Having a local partner to do business is a requirement enforced across the United Arab Emirates. Many of the foreign investors are not introduced to the concept of commercial partnership with a UAE national which is also referred to as a Local Sponsor in Dubai, UAE.
If you are analysing the need for a local partnership or local sponsorship or are not sure whether you need a local partner to do business in Dubai, then you must read this article.
So, who is a local partner?
A local partner or a local sponsor is an Emirati national, who may have the qualification pertaining to the relevant business activity.
According to the directives specified by the UAE Commercial Companies Law, 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 share capital of an LLC as per Article 10 (1) of the Federal Law No. 2 of 2015. Any company established shall have one or more UAE partners holding at least 51 percent of the share capital of the company as per the rule.
Does business set up in the UAE need a local partner?
Not all business setups require a local sponsor in UAE Mainland. For instance, professional companies do not require a UAE local sponsor or partnership with a UAE national and can be under 100% foreign ownership. Even small businesses in Dubai and in other parts of UAE such as a salon, a cafeteria, coffee shops, IT services, consultancy licenses, etc. do not need a local partnership and can enjoy 100% ownership.
But businesses such as general trading and companies that need commercial licenses do require a local sponsor, who owns a minimum 51% of shares in the company. This clause sometimes becomes a challenging experience for foreign investors.
What are the types of local partners or local sponsors in the UAE?
There are mainly 3 types of local partnership or sponsorship, available t businessmen and entrepreneurs across the UAE those are –
Corporate Partnership, wherein a UAE company holds 51% of the share and liabilities of a company owned by an individual or group of partners of a foreign origin.
Individual Sponsorship is when an Emirati national in his or her individual capacity becomes the local sponsor of a company.
Local Service Agent is when a local Emirati merely act as a representative of a company in all administrative dealings with government departments. It is mainly applicable for professional companies and the local service agent does not hold any shares of your company.
How to get a reliable local partner in the UAE?
Finding a reliable local partner in a foreign country can be difficult for most investors and entrepreneurs. Also, sharing the majority of shares with a recently know commercial entity could be petrifying. Hence, the best way to get a reliable local partner is through a business setup service provider and who better than Shuraa Business Setup.
Shuraa Business Setup is a leading business setup service provider in the UAE. Shuraa has registered more than 20,000 companies over the last 18 years. We offer reliable local partners as well as allow you to have complete ownership of your company.
Shuraa Business Setup does not involve in any of your business proceedings and has no share in the profits and liabilities of the company. We have a documented court agreement that states it all so that your interest is assured at all times.
To know more about business sponsorship services or business partnership services with Shuraa Business Setup call us on +97144081900 or to request a call back on +971507775554. You can also email us on [email protected] or log on www.shuraa.com.