Trusted Local Sponsor Services in Dubai
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The involvement of local sponsors in Dubai is paramount to the formation of mainland firms in Dubai as stated by the UAE commercial companies’ law and UAE civil law. Local Sponsors or Nominee Shareholders are either nationals of UAE or a company whose shareholders are 100% UAE nationals, UAE Local sponsors can also act as local service agents who will be paid an annual fee for the services they render.
For the establishment of mainland LLC by foreign investors, it is mandatory by the government that local sponsors own up to 51% of the company shares. The formation of Professional and representative offices, on the other hand, do not require local partners for their establishment in Dubai. They can be 100% owned by foreign shareholders.
The appointed local sponsor in Dubai takes no role in the day-to-day running of the company’s business. They are responsible for liaising with the necessary government department on behalf of their organization in the obtaining of visas, immigration approvals, and other licenses.
Finding a local sponsor in Dubai that fits the required qualifications needed might seem quite a daunting task for foreign businessmen. Local sponsorship in Dubai is nevertheless a mandatory requirement for business formation. The local sponsors (Nominee Shareholders) in UAE can have 51% only if the legal form is a limited liability company (LLC), for other legal forms, the local service agent will have 0% shares of the company.
Advantages of Individual Local Sponsor
- Better personal relationship
- Less time to finish the license transactions
- Requires less paperwork to finish the approvals
- Can push the government approvals if delayed
- His experience can be a good factor to avoid any problems
- Sponsorship fees are not expensive
Disadvantages of Individual Local Sponsor
- Should have 51% shares in mainland LLC companies
- In case the sponsor is not available the work could be delayed
- Can claim the 51% shares if the side agreement is not signed
- If the sponsor dies his shares will be transferred to his/her heirs
Local Service Agent in Dubai (LSA)
A few company types in Dubai does not require a local partner or local sponsor (Nominee Shareholder), it can be owned 100% by foreign investors, this includes professional companies, this includes sole establishments and civil companies, branch of a free zone or foreign company, representative office of a free zone or foreign company, however it requires a local service agent (LSA) or a company agent (CA).
The local agent is a UAE national or a company owned 100% by UAE nationals, the share percentage of a local service agent in UAE is always 0%, an LSA agreement should be signed to appoint a local service agent in Dubai, this agreement will specify the annual sponsorship fee.
Advantages of Local Service Agent
- Better relationship with individual LSAs
- Will have 0% only of the company shares, the full shares are owned by the investor
- Does not interfere in the day to day business operations
- Changing the local agent to another one is much easier than changing a shareholder
- Sponsorship fees are not expensive
Disadvantages of Local Service Agent
- In case the local service agent is not available the work could be delayed
- Can remove his name from the license in case of disagreement
Corporate Sponsorship in Dubai
The Corporate Sponsorship is a term used to define the sponsor type, it refers to a corporate entity fully owned by UAE nationals, the corporate will act on behalf of the local sponsor, it can act as a local shareholder or local service agent, in this case, more paperwork is needed to add the corporate as a sponsor, the lawyer, the manager or the PRO services provider will have a power of attorney to represent the corporate, the local sponsor will not be involved directly in the process, this type of sponsorship has few benefits and disadvantages.
Advantages of Corporate Sponsorship
- Better protection, if the UAE national dies this will not affect the business
- Official relationship, the UAE local is not directly involved, a PRO or a lawyer will handle the paperwork
Disadvantages of Corporate Sponsorship
- More complicated paperwork in case of corporate structures
- Can claim the 51% shares if the side agreement is not signed
- Sponsorship fees are more expensive
To Summarize:
Do You Need a Local Sponsor for Your Company in Dubai?
- The Answer: it depends, if your business location is in mainland, or you open a branch of your company in mainland, then yes you need a UAE business sponsor, although in most cases, the sponsor will be a local service agent, the company shares will be owned by you, except for commercial activities like general trading, the company must be an LLC and the UAE local should have the 51% of company shares.
- The other option is to open a free zone or offshore company, in this case, you don’t need a local sponsor, but your activities will be limited to the free zone area.
How to Choose the Right Local Sponsor in UAE?
- Choose a good local sponsor that you trust by a personal relationship
- If you don’t know any UAE local you can use an experience business setup advisor to do this task on your behalf
- Don’t go for very cheap sponsorship, some of them are not serious about doing actual business
- Transparent fees, sometimes there will be hidden fees paid to the sponsor to sign any official document
- Always have the right documentation, contracts, POAs, Side agreements to protect your business assets
- Make sure the sponsor is not a busy person, you may need his signature at any time to submit an official transaction
Paso corporate services will fast track your Dubai company registration process through effective sourcing of efficient and reliable local sponsor in Dubai, we can solve all the problems mentioned above, you will have full protection and peace on mind when it comes to your business safety, we are your premier agency for the licensing and company set up in Dubai.