Dubai local sponsor or sponsorship can be any organization or company who supports any activity, event or organization financially. When A LOCAL SPONSOR in Dubai is referred then it’s the person or organization of local origin supporting any business.
If you are willing to set up a company in UAE, you are required to select a local sponsor, especially if you are setting up a company in mainland. LOCAL SPONSOR IS REQUIRED IN MAINLAND AND NOT IN FREE ZONES business setup. So if you are setting up a business in a Freezone you do not require a local sponsor. Local sponsorship is necessary for person of foreign origin willing to setup a business in mainland Dubai.
A local sponsor should be a national of UAE i.e. an EMIRATI also acting as a service agent for your business. This local sponsor is referred to as the sleeping partner. The local sponsor generally has no role in your business.
- A local sponsor in the formation of a company in mainland Dubai owns 51% BUSINESS SHARE.
- A local sponsor has no role to play actively in your business (in general)
- A local sponsors main role is to COORDINATE WITH THE GOVERNMENT and authorities
- A local sponsor has to obtain LABOR AND IMMIGRATION APPROVALS and VISAS
- A local sponsor also completes all the other document clearing activities for the company being formed.
Entrepreneurs interested in setting up a business in UAE mainland need to know a few things about a local sponsor. A local sponsor can be a company as well as an individual. Local sponsors are a partner in your company and manage its documentation as well. Local sponsors charge an annual fees, the details of which are mentioned ahead in the article. These local sponsors are safe and secure and a necessity while company formation in Dubai mainland.
A local sponsor does not take part of the profit you make in most of the cases, but they charge a set amount of fees or minimal share of the profit. All this depends on the type of activity as a business your company is undertaking. The charges or fees also depends upon the sponsor you choose. However the annual sponsorship starts at around AED 10,000.
Before you make up your mind about finding yourself any local sponsor, you should know about the various types of local sponsors. Mainly a local sponsor can be categorized into 3 types:
It is easy to guess by the name that an individual sponsor is a single person or sponsor. An individual local sponsor is an individual Emirati national sponsor. He becomes the shareholder of 51% stake of your business. He is hence 51% liability of your company.
An individual local sponsor should be a UAE citizen over the age 21. Such a local sponsor can be male or female. An individual local sponsor should be either a professional, a business owner or a Government employee. Though they might not be experienced in the business activity that you are undertaking.
Whatever you earn through your business, i.e. your earnings are held in the name of the business and not in the name of the local sponsor. The individual local sponsor can at any time hand over the power of attorney to foreign investors and there by full control of its day to day activities to them.
Corporate local sponsor is no different from the individual except for the fact that in this the local sponsor is an Emirati national company. In this type of local sponsor also the stake of 51% are held and they too receive a said amount of fees or profit.
These is another type of local sponsors in Dubai who are the representatives of professionals in Dubai. Any professional like doctor, engineer or artisan wants to start a business in Dubai need a local service agent to be there representative in dealings with government departments.
These local service agents charge the pre-agreed fees from professionals in return of their service and they do not hold any shares and liability in the business.