Any non-GCC national who wanted to launch a business in the Dubai mainland at one point had to hire a local sponsor. However, because circumstances have altered in recent years, it is now frequently acceptable for 100% foreign ownership of UAE mainland businesses.
However, not all industries can do this. For most of company registration in Dubai you need a local sponsor. And even in those cases where it is permitted, approval is still necessary and subject to denial.
Local sponsor in Dubai: All the information you need
Any non-GCC national who wanted to open a business in dubai mainland at one point had to hire a local sponsor. However, because circumstances have altered in recent years, it is now frequently acceptable for 100% foreign ownership of UAE mainland businesses.
However, not all industries can do this. And even in those cases where it is permitted, approval is still necessary and subject to denial.
The good news is that if you do need a local sponsor, obtaining one can be simple and quick with the correct assistance. We’ll discuss the important aspects you must keep in mind along the route in this article.
What does “local sponsor” in Dubai mean?
An international investor assigns a local sponsor to hold a 51% interest in a UAE company. Although the sponsor has a majority interest, they have no voting rights and are not involved in day-to-day business decisions.
Additionally, they don’t keep 51% of the revenue. Instead, sponsors receive a yearly fee in exchange for their efforts. Sponsors might be either private citizens or businesses.
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Finding a local sponsor
Finding and selecting a local sponsor is an important business choice that should not be rushed. Even though you and your sponsor are not traditional business partners, you still need to have a solid and reliable connection. It might be challenging for entrepreneurs who are new to the UAE to be certain they have found the correct match because of this.
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Types of local sponsors
In Dubai, there are various local sponsor categories to pick from. You have the option of choosing a private, corporate, or neighbourhood service agent.
Male or female individuals may sponsor an individual, however they must be UAE citizens who are at least 21 years old. They should also be professionals, business owners, or government personnel, even if they do not necessarily need to have knowledge of your line of work.
Corporate sponsors are companies, as the name implies. They could be any locally owned or legally registered company doing business in the UAE. It is significant to highlight that only corporate entities with the appropriate government licences may serve as sponsors.
The final requirement for beginning a professional services business is local service agents. In this scenario, foreign business owners can keep 100% of the company but will need a service agent to communicate with the relevant government agencies. Additionally, local service representatives receive a yearly fee for their work.
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Assignments for a local sponsor
A local sponsor’s main responsibility is to represent you in all interactions with the government and other official institutions. Along with these tasks, they also analyse business documents written in Arabic, close bank accounts, and revoke licences like work visas.
What to consider before choosing a local sponsor
Before choosing a local sponsor, there are numerous factors to take into account. If you want to start a business in Dubai, you must make sure that your sponsor is a local; otherwise, they will need to travel back and forth to sign and approve official documents.
You should also research your sponsor’s past and previous business interactions to make sure they are trustworthy and legitimate. Before entering into any sponsorship deal, it’s crucial to explicitly spell out all requirements, obligations, and costs in writing.
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Change your local sponsor in Dubai: How to
It may become necessary from time to time to switch your local sponsor. Once more, with professional assistance, this procedure can be simple.
Approaching your existing sponsor and informing them of your plans to change is the first thing you should do. Once you’ve taken care of this, you’ll need to gather your sponsorship paperwork, including your memorandum of association, power of attorney, and evidence of your yearly contributions.
To end your sponsorship, you and your sponsor must appear in court together. At this point, fresh documentation may also be supplied to start your new sponsorship.
Acquiring a trade licence for Dubai without a local sponsor
If you want to get a trade licence in Dubai without a local sponsor, you have a few possibilities. You may launch a professional services company and run it entirely on your own, utilising solely service agents.
As an alternative, you might launch a mainland company outside of a regulated sector like those mentioned above and apply to the DED to keep 100% of the company.
Freezone business setup in Dubai is an additional choice. Businesses operating in free zones benefit from 100% foreign ownership, 0% corporate and personal income tax, 100% exemption from customs taxes, and complete repatriation freedoms.
