Find your Business Sponsor or
Local Sponsor in Dubai
Verified Local Sponsor
For those outside the Gulf Cooperation Council (GCC) who are keen on procuring a commercial or industrial licence on the UAE mainland, partnering with a verified local sponsor is a mandatory step. If, however, your business is located within a free zone or is operating under a professional services licence, this requirement is waived.
If your operational model necessitates such a sponsor, VR1 stands ready to streamline the process.
This partnership often manifests in the form of a mainland Limited Liability Company (LLC), where you, the Business Owner, maintain 49% ownership, delegating the majority 51% to the local sponsor.
It’s important to understand that this ownership division does not automatically dictate profit distribution, and typically, the sponsor remains removed from day-to-day operations. When it comes to securing a credible local sponsor, either an Emirati individual or a fully Emirati-owned corporate entity, complete with a functioning board, is requisite.
3 Types of Sponsorships
This is a sponsorship arrangement where a UAE national sponsors a foreign business or individual. According to the UAE Commercial Companies Law, any foreign entity seeking to establish a mainland business in the UAE is required to have a local sponsor. This individual local sponsor holds a 51% stake in the company. However, while they legally own the majority of the company, they often agree not to intervene in the company’s operational, financial, or investment matters. This type of sponsorship is mainly for commercial and industrial licenses.
This is a professional arrangement where a UAE-based company acts as a sponsor for a foreign business. The corporate sponsor must be 100% owned by UAE nationals. The advantage of this sponsorship model is that the corporate sponsor typically provides additional services such as legal, PRO (Public Relations Officer), accounting, and others. This type of sponsorship is generally preferred by larger foreign businesses and is considered safer because agreements are made with corporate entities and not individuals. The corporate sponsor will hold a 51% stake in the company.
Local service agents, also known as National Service Agents, are UAE nationals (individuals or companies) who represent foreign companies in administrative dealings with government departments and assist in obtaining necessary licenses and permits. This is mainly applicable to professional licenses where 100% foreign ownership is allowed. The service agent does not have any civil responsibility or financial obligations to the company. The service agent is usually paid an annual fee for their service, which can be negotiated. The service agent also has no rights, shares, or interests in the company or its management.
FREQUENTLY ASKED QUESTIONS
To find a reliable local sponsor, you can utilize our business consultancy services, as we have a network within local business circles in Dubai.
A local sponsor's primary responsibility is to facilitate the necessary procedures for business licensing and compliance with UAE's legal requirements. country boasts a highly competent workforce. The UAE has an ease of doing business ranking of 16 out of 190.
A local sponsor generally does not interfere with business operations unless explicitly stipulated in the agreement. However, they have the legal right to do so as they hold a significant stake in the company.
Costs associated with a local sponsor can vary, often involving an annual fee which can be a flat rate or a percentage of the business profits, subject to the agreement.
Legal protections involve contractual agreements which should be designed to protect the interests of the foreign investor, including clauses that prevent sponsors from taking advantage of their position.
The roles and rights of a local sponsor typically involve holding a 51% share in the company, assisting with governmental procedures, and potentially having a say in business operations based on the agreement.
To change the local sponsor, a new agreement needs to be drafted with the new sponsor, and the previous sponsor must be adequately discharged as per the guidelines of the Department of Economic Development (DED).
As of now, a local sponsor must be a UAE national or a company wholly owned by UAE nationals.
If a local sponsor dies, their shares in the company are usually passed onto their heirs. In case they wish to withdraw, the terms of the contract will determine the next steps.
Typically, a local sponsor holds a 51% stake in the company, but they may agree not to interfere with operations or profits for an annual fee.
Compensation varies based on the agreement. It could be a flat annual fee or a percentage of profits.
As per the law, the local sponsor cannot sell their sponsorship without the foreign partner's consent.
Recent changes in UAE law have allowed certain businesses to set up in Dubai without a local sponsor, but the specifics depend on the business activity. Get in touch with us to know more
Yes, you can have more than one local sponsor, but the total local sponsorship should amount to 51% of the company's ownership.
Disputes with a local sponsor are typically resolved through arbitration or court proceedings, and the terms of the contract often dictate the approach.
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