HOW TO FIND A LOCAL SPONSOR IN DUBAI FOR YOUR BUSINESS

Establishing a business in Dubai is not possible without the assistance of a local sponsor unless you are operating in a free zone. Thus to start and operate a business in the mainland area it is absolutely mandatory to get a local sponsor in Dubai to get your trade license active.

If you are planning to set up a business in Dubai. Read More: How to Setup Business in Dubai

How many shares will the local sponsor need?

Mentioned in the previous stanza, free zones companies are free from the
restriction of a local sponsor and they can hold 100% share of their company.
But for Mainland, UAE will get 51% of the share and the company will get the
remaining 49% share.

Types of Local Sponsors in Dubai.

  •   Individual Sponsor.
  •   Corporate Sponsor.
  •   Service Agent.

Individual Sponsor

When an Emirati national becomes your sponsor in his/her individual capacity then
he/she will be called an individual sponsor for your company.

Suitable for:

  • Establishing a Trading company
  • Opening a Limited Liability Company

Points to ponder upon:

  • It is not necessary for an individual sponsor to be in the same field of business as you are in.
  • The individual sponsor can be a government employee, a resident of Dubai or a businessman.
  • The individual will hold 51% of the share and will also be liable
    for 51% of the liabilities.

Corporate Sponsor

HOW TO FIND A LOCAL SPONSOR IN DUBAI FOR YOUR BUSINESS

HOW TO FIND A LOCAL SPONSOR IN DUBAI FOR YOUR BUSINESS

When UAE national owns a company then that company comes under the category of a local
the company thus it is allowed to sponsor any other company of foreign origin and is called a corporate sponsor.

Suitable for:

  • Establishing a Manufacturing concern.
  • Forgetting a Commercial License.

Points to ponder upon:

  • An expat can also take the services of a corporate local company to sponsor for their business.
  • It is a big myth that a local sponsor will only share the profits of the company, In reality, a local sponsor is accountable for all the actions of a company i.e. profits as well as liabilities.
  • Just like an individual sponsor a corporate sponsor will hold 51% of the share and the liability of the company.

Service Agent

When a doctor, IT expert, engineer or any other professional service provider wants to
practice their profession in Dubai then they will need to appoint a service agent.

Suitable for:

  • For representative offices.
  • For professional service providers.
  • For the branch of foreign companies.

Points to ponder upon:

  • Unlike other local sponsors, a service agent will not hold the share of the company so an expat can hold 100% share of his/her company.
  • As the expat is holding the 100% share of his/her company, the service agent will not be held accountable for the actions of the company as it is a mere representative of the company.
  • The remuneration of the agent is on fixed basis depending upon the prominence and the location of the company.

  What should you take care of before hiring a local sponsor?

The importance of this section cannot be overstated as the type of sponsor will
have a direct impact on the operations and establishment of business. So before
hiring a sponsor you must take care of the following points:-

  • Residency: You should avoid a sponsorship with a person who is not
    a fixed resident of Dubai because if your sponsor is not a fixed residence of
    Dubai then you would have to travel for signature each time you want to process
    something in a government department.
  • Family background check:- Selecting a sponsor from a reputed and
    well-off emirate family will ensure the smooth flow of your enterprise.
  • Qualification Check: There will be a language barrier if your
    sponsor does not have a strong education background.
  • Previous companies: Before selecting a sponsor it is a good practice
    to talk with the other companies which the sponsor is already representing.

Need some guidance to start a business in Dubai. Read More: HOW TO START A BUSINESS IN DUBAI

 Common FAQs

  • What are the common fees for hiring a local sponsor in Dubai?

The general fee for hiring a local sponsor is directly related to the nature of the business. But on an average, the general fee for hiring a local sponsor is around 7000 AED.

  • What do you mean by a local sponsor?

As per UAE law, any business which is operating in UAE requires an individual/company who acts like a dormant partner and represents the company on the behalf of the expat in UAE.

  • Will every expat require a local sponsor for their company in UAE?

Except for Gulf Cooperation Council (GCC) and free zone companies, every company which is operating in UAE mainland area will require a local sponsor.

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