Is There a Need for a Local Sponsor in Dubai?

Dubai is the land of opportunities, and entrepreneurs from around the globe find a home for their ventures in this region. Businessmen...

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Need for a Local Sponsor in Dubai

Dubai is the land of opportunities, and entrepreneurs from around the globe find a home for their ventures in this region. Businessmen can select any of the free zones to establish their dream business in the UAE. But, if they wish access to the world-famous Dubai mainland market, they might need a local sponsor in Dubai in case their business activities don’t qualify for 100% foreign ownership.

The local sponsor is a UAE national (also called Emirati) who’ll partner with foreign investors. Moreover, they’ll gain 51% shareholding of their company. However, note that you should first get in touch with the DED. This is to assess whether your venture qualifies for complete foreign ownership. It’s critical to always collaborate with a reliable local sponsor. This is because an unsupportive sponsor can cause a lot of issues during company incorporation.

In addition, he/she might also disturb your normal business functioning. However, you don’t have to worry about these factors when you connect with the business advisors at Shuraa Business Setup. We empower our clients to enjoy 100% operational ownership of their firms. This empowers them to make the most of the growth opportunities in the Emirates.

How to Choose a Reliable Local Sponsor for Your Company?

It’s vital to collaborate with a reliable local sponsor for business in the UAE to carry out risk-free business activities. Here are a few pointers that’ll help you find the perfect business sponsor:

1. Ensure that the sponsor is legitimate, especially if you’re collaborating with an individual local sponsor. Perform a brisk background check to understand who they are and make a contract only when you’re fully satisfied with your findings.

Sponsors who come from credible families and are respected in society are the best individual sponsors. Moreover, you can also get in touch with the business advisors at Shuraa, and we’ll help you with your incorporation requirements.

2. You should look for a local sponsor based on your operational requirements. For instance, an investor who wishes to explore the government sector and procure such projects should hire government personnel as their local sponsor. Furthermore, inquire about their linguistic expertise to avoid any language obstacles that might lead to unwarranted confusion.

3. Discuss everything about the payment, compensation, and advantages of the local sponsorship contract. Keep the progress well documented. In addition, ensure that you’re not paying anything more than the standard compensation fee for a local sponsor in the Emirates.

You might come across individuals who’ll claim that they have a sizable business network, but it’s your responsibility to examine their claims and make a researched decision.

Other Points to Consider While Choosing a Local Sponsor

  • Most local sponsors are recruited on a yearly fee basis for the services they offer. However, discuss the same in advance to comprehend whether your local sponsor is on the same page as yours or does he/she want a percentage of your capital gains. Furthermore, don’t forget to validate the local sponsorship agreement deed before finalizing the deal.
  • Look for a local sponsor who is available whenever you’re going into a contractual agreement or any other official formality. You can avoid all this hassle by collaborating with Shuraa Business Setup, and we’ll become your silent or sleeping partners so that you have 100% ownership of your firm. We take pride in doing the same at a highly competitive cost since we also want you to invest your hard-earned money in growth-related activities.

Types of Local Sponsors in Dubai

Expatriates must have a local sponsor for business in Dubai if their business activities don’t satisfy the criteria for 100% foreign ownership in the Dubai mainland. The same is administered under the commercial Companies’ Law, and any non-compliance can lead to repercussions. Hence, you should know the different types of local sponsors in case you need a local sponsor in Dubai:

Corporate Local Sponsor

Corporate local sponsors can be a government or local body that concurs to partner with you for your business incorporation. As per Article 10 (A) of Federal Law No.2 (2015), any Emirati that agrees to become a local sponsor for the foreign business must possess a minimum of 51% equity shares in their organization. The type of venture and company framework you want to have also played a critical role in finalizing the local sponsorship in the Emirates.

Individual Local Sponsor

You can collaborate with an individual local sponsor to launch an LLC in the Dubai mainland. The entrepreneurs looking to establish a commercial business in the UAE prefer to partner with an individual local sponsor as they usually don’t get involved in the operational activities.

Just like in the case of a corporate local sponsor, the individual local sponsor should also possess a minimum of 51% shareholding in the foreign firm. The UAE’s government is a vehement supporter of gender equality. Therefore, both males and females are eligible to become local sponsors for setting up a business in Dubai.

Local Service Agent as a Sponsor

If you wish to secure a professional business license and provide services to your consumers in the mainland region, you should go for a service agent as a local sponsor. This agent is an Emirati resident.

In addition, you can collaborate with him/her to open your professional business in the Emirates. All you need to do is pay them a reasonable fee for their contract, and you’re done. They never interrupt your business’s operations, so you can enjoy 100% operational ownership.

Roles and Responsibilities of a Local Sponsor in Dubai

Your local sponsor has a lot more responsibilities than having a 51% shareholding in your company. Local sponsors assist in:

  • Procedures involved in bank account closure
  • Settlement of outstanding debts (if applicable)
  • Help in the license renewal process and translation work (in Arabic)
  • Provide signature on behalf of the foreign business owner in several contracts and government applications
  • Cancellation of employee’s labor status and employees work visa
  • Provide their opinion on local law enforcement and suggestions that’ll help you grow your business in the UAE

Read Also: How to Do Successful Business Setup in the UAE?

Hire a Reliable Local Sponsor in Dubai!

A local sponsor is a valuable asset to your company in Dubai, given that you collaborate with the right one. It can become tricky for expatriate investors who need a local sponsor in Dubai for company formation. Therefore, you should get in touch with the experts at Shuraa Business Setup. Our legal advisors know the local sponsorship laws inside-out and would assist you with all your company incorporation requirements too. Moreover, you can partner with us if you’re searching for a reliable local sponsor, and you can take our word that the fee won’t be an issue. However, as discussed before, always assess whether your business needs a local sponsor or it’s eligible for 100% foreign ownership.

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