Local Sponsor for Business

Local Sponsor for Business Setup - Do You Need Them?

In the United Arab Emirates commercial law, foreign investors are required to have a resident, a UAE national, as a sponsor in the mainland business setup. Usually, a sponsor does not involve in the company’s day to day operational or administration works. The company signs a contract with them and they agree upon annual charges based on the agreement mentioned in the contract. The purpose of appointing a local sponsor is to liaise with the concerned authorities and government departments.

Local Sponsor for Business in Dubai UAE

Local sponsors in UAE, also referred to as local service agents or nominee shareholders, have shares in mainland companies with foreign investment. However, they are mostly inactive. Only a UAE national (Emirati) with a family membership card can become a local sponsor of a mainland company in the UAE.

The different types of local sponsorship in the UAE:-

Corporate Local Sponsor

To start a company in the Dubai mainland, a corporate body that is formed and registered in Dubai has to appoint a local sponsor. The UAE national appointed as a local sponsor is entitled to 51% of the total company’s share, owned by foreign origin individuals or a group of business partners. Corporate local sponsorship is the most popular and very appropriate to start an LLC in Dubai.

Individual Local Sponsor

An individual Emirati national sponsors the business and possesses a 51% stake in the company. The person agreeing to sponsor must be a UAE citizen and can be either a male or a female. The local sponsor is not necessitated to be participating in the business activity or even become a business owner. Individual local sponsorship is ideal to start a commercial business in Dubai.

Local Service Agent

Local service agents who are UAE residents and agree to act as a sponsor are the third type of local sponsors. This form of sponsorship is most suitable for a professional business in Dubai.

Consider These Points Before Hiring a Local Sponsor

Make sure you have cross-checked your local sponsor before hiring. Here are some points to consider:

• The local sponsor should be a resident of Dubai. If the sponsor is not a Dubai resident then as an investor you will have to travel each time for signatures or government formalities processes.
• Does a proper family background check of the sponsor? A sponsor from a well-reputed family in Dubai will be beneficial for your business. As a UAE national he/she may most likely have a reputation in the area.
• Also, a government employee can be another beneficial option as a local sponsor in Dubai for your company as it would have a direct connection to government agencies.
• If you are a foreign investor, before signing your sponsorship deed agreement, make sure you have verified it.
• Make all the points clear, whether it is any conditions, services or fees you have to pay to your local sponsor.
• You can also seek advice from us about a local sponsor in Dubai. We can provide you with complete guidance on having a local sponsor.

Roles and Responsibilities of Local Sponsors in UAE

The local sponsor is responsible for some important dealings as mentioned below:

• Cancellation of employees' work visa
• Cancellation of the labour status for employees
• Closing bank accounts
• To settle any outstanding debt (if necessary)
• The Local Service Agent can deal with the government officials and Ministries on behalf of the businesses and also facilitates the renewal process.
• Interpreting the business contracts for business registration that are in Arabic, a local authority is required to understand and interpret these documents and can sign on the behalf of their foreign business partner.

Planning to Start a Business in UAE?

A local sponsor in Dubai is an advantageous asset for a foreign investor planning to start a business in Dubai (UAE). This rule by the government of Dubai benefits both the local sponsors and the companies as they get a readily available person to build goodwill for the company. At OBK Business Centre, we can handle all your local sponsor related queries on the business setup process and growth.