Is a local sponsor necessary to start business in Dubai?

Is a local sponsor necessary to start business in Dubai?

Dubai is the land of opportunities, and investors from around the world find a home for their business in this region. Businessmen can choose any of the free zones to launch their dream venture in the UAE. If they want access to the world-famous Dubai mainland market, they need a local sponsor for business in Dubai. The local sponsor is a UAE national (also called Emirati) who’ll partner with foreign investors and gain 51% shareholding of their company.

It’s critical to collaborate with a reliable local sponsor because an unsupportive sponsor can cause a lot of trouble during company formation and might also disrupt your normal business functioning. However, you don’t have to worry about these aspects when you get in touch with the business consultants at Shuraa Business Setup. We empower our clients to enjoy 100% operational ownership of their business so they can make most of the growth opportunities in Dubai.

Types of local sponsors in the UAE

It’s mandatory for expatriates to have a local sponsor for business in Dubai if they wish to open a limited liability company (LLC) in the Dubai mainland. The same is governed under the commercial companies’ law, and any non-compliance can lead to repercussions. Therefore, you should know the different types of local sponsors in the UAE:

Corporate local sponsor

Corporate local sponsors can be a government or local agency that agrees to partner with you for your business establishment. As per Article 10 (A) of Federal Law No.2 (2015), any Emirati that agrees to become a local sponsor for the expat business must have a minimum of 51% equity shares in their company. The type of business and company structure you wish to have also plays a vital role in deciding the local sponsorship in the UAE.

Individual local sponsor

You can partner with an individual local sponsor to open an LLC in the Dubai mainland. The investors looking to open a commercial business in the UAE prefer to partner with an individual local sponsor because they usually don’t get involved in the business activities. Just like in the case of a corporate local sponsor, the individual local sponsor must also have a minimum of 51% shareholding in the foreign company. The UAE’s government is an ardent supporter of gender equality. Therefore, both males and females are eligible to become local sponsors for business in Dubai.

 

Local service agent as a sponsor

If you want to obtain a professional business license and offer services to your customers in the mainland region, you should go for a service agent as a local sponsor. This agent is an Emirati resident, and you can partner with him/her to launch your professional business in the UAE. All you need to do is pay them a nominal fee for their agreement, and you’re done. They never interrupt your company’s functioning so you can enjoy 100% operational ownership.

How to choose a reliable local sponsor for your business?

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

 

  1. Ensure that the sponsor is genuine, especially if you’re partnering with an individual local sponsor. Perform a quick background check to know who they are and make an agreement only when you’re completely satisfied with your findings. Sponsors who come from reputed families and are respected in society are the best individual sponsors. Moreover, you can also connect with the business experts at Shuraa, and we’ll help you with your requirements.

 

  1. You should find a local sponsor depending on your business requirements. For example, an investor who wants to explore the government sector and secure such projects should hire a government employee as their local sponsor. Furthermore, inquire about their linguistic expertise to avoid any language barriers that might lead to unnecessary confusion. 

 

  1. Discuss everything about the payment, compensation, and benefits regarding the local sponsorship agreement. Keep the progress well documented and ensure that you’re not paying anything more than the standard local sponsor fees in Dubai. You might come across people who’ll claim that they have an immense business reach, but it’s your responsibility to analyze their claims and make an educated decision.

 

  1. Most local sponsors are hired on an annual fee basis for the services they provide. However, discuss the same beforehand to understand whether your local sponsor is on the same page as yours or does he/she wants a percentage of your annual profit. Moreover, don’t forget to get the local sponsorship agreement deed verified before finalizing the deal.

 

  1. Find a local sponsor for business in Dubai who is available whenever you’re getting into a contractual agreement or any other official legality. You can avoid all this hassle by partnering with Shuraa Business Setup, and we’ll become your silent or sleeping partners so that you have complete ownership of your business. We take pride in doing the same at a very nominal cost because we also want you to invest your hard-earned money in business growth-related activities.

 

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

Connect with Shuraa

A local sponsor is a valuable asset to your company in the UAE, given that you partner with the right one. It can become tricky for foreign investors to search for an ideal local sponsor for business in Dubai all on their own. Our legal advisors know the local sponsorship laws inside-out and would help you with all your company formation requirements too. Furthermore, you can partner with us if you’re looking for a reliable local sponsor, and you can take our word that the fee won’t be an issue. So, what’s the wait for? Get in touch with our team today!

 

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