Corporate Sponsorship in Dubai
Corporate Sponsorship for Business Setup in Dubai, UAE
Dubai is one of the seven Emirates and a well-known trading hub in the Mena region. There are several exhibitions and numerous year-around business events in Dubai. With the Expo2020 approaching, Dubai will become more and more attractive for businessmen and businesswomen around the world.
Now is the right time to set up your business in the UAE, as the Expo2020 is expected to further boost the economy and to provide even more business opportunities. With the support of our business setup consultants, a company formation in Dubai can be fast and easy, but often requires a corporate sponsorship or a local shareholder, holding 51% of the company shares.
UAE Business Setup with Local Shareholder
Every year, several foreign investors, entrepreneurs and founders plan their company formation in the UAE and often they do their business setup in Dubai mainland. Depending on the requested activity, a Dubai mainland company setup can be mandatory, for example for company formations in the construction sector.
The UAE Commercial Companies Law requires a local shareholder or a corporate sponsor in Dubai for limited liability companies or Dubai mainland companies. This so called local shareholder is a UAE national and a so called corporate sponsor is a UAE company, holding 51% of the company shares.
As stipulated by the law, a mainland business setup in Dubai needs a 51% local sponsor and this often comes in the form of an UAE national, holding 51% of the company shares in his individual capacity.
Foreign entrepreneurs doing business in the UAE for their first time, find this regulation and its proceedings extremely difficult. Overseas businessmen and businesswomen often do not personally know UAE nationals. They are most likely not willing to distribute 51% of their company shares to them. Generally, foreign founders do not want the 51% local sponsor in UAE to influence their business or to have any interference with their company profit every year.
Company Formation with Corporate Sponsor in Dubai
Instead of getting an individual local shareholder on board, several foreign entrepreneurs search for corporate sponsorship services in Dubai. These corporate sponsorship services are provided by UAE companies held by one or more UAE nationals. Instead of an individual person, the UAE company will become the 51% local shareholder in the new company. This corporate sponsorship service offers more financial security and individual freedom to the foreign company owner.
Benefits of Corporate Sponsorship in Dubai
UAE company formations like a Limited Liability Company (LLC, Dubai mainland company) need a 51% local sponsor. If a UAE national becomes the sponsor, the Emirati holds 51% of the company shares in his individual capacity. The UAE national does not have to be a businessman or needs any experience in the relevant field. With his 51% of the company shares, he can overrule the 49% foreign shareholder and influence several administrative processes and business decisions.
With a corporate sponsorship, the foreign entrepreneur maintains complete control. In general, corporate sponsors in Dubai do not want to get involved in the day-to-day business. The foreign business owner keeps his full power and the company management.
Often corporate shareholders holding 51% do not insist to receive 51% of the corporate profit. Corporate sponsors in Dubai often get an annual lump sum payment only. Therefore, the foreign entrepreneur retains 100% of the financial benefits.
To regulate the rights and obligations of a local sponsor, side agreements are needed. It could be hard to get such documents in place, as they need to be in Arabic. Another advantage of a corporate sponsor in Dubai is, that the company provides side agreements already drafted from their experienced legal counsels. So, the rights and obligations can be secured, and the company formation in UAE can be speed up.
Our Corporate Sponsorship Services
Our business setup consultants in Dubai and our PRO services in Dubai can support you with your company formation in UAE. Furthermore, Business Link UAE can act as your corporate sponsor. As your 51% local shareholder, we can provide you with more flexibility. You will keep in charge to secure your company management and you will keep the power over your company assets.
