As per United Arab Emirates law about mainland business setup, foreign investors are required to have a resident, a UAE national, as a sponsor. A Sponsor is typically not involved in the company’s administration mostly and is agreed upon yearly charges according to the contract. Usually, a local sponsor is appointed to liaise with the government department and authorities.
Also Read: UAE New Family Sponsorship Policy for Expats
Local sponsors in UAE used to refer to local service agents and nominee shareholders (sleeping partners) in mainland companies with foreign investment. A sponsor has to be a UAE national (Emirati) with a family membership card.
A corporate body that is established and registered in Dubai is required to appoint a local sponsor for starting a company in Dubai mainland. The UAE national will hold 51% of the shares of a company owned by individuals or a group of partners with a foreign origin. This type of sponsor is common and very suitable for opening an LLC in Dubai. The corporate sponsors can be of any local or government authority, depending upon the requirement of the business that the investors want to start in Dubai.
As the name suggests, this is when an individual Emirati national sponsors the business and holds a 51% stake in the company. Individual sponsors must be UAE citizens and can be male or female. It may not be necessary for the local sponsor to be involved in the business activity or be a business owner. This type of sponsorship is suitable for opening a commercial business in Dubai. The individual sponsor should hold at least 51% of total equity shares.
The third type of local sponsor is a service agent who is a resident and agrees to act as a sponsor. If you are willing to open a professional business in Dubai then this form of local sponsorship is suitable.
A local sponsor should be cross-checked before hiring. Here are some points to remember:
Check if the local sponsor is a resident of Dubai. If the sponsor is not a resident of Dubai then the investor has to travel each time for signatures or process govt formalities.
The local sponsor is responsible for some important dealings as mentioned below:
Also Read: Things to Consider while Setting up Business in Dubai
A local sponsor in Dubai is a valuable asset to the company. This rule by the government of Dubai benefits not only local sponsors but also companies that will help them because a local sponsor will become a ready-made goodwill for the company. We at FAR Consulting Middles East can handle all your local sponsor-related requirements proficiently so that you can concentrate on business growth contact us today for our services in UAE.