Finding a local UAE sponsor who is reliable and encourages your business outlook could be a tough task, especially if you are new to the country. Anyone wanting to start a business in Dubai or anywhere across the various emirates, must start by first tying with an Emirati national.
Finding a local sponsor in Dubai is the most crucial aspect of setting up a business. This is mainly because if you end up with a wrong sponsor, it will create difficulties in regulating your company. However, before we explore the path of securing a local sponsor for business in Dubai, it essential to learn everything about this process and why is it needed.
What is local sponsorship in UAE?
Local sponsorship in UAE basically means that you need to partner with a UAE national also referred to as an Emirati. According to the Commercial Companies’ Law, setting up a limited liability company mandates you to have a business partner.
The partnership or local sponsorship in UAE is contracted as per the Article 10 (1) of the Federal Law No. 2 of 2015, which states that every UAE national entering into an agreement of a local partnership with a foreign investor shall hold at least 51 percent of the shares in the company. Nevertheless, this does not mean that you need to share the income, profits, and loss that are incurred by the company. Local sponsorship in UAE also can be contracted on your terms through an Investor’s Right Protection Contract.
Why do you need a local sponsor?
One of the essential foundations of starting a business in Dubai or anywhere across the UAE is to partner with a UAE national, also referred to as a local sponsor.
You need a local sponsorship in UAE to regulate in accordance with the UAE commercial companies’ law. Moreover, having a local sponsorship in UAE allows you to take advantage of the exclusive benefits of setting up a limited liability company.
Watch the video below to get a better understanding of the sponsorship requirement
How to Find a Local Sponsor in the UAE?
It’s vital to collaborate with a reliable local sponsor for business in Dubai to carry out risk-free business activities. Here are a few pointers that’ll help you find the perfect business sponsor:
Step 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.
Corporate sponsors in the UAE 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.
Step 2. You should look for a UAE company 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 sponsors. Furthermore, inquire about their linguistic expertise to avoid any language obstacles that might lead to unwarranted confusion.
Step 3. Discuss everything about the local sponsor fees in Dubai, 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.
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.
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 sponsor in Dubai 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 plays a critical role in finalizing the corporate sponsorship in Dubai.
Individual Local Sponsor
You can collaborate with an individual local sponsor in the UAE to launch an LLC in the Dubai mainland. 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.
Roles and Responsibilities of a Local Sponsor in Dubai
Your sponsor would have a lot more responsibilities than just 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.
How to change a local sponsor in Dubai?
Follow the steps mentioned below to change your local sponsor in Dubai:
1. Discuss with your current sponsor
Try to clear out any confusion and disputes with your current sponsor. Consider their point of view and come up with solutions that can settle the argument outside the court.
2. Involve other stockholders
3. Prepare the documents
4. Approach the court
5. Find a new local sponsor
Once all the above steps are legalised, you can onboard a new local sponsor for your business in Dubai. Ensure that you choose a reliable one like Shuraa because changing UAE sponsors is a hectic process that consumes a lot of time, energy, and money.
What is the Local Sponsor Fee in Dubai?
The average local sponsor cost is somewhere around AED 8,000 per year. However, you need to consider several factors before the final fee for a local sponsor is drafted and agreed upon. These include:
- Nature of your business
- Local sponsor’s involvement in legal formalities
- Local sponsor’s involvement in day-to-day business activities
- Partnership tenure
We, at Shuraa, become your sleeping partners for an annual remuneration and empower you to enjoy complete operational ownership of your business.
Does your business need local sponsorship in the UAE?
As per the law, anyone willing to start an LLC company should partner with a UAE national. Mainland companies under a limited liability company structure are subject to local sponsorship in the UAE.
Business such as general trading, contracting, real estate, advertising, technical services, industrial and manufacturing license, cargo and logistics industries, textile businesses, cosmetic and perfume businesses, electronic industries, cleaning equipment industries, fuel and petrochemical industries, jeweler business etc. need local sponsorship in UAE. To check whether your business needs a local sponsorship in the UAE. click here and connect with an expert.
The best way of finding a local UAE sponsor:
Are you looking for a UAE local sponsorship? The best way to find a local UAE sponsor in Dubai is with SHURAA BUSINESS SETUP. We at Shuraa Business Setup can secure your partnership! We ourselves become your contracted local partner as per your terms guaranteeing complete protection. This law is not restricted to all business activities but certainly to commercial and trading businesses. We as a business setup company ensure that your business is entirely yours and you alone enjoy all the profits.
Thus, Shuraa Business Setup becomes your silent partner or sleeping partner. A contracted court agreement called the Investor’s Right Protection Contract allows us to offer you 100% business operational ownership. Our lawyers prepare water-tight protection contracts to secure investors’ interests and ensure that the investors are fully protected at all times. Shuraa Business Setup as your local UAE partner only charges a nominal annual partnership fee.
We help you with the legalities of setting up a business in the UAE and provide you with FREE PRO services for the year if your company is under Shuraa’s sponsorship. Speak to a business setup consultant today! Follow the link www.shuraa.com/contact/ or call us on +97144081900. You may also email us on [email protected] or WhatsApp on +971507775554.