Starting a business in Dubai is rewarding. However, to register a business in Dubai mainland, you need to meet certain requirements. One of them is onboard a local sponsor as certain business activities in Dubai mainland mandates it. This article provides insight into all the necessary details about a local sponsor in Dubai.
Who is a Local Sponsor in Dubai?
A local sponsor is an Emirati or a UAE national who acts as a shareholder for your business in the UAE.
Certain business activities require you to have a local sponsor in Dubai. These include activities related to oil exploration and production, security and military, banking, financing, and insurance activities.
As per law, a local sponsor owns 51 percent of a company's shares, while the investor owns the remaining 49 percent. The local sponsor is not involved in the day-to-day decision-making process related to the business, but the extent of its involvement in the company will vary depending on the agreement.
Types of Local Sponsors in Dubai
Appointing a local sponsor will depend on the business activity you wish to undertake. Let us look at the types of local sponsors available in Dubai:
Individual Local Sponsors
Individual sponsors must be UAE citizens over 21 years of age. They can hold a 51 percent stake in the company. The local sponsors should be professionals, business owners, or government employees.
Corporate Sponsors
This is similar to individual sponsors, except the sponsor is a UAE-based company. The foreign investor will run the company, with the local sponsor receiving a share of the profits.
Local Service Agents
A professional needs a local service agent to start trading in Dubai. The local service agent in Dubai acts as the business representative in administrative dealings.
Factors to Consider for Choosing a Local Sponsor in Dubai
Let us understand the factors to consider before finalising a local partner in Dubai:
- Verify the credibility of the local sponsor. Evaluate their background, and sign the contract.
- Appoint a local sponsor who aligns with your business requirements. If you are in a legal business, for example, try to hire a local sponsor with a legal background.
- Maintain a record of the agreement and make sure you are paying the appropriate amount of compensation.
Advantages of Having a Local Sponsor for Your Business in Dubai
Having a local sponsor in Dubai for your business comes with various benefits, some of which include:
- Can trade locally within the UAE market
- Open limitless branches throughout the UAE
- Full repatriation of profits and capital
- Capability of availing any private and government projects
- Allows foreign investors to obtain residence visas for themselves and their dependents.
Responsibilities of a Local Sponsor
Some of the essential duties of a local agent in Dubai are as follows:
- Help in the procurement of work visas.
- Closure of bank accounts in case of business shutdown.
- Interpreting the Arabic business contracts during the process of company registration in Dubai.
- Acting as government liaison between the company and the government authorities.
- Deal with government authorities and Ministries on behalf of the firm to make the renewal process more accessible.
How to Change a Local Sponsor in Dubai?
There can be instances when you might want to change your current local sponsor. The procedure for changing your local sponsor in Dubai involves:
Consultation with Current Local Sponsor:
The first step is to inform the current local sponsor about your decision and sort out any differences that might exist.
Consult with Shareholders:
Keep every individual involved in the decision-making process. Inform the shareholders and take a collective decision on appointing a new local sponsor.
Prepare Required Documents:
Foreign investors must show appropriate documentation to the court for a seamless change of local sponsors. Submit the Memorandum of Association (MoA), immigration document, among other documents to the relevant authorities.
Submit the Documents:
Provide the documents in the court to change the current local sponsor. Updated documentation will be sent to facilitate the appointment of the new sponsor.
Avail BSW Assistance
Finding a proper local sponsor can be difficult for foreign business investors. In that regard, Business Setup Worldwide professionals can ease the process. Our services are affordable and can ease the involved complexities. Contact us to learn more about appointing a local sponsor in Dubai and get started with the process.
