Depending on business needs, foreign investors should find a local sponsor to start their business in Dubai. Consult NHBC business setup firm for more details.
UAE’s growing economy paved way for many foreign investors to start their business indifferent Emirates. Every entrepreneur fosters their idea and turn into profitable business establishment. Initially, you have to complete the business setup process in Dubai. Yet, there are few rules and regulations before setting up your business, this usually causes some confusion. The most important confusion is that whether you need a local sponsor or partnership with UAE national to start your company.
Who is a local sponsor or partner in UAE?
Localsponsor or partner is an Emirati national who possess the necessaryqualification associated with the business activity. As per the UAE commercialcompanies’ law, every UAE national who agree to be a local partner shall holdat least 51% shares in the share capital of LLC. Article 10(1) of Federal LawNo.2 of 2015 is the law that depicts the need of local sponsors.
Local sponsors are also recognized as local service agents, nominee shareholders, or sleeping partners. To get a local sponsor, you should pay them annually based on the agreed contract.
There are three types of local sponsors in UAE,
Individual sponsor is an Emirati national who have the individual capacity to become the local sponsor of a company.
In corporate partnership, UAE Company holds at least 51% shares and liabilities of a company owned by partners with foreign origin or individuals.
Local Service Agent
Local service agent is an UAE national who merely act as a representative of the company in all dealings with the government departments. LSA is mainly applicable to professional companies where they don’t hold any shares of your company.
Some local sponsors act as a passive partner. They help in business setup supporting foreign investors to deal with local laws, rules, regulations, and even cultural norms.
When do you need a local sponsor?
A local sponsor is mandatory for any foreign investors who wish to establish their business in any of the UAE mainland. Moreover, the sponsor should hold at least51% shares of the company.
When you don’t need a sponsor?
If you’re setting up a company in the free trade zone of UAE, then you don’t need a local sponsor. The free zone companies have 100% ownership of the company. The drawback of choosing free zone is that you can’t trade or do business outside the designated free zones. Here, you can’t directly connect with the UAE mainland customers.
How to find a trustworthy local sponsor in UAE?
Finding a trustworthy local partner in UAE is a challenging task for foreign investors and entrepreneurs. Moreover, it’s not easy sharing majority of shares with an unknown local partner. Therefore, it’s recommended to consult a business setup company like NHBC to find your local sponsor.
NHBC is a leading business setup agency offering reliable local partners whereas you can enjoy 100% ownership of the company. We provide business setup and related services like sponsoring, license, and partner sourcing. With right expertise, we assist you in setting up a company with local sponsor.
Having a local sponsor is highly beneficial to understand the local laws and allows you to build new relationships in the country.
To know more about local sponsors in UAE, contact NHBC business setup firm in Dubai.