avoid acting as though the future association is already an independent legal person capable of holding assets, signing long-term contracts or employing staff in its own name.

If a declaration application is rejected, Article 13 provides an appeal mechanism to the Minister within 30 days, followed by a right to resort to court within the statutory period after rejection or failure to decide the appeal.

The first elected Board follows formation

After declaration, the temporary committee must call the General Assembly within the statutory period to elect the Board.

Article 22 provides that an Association's Board of Directors ordinarily consists of at least five and no more than eleven members, unless the Competent Authority approves a larger board.

At least 70% of the Board members specified in the by-laws must be UAE nationals.

The Board manages the Association's affairs and provides the means necessary for the organisation to conduct its approved activities and achieve its objectives.

Board governance should be treated as fiduciary-style stewardship

The legislation does not allow Board members to treat the organisation as an asset owned by its founders or members.

Article 36 makes clear that the Association's funds belong to the Association itself. Members do not own those funds, and a withdrawing or dismissed member cannot demand a share of the organisation's property merely because of membership.

Strong governance should therefore include:

• documented Board resolutions;
• conflict-of-interest procedures;
• segregated financial approval limits;
• procurement rules;
• clear employment and remuneration controls;
• auditor independence;
• controls over related-party contracts;
• accurate minutes;
• annual planning and budgeting; and
• regular compliance reporting to the Board.

The General Assembly retains important powers

The General Assembly is not ceremonial. It reviews annual governance and financial matters and elects the Board.

The statutory framework provides for Ordinary and Extraordinary General Assemblies, quorum and voting controls and regulatory notification. The 2025 Executive Regulation also gives Ministry and Local Authority representatives defined supervisory functions at General Assembly meetings, including monitoring quorum, the agenda, voting and Board elections.

The Board must submit minutes of Ordinary and Extraordinary General Assembly meetings to the Competent Authority within the required period for approval.

A professional director is also part of the modern governance model

The 2025 Executive Regulation requires governance structures to include a director or executive-management function, and the administrative penalty schedule specifically addresses failure to appoint a director within the applicable period or appointment without the Competent Authority's approval.

This reflects a broader move away from purely volunteer governance toward professional administration with identifiable executive responsibility.

Public-welfare organisations can have several lawful funding sources

Article 35 recognises financial resources including:

• membership fees;
• revenue from activities and services consistent with the organisation's purposes;
• income from permitted investments;
• donations, gifts, bequests, grants and subsidies received in accordance with UAE legislation; and
• other revenue authorised by the by-laws or approved by the Competent Authority.

This gives organisations funding flexibility, but each revenue stream must remain connected to the non-profit purpose and other applicable legislation.

Donation income remains subject to the separate Donations Law

Federal Decree-Law No. 50 of 2023 recognises donations as a possible resource, but it does not override Federal Law No. 3 of 2021 Regulating Donations.

Where the organisation collects donations from the public, it must analyse whether it is itself among the entities authorised to collect or whether a permit and regulated fundraising structure are required.

The Donations Law also regulates collection methods, advertising, bank accounts, overseas transfers, beneficiary delivery and criminal exposure for unauthorised fundraising or misuse of donated funds.

A public welfare licence should therefore never be treated as a universal fundraising permit.

Bank accounts are tightly controlled

Article 37 requires an Association to maintain one or more accounts with national banks operating in the UAE.

The UAE dirham is the base currency. Foreign-currency accounts require Competent Authority approval and supporting justification.

The account must be opened on the basis of a certificate from the Competent Authority, and the Executive Regulation requires an application identifying the persons authorised to open, manage, operate and close the account.

The organisation must deposit cash funds into its own bank accounts and may not disburse them before deposit.

Banks are also restricted from opening accounts for an unregistered or unlicensed public welfare organisation.

Investment is permitted, but surplus funds are not an investment portfolio for private benefit

Article 38 requires funds to be used for the purposes for which the organisation was established.

The Association may not engage in financial speculation or distribute revenue or investment returns to Board members, founders, members or employees.

However, after approval of the Competent Authority, funds in excess of current needs may be invested to generate financial returns that help the Association achieve its objectives.

The 2025 administrative-penalty schedule separately penalises investment of Association funds in violation of the applicable controls.

Annual accounts require an approved auditor

Article 39 requires an annual final account approved by an audit office authorised in the UAE, together with a draft budget for the next year.

The Board must provide the Ministry and Local Authority with the previous year's final account and the new draft budget within 15 days after their approval by the General Assembly.

This creates a three-layer financial-governance structure:

1. management prepares the records and proposed budget;
2. an independent approved auditor reviews the final accounts; and
3. the General Assembly approves them before submission to the regulator.

Record retention is now specified in detail

Article 8 of the 2025 Executive Regulation requires the Association to maintain administrative and financial records at its headquarters.

Records include membership data, Board and General Assembly minutes, activity reports, donor and grant records, accounting records, receipts, payment vouchers, final accounts, audit reports, budgets and fixed-asset records.

Administrative records must generally be retained for at least five years, while financial records must generally be retained for at least ten years. They should not be destroyed after those periods without Competent Authority approval.

Transparency is a statutory obligation

Article 50 imposes unusually detailed continuing obligations.

Public Welfare Associations must establish internal controls, financial and organisational procedures, good-governance systems and professional codes of conduct.

They must also maintain transparency and disclosure regarding matters including:

• sources of funding;
• members;
• annual budgets;
• activities;
• projects;
• cooperation arrangements; and
• material organisational information.

The law expressly requires publication through available means or as determined by the Competent Authority.

AML and terrorist-financing controls are part of ordinary governance

The legislation requires public welfare organisations to protect themselves against misuse for illegal financing, particularly terrorist financing and financing of illegal organisations.

Articles 52 to 54 give the Ministry and Local Authorities functions relating to risk assessment, monitoring, data exchange, supervision and inspection.

An organisation receiving donations, grants or international funding should therefore maintain controls concerning:

• donor identity and source of funds;
• beneficiary verification;
• sanctions and prohibited-party screening where applicable;
• transaction approval;
• cross-border payments;
• cash handling;
• project monitoring;
• record retention; and
• escalation of suspicious or unusual activity.

The regulator can inspect administrative, technical and financial affairs

Article 54 subjects organisations to supervision by the Competent Authority across administrative, technical and financial matters.

The authority may review records and documents and request information or reports to confirm that financial and in-kind resources are being directed toward the organisation's lawful purposes and projects.

The Ministry may also coordinate with Local Authorities on inspections where required.

This means an organisation should operate on the assumption that every major transaction, Board approval, project payment and funding source may later need to be explained to the regulator.

Foreign relationships need prior approvals

International activity is possible, but it is controlled.

Article 17 permits affiliation, participation or membership in a similar organisation outside the UAE only after approval of the Local Authority and authorisation from the Ministry in coordination with the relevant authorities.

Article 18 permits external projects falling within the organisation's purpose only after the required approvals.

The 2025 Executive Regulation requires a formal application before external project activity and a post-project report after completion.

The law also prohibits entering agreements with foreign parties outside the UAE without Ministry approval and restricts dealings with embassies, consulates and diplomatic missions without the required permissions.

A UAE organisation can work abroad without opening a foreign branch

The distinction is important. The law permits approved external projects, but Article 51 prohibits public welfare organisations from opening branches or offices outside the UAE.

International delivery should therefore be structured through the permitted project, cooperation and approval mechanisms rather than by assuming the organisation can freely establish foreign offices.

Political and partisan activity is outside the permitted framework

Article 51 prohibits political or partisan activity and activities interfering in politics or matters affecting State security or governance.

The law also prohibits secret, military or paramilitary structures, support for illegal or terrorist organisations, prohibited discriminatory activity and other conduct affecting public order or security.

These are not merely restrictions on public messaging. They form part of the compliance perimeter that can lead to serious sanctions or dissolution where breached.

Regulatory oversight includes the power to intervene in governance

Supervision is not limited to requesting documents.

Where serious governance or compliance failures arise, the law and 2025 enforcement framework allow measures that can include suspension, appointment of a temporary Board or manager and, in appropriate cases, dissolution and liquidation.

Cabinet Resolution No. 78 of 2025 establishes escalating administrative sanctions. Violations can move from warnings to financial penalties and temporary suspension of services, depending on the breach and recurrence.

The schedule expressly covers unapproved events, unauthorised foreign affiliations, external projects without approval, recordkeeping failures, improper bank accounts, unlawful investments, failure to hold the annual General Assembly and activity outside the approved by-laws.

Some violations also carry criminal exposure

Article 62 contains criminal sanctions for particularly serious breaches.

Establishing, organising or managing a public welfare organisation, or opening a branch, without the required licence and Ministry notification can result in imprisonment and a fine of at least AED 500,000, or either penalty. The offending entity is treated as dissolved by law and the competent court may order closure of the premises.

The same Article addresses dealings with illegal organisations and continued public-welfare activity after failure to regularise into a lawful form.

Article 63 can also expose the person responsible for actual management where that person knew of the unlawful conduct or a failure of management duties facilitated the offence.

Dissolution can result from governance or financial failure

Article 55 gives the Competent Authority power to dissolve and liquidate an organisation through the statutory process where specified grounds exist.

These grounds include serious statutory or by-law violations, conduct conflicting with public order or morals, insufficient membership, failure to pursue the stated purposes seriously, misuse of funds, inability to meet financial obligations, obstruction of inspection or intentional misleading information, and inability to convene the General Assembly for two consecutive years.

The law also permits alternatives to immediate dissolution in certain cases, including appointment of a temporary Board or manager.

Voluntary liquidation is also possible

Article 57 permits voluntary liquidation through the appropriate resolution of the Extraordinary General Assembly, founders or Board of Trustees depending on the legal form, subject to statutory notification.

After dissolution, those responsible for the organisation cannot simply distribute the remaining property as they choose. Article 58 makes disposal of funds and documents subject to the Competent Authority's liquidation decision and the applicable by-law and Executive Regulation rules.

The organisation remains a legal person to the extent required to complete liquidation before removal from the national Register.

The 2025 classification system matters to both licensing and supervision

Cabinet Resolution No. 159 of 2025 makes the Classification Guide the current reference framework for licensing, supervision and oversight of Public Welfare Associations.

The Guide also states that a public welfare organisation operates within one primary field of work, although it may conduct multiple approved activities within that primary field.

Organisations should therefore review their existing licence and by-laws against the current classification rather than assuming every socially useful activity sits automatically within their approved objects.

Corporate Tax public-benefit status is a separate legal question

The Corporate Tax Law uses the separate concept of a Qualifying Public Benefit Entity.

Under the Federal Tax Authority's published guidance, the entity must satisfy Article 9 conditions that include being established and operated for recognised public-benefit purposes, not carrying on unrelated business activities, using income and assets for the stated purpose and reasonable associated expenditure, and not making income or assets available for the private benefit of founders, members, trustees or similar persons except in the permitted cases.

Even where those substantive conditions are satisfied, the entity must also be listed in the relevant Cabinet decision to obtain Qualifying Public Benefit Entity status.

Accordingly:

A public welfare licence does not itself create a Corporate Tax exemption, and a tax classification should not be used as a substitute for the licensing and governance requirements of Federal Decree-Law No. 50 of 2023.

Cabinet Decision No. 37 of 2023 maintains the tax list

Cabinet Decision No. 37 of 2023 identifies entities recognised as Eligible or Qualifying Public Benefit Entities for Corporate Tax purposes.

The list has its own tax function and contains federal and local bodies and organisations meeting the relevant tax framework. It should not be confused with the national Register of Public Welfare Associations maintained for regulatory purposes.

An organisation seeking Corporate Tax exemption should therefore coordinate its public-benefit licensing position with its separate tax-registration and Cabinet-listing requirements.

Local authorities remain important

The federal framework is national, but licensing and supervision can operate through Local Authorities.

Abu Dhabi's Department of Community Development, for example, currently provides NGO licensing, licence renewal, branch licensing, bank-account approvals, overseas-transfer approvals, foreign-affiliation approvals, event approvals and investment approvals under Federal Decree-Law No. 50 of 2023 and its implementing framework.

Organisations should identify the authority with jurisdiction over their headquarters and branches rather than assuming that all operational applications are made directly to one federal office.

A practical formation and governance matrix

Issue	Key legal question
Legal form	Association, National Society, Union, Social Solidarity Fund or another permitted form?
Purpose	Does the proposed work fall within the current Public Welfare Activities Classification Guide?
Founders	Are the number, nationality, residency, age and conduct requirements satisfied?
By-laws	Do they regulate governance, finance, activities, staff, audit and liquidation?
Licence and declaration	Have the Local Authority and Ministry processes been completed?
Board	Does the Board satisfy size, nationality, election and governance requirements?
Funding	Are the revenue sources lawful and consistent with the approved purposes?
Donations	Does the Donations Law require separate fundraising authority or permits?
Banking	Are accounts opened under the Competent Authority certificate and operated by approved signatories?
Investment	Is investment limited to approved surplus funds and free from private distributions?
Foreign activity	Have required approvals been obtained for affiliation, agreements and external projects?
Tax	Does the entity separately satisfy Corporate Tax Qualifying Public Benefit Entity requirements?

Practical compliance checklist

1. Confirm the approved field. Match the organisation's objects to the 2025 Classification Guide.
2. Use the correct legal form. Membership-based and asset-based organisations require different structures.
3. Verify founders. Test nationality, residency and other eligibility conditions before filing.
4. Draft operational by-laws. Include governance, conflicts, finance, staff, audit and liquidation rules.
5. Complete licensing and registration. Do not begin regulated public-welfare activity prematurely.
6. Build a compliant Board. Track composition, elections, meetings and regulatory notifications.
7. Appoint professional management. Define authority between the Board and director.
8. Segregate organisational assets. Members do not own Association property.
9. Control funding sources. Document fees, grants, donations, subsidies and activity income.
10. Check the Donations Law before fundraising. Public-welfare status is not a blanket collection permit.
11. Use approved bank accounts. Keep signatory and regulator records current.
12. Invest only within the authorised framework. Avoid speculation and private benefit.
13. Audit and report annually. Track the 15-day submission requirement after General Assembly approval.
14. Retain records. Administrative and financial retention periods should be built into the records policy.
15. Operate AML/CFT controls. Apply risk-based donor, beneficiary and payment review.
16. Obtain foreign-activity approvals. International affiliation and external projects require regulatory planning.
17. Review Corporate Tax separately. Confirm Cabinet listing and tax compliance instead of assuming non-profit status equals exemption.
18. Prepare for inspection. Maintain an auditable record of every material governance and financial decision.

Key takeaway

The UAE's modern public-benefit framework is not simply an incorporation regime. Federal Decree-Law No. 50 of 2023 and its 2025 implementing instruments regulate the entire lifecycle of the organisation: formation, classification, legal personality, membership, boards, finances, banking, investment, events, overseas relationships, transparency, AML/CFT controls, inspection, sanctions and dissolution.

The framework allows meaningful civil-society and community activity, but that activity must remain within the approved purposes and governance structure. Public-welfare assets belong to the organisation, not to founders or members, and revenue or investment returns cannot be converted into private distributions.

The regulatory environment also now has sharper operational detail. Cabinet Resolution No. 78 of 2025 provides a graduated administrative-penalty system, while Cabinet Resolution No. 159 of 2025 creates a unified classification framework for permitted fields and activities.

Finally, public-benefit regulation and tax status should be kept separate. An organisation can be validly licensed for public-welfare activity without automatically qualifying for Corporate Tax exemption. Qualifying Public Benefit Entity status requires satisfaction of the Corporate Tax conditions and inclusion in the relevant Cabinet listing.

HZ Legal can assist founders, boards, charities, professional bodies, community organisations and institutional donors with UAE public benefit organisation formation, by-laws, governance, fundraising and donation compliance, bank and investment approvals, cross-border activities, regulatory inspections, restructuring, Corporate Tax public-benefit status and dissolution.

Official and authoritative sources

• UAE Legislation — Federal Decree-Law No. 50 of 2023 Regarding the Regulation of Public Welfare Associations.
• UAE Legislation — Cabinet Resolution No. 5 of 2025, Executive Regulation of Federal Decree-Law No. 50 of 2023.
• UAE Legislation — Cabinet Resolution No. 78 of 2025 on administrative violations and penalties.
• UAE Legislation — Cabinet Resolution No. 159 of 2025 approving the Classification Guide for Public Welfare Associations and their activities.
• UAE Legislation — Federal Law No. 3 of 2021 Regulating Donations.
• Federal Tax Authority — Corporate Tax: Exempt Persons and Qualifying Public Benefit Entities.
• UAE Legislation — Cabinet Decision No. 37 of 2023 concerning Eligible Public Benefit Entities for Corporate Tax purposes.
• Abu Dhabi Department of Community Development — NGO licensing and regulatory services.

This article provides general legal and regulatory information only and does not constitute legal, tax, AML or financial advice. Public-benefit requirements depend on the proposed legal form, emirate, activity classification, founders, funding model, donation activity, foreign relationships and applicable local authority procedures. Corporate Tax exemption is a separate legal status and should be reviewed independently from public-welfare licensing.