Local Sponsor 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-round business events in Dubai. With 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 Expo2020 is expected to further boost the economy and 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 a UAE national, holding 51% of the company shares in his individual capacity.
Foreign entrepreneurs doing business in the UAE for the 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’s 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 need any experience in the relevant field. With 51% of the company shares, he can overrule the 49% foreign shareholder. Even can influence several administrative processes and business decisions.
With 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 by their experienced legal counsels. So, the rights and obligations can be secured, and the company formation in UAE can 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.
Sponsorship Opportunities for a business startup in Dubai, UAE
Despite being a business hub for commercial, industrial, and trading sectors, the uphill battle for newbies in UAE is to find a local and corporate sponsorship. Especially, when entrepreneurs are willing to operate a business in Dubai Mainland, where an ex-pat can only retain a share of 49% and the rest 51% goes to a local sponsor. The concept is different for free trade zones, where it allows 100 percent foreign ownership according to new legislation. There are three types of sponsorships for company setup in Dubai Mainland, including Local Sponsors Corporate Sponsors, and Local Service Agent. Here we are going to tell you the pros and cons of UAE Local Sponsors Corporate Sponsors and Local Service Agents for company setup in Dubai.
Individual Sponsorship in general terms – Local Sponsor in Dubai:
Local sponsorship is much required when you are planning to set up a business outside the free zone in UAE. Business activities like trading or manufacturing unit and a limited liability company work well with such sponsorship. To choose an individual or local sponsor, you need to be cogitative and wise because your local partner takes an enormous share of your company. Only a trusted partner or an Emirati national with good repute can help you in the long run, then he/she may be a professional, a UAE government employee, or a reputed businessman.
An Emirati partner or local sponsor could retain a 51% share in this type of sponsorship. UAE Local sponsor will not ask you for any share in company profit as you just need to pay him his annual fee.
Knock-out benefits of individual sponsorship include:
- Inexpensive and affordable,
- Shrink paperwork with the help of a local sponsor, and
- Open doors for new businesses through the association of local partners with foreign ex-pats.
Think on lose grounds before taking a plunge:
- Sometimes operation efficiency is affected or has a negative influence due to Emirati’s random travel plans.
- Premature retirement or the unfortunate demise of a local sponsor leads to the shifting of legal heirs and causes severe delays in the process.
Ideate your thoughts before opting for corporate sponsorship in Dubai for starting your own business:
When rights are compared, corporate sponsorship is much like an individual sponsorship; however, differs in certain norms. Be assured to get a share of 49% ownership especially when you plan to establish a mainland office; however, 51% ownership goes to corporate sponsors.
Corporate sponsorship is beneficial due to following reasons:
- Expat holds all advantages with 100% financial benefits,
- No intervening from a local partner on day-to-day company activities,
- Secured legal and regulatory agreements,
- Quick documentation process, and
- Succession planning is not required.
The sponsorship has some tribulations as well:
- One of the expensive sponsorships,
- Add-On Paperwork
Get Across Local Service agent in UAE
Acting as a company representative, a local service agent is an Emirati national who helps sole proprietorship, civil business, or a branch office in setting up their business activity. Unlike individual sponsorship, the local service agent works on agreed annual fees, settled as a commercial contract for their services, and does not attain any profit share from the company or branch office. The Local Service Agent is responsible to make all arrangements and meetings with regulatory bodies and government officials on the company’s behalf. He’s the one facilitating renewal licenses off the hook.
Reify the Benefits of having a local service agent in Dubai
- Easily available online,
- Speed up the process, kickback and saves time,
- Help in document clearance and renewals, PRO services in Dubai, and
- No undertaking on any financial obligations.
- Finding the right and qualified local agent is quite challenging,
- Sometimes additional costs are hush-hush concerns in the sponsorship fee.
- Sudden absconding without leaving a trace.
- Pending signatures on paperwork due to long absence.
The sponsorship choices rely on the Incorporated and the Individuals comfort zone. Where corporate sponsorship for business setup in Dubai provides financial independence and a sense of security, and individual sponsorship is affordable and opens endless business opportunities for newfangled set-ups. Set up an appointment with a Business Link expert. To know more about the ropes of UAE company formation sponsorship and reap its benefits.
Why do You Need a Local Sponsor in Dubai?
Any expatriate wishing to carry out industrial, commercial, or trading activities within the United Arab Emirates mainland requires a Local Sponsor in Dubai as a compulsory regulation.
Another reason why business owners may find it handy to have a local sponsor is due to the lack of knowledge they may possess regarding the local policies, norms, and regulatory functions of the region; and to tackle this the government has made it mandatory that a local sponsor exists in the formation of companies.
The upside of this legislation is that once the right sponsor has been chosen, they will become ready-made goodwill for the startup. With Business Link UAE the path toward finding the most suitable sponsor for your business needs couldn’t be simpler.
100% Foreign ownership has been established by the local service agent. Professional services, as well as branch and representative offices, do not require a local sponsor
Local Sponsor in Dubai / Sleeping Partner for Business
Company formation in Dubai comes with a number of rules and regulations. The Dubai business setup can be divided into two:
- The Dubai Mainland Company
- Free Zone Company Formation
Starting a company in Dubai and operating a business in the Dubai Mainland area requires a local sponsor to be compulsorily appointed.
To get the various paperwork done from the ministries & the government, the local sponsor is appointed by the UAE legislation states.
A local sponsor is an Emirati or a UAE national, who acts as your service agent for your business in the UAE. He usually acts as a sleeping partner of your company.
Being a mandatory requirement, it’s a real, inevitable challenge for foreign investors to find the right local sponsor in Dubai. Appropriate for their line of business.
Usually, the local service agent has no particular role or interest in the business but is selected for the sole purpose of liaising with the government departments. Authorities obtain labor and immigration approvals, visas, and complete other necessary paperwork for the company. The local service agent is to be paid an annual fee for his services.
Local Sponsorship in the UAE – How Who & Why?
The UAE markets have gained increasing popularity in terms of foreign investments; entrepreneurs have gained interest in setting up businesses via business setup consultants in Dubai; our Business Link UAE experts facilitate a timely smooth transition into the market. With respect to the UAE Commercial Companies Law that governs the criteria by which companies are set up. It is a mandatory requirement that all companies should establish in the UAE. It has a national partner acting as a local sponsor with a 51% share in the company whilst the remaining 49% shares belong to the expatriate business owner.
It refers to a sponsor who is a UAE national/citizen with a family membership card. However, the aforementioned can bear exemptions with regards to companies established in Free zones, Civil Companies, and the like. Having this said, business owners have the option of acquiring a local individual to represent that 51% or to have a corporate act as the 51% shareholder. However, any corporate acting as a shareholder must be 100% owned by a UAE national.
In both cases, the foreign investor will be the local person running the company while the local sponsor receives a fee or profit share agreement. It is not uncommon that foreign investors and business owners face slight difficulty with regard to obtaining a UAE national they are familiar with within the area of business. Due to this commonality, we at Business Link UAE are certified and licensed to act as a Corporate Sponsor in Dubai for those interested in setting up a mainland company in Dubai.
Local service agents need in cases where doctors, engineers, and accountants wish to establish a business within their respective areas. In such cases, foreign investors are eligible to obtain a professional services license and maintain 100% ownership of their business. However, a local service agent needs to appoint. So as to play the role of a representative in charge of all government-related administrative tasks. In these cases, the local service agent is paid an annual fee for they do not hold a stake in the business.
Local Sponsor, Local Service Agent & Corporate Sponsor
When weighing out which sponsorship method best suits investors. It is crucial to understand the characteristics. The benefits provided by each, individual, local service agent, and corporate sponsorship. When considering pursuing a local sponsorship, business owners must first determine the type of business activity of the company. Potential business owners interested in setting up an LLC, trading company, or manufacturing companies are eligible to seek corporate sponsorship. Company set up processes and procedures are not without their research and extensive cost-benefit analysis. There are many variables worth considering and weighing out when looking into acquiring a sponsor. When considering pursuing a local sponsorship, business owners must first determine the type of business activity of the company. Common considerations to take into account before starting a sponsored search include:
- Will the sponsor help the business? No, because the local sponsor is merely providing a service and requires a pre-agreed upon profit share. Whilst the expatriate is taking care of the business.
- Should my sponsor have a high profile?
- What are possible worst-case scenarios with each sponsor type?
- What are the key benefits? Apart from having access to the local market, LLCs formed with a local sponsor are tax-free and the expatriate can repatriate 100% of his profits.
How Business Link UAE can Help to Find Local Sponsors
Business Link UAE assists you in successful company registration in Dubai. By finding a reliable, trustworthy, and secure UAE national or Emirati to act as your local sponsor or service agent. Being the most reputed business setup consultant in Dubai, we specialize in offering back-to-back business solutions ranging from licensing, and local sponsorship to actual office setup in Dubai.