Why a Local Sponsor for a Company Setup in Dubai?

Home to the world’s tallest building, Dubai has evolved from an oil-dependent economy to one of the leading economic and innovation hubs of the world. Its progressive government, economic diversity has made Dubai a fertile ground for setting up a new business. Dubai government welcomes new businesses into its territory with open hands. To ensure that the business industry gets the maximum gain, the UAE capital has set up various policies.

Any foreigner interested in setting up a business in Dubai would find the situation slightly difficult as they may be unaware of the surroundings, the policies and norms of the government. A foreigner completely unaware of the government rules gathering all the necessary documents and waiting for affirmation from the officials will be a tedious process with verification, checking and cross-verification. To overcome all these hurdles, Dubai government has made it mandatory for a foreign businessperson to have a local sponsor for their business. A local sponsor is not a burden but a valuable asset to the company. (Dubai Local Sponsorship)

Dubai Local Sponsorship

Who is a Local Sponsor?

Local service holders and nominee shareholders are referred to as sponsors. A local sponsor is a local resident of the country who owns at least 51% of the company’s shares. This norm of local sponsorship is valid throughout the nation except in Dubai free zone regions.

Types of Local Sponsors

Depending on the type of business to be set up in Dubai, there are three types of local sponsors-

Corporate Local Sponsor DUBAI

This type of sponsorship involves a corporate firm sponsoring the new business and holds 51% of liability. This is suitable for a limited liability company or a manufacturing business.

Individual Sponsor

To set up a trading company or a limited liability company, individual sponsors are the right choice. An Emirati national will hold a 51% share and a 51% liability of the company. In cases where both parties do not agree to a 51% share, the government also permits an option to offer a fixed annual fee to the local sponsor.

Local Service Agent

To open any professional business in Dubai, a local service agent acting as a sponsor will be suitable. This type of sponsorship involves a local resident acting as a sponsor for the company. The remuneration in such cases is usually an annual fixed fee basis.

Points to Consider Before Getting a Local Sponsor

Signing on someone instantly as the company’s sleeping partner in a completely strange country is not a very wise decision. There are certain aspects that need to be verified before the signing on the dotted line –

  • Verify and cross-verify if he/she is a resident of Dubai. If not, then travel expenses would be the major expenditure for every business transaction.
  • Check out the educational qualifications of the sponsor else there will be an additional process of hiring a translator to get the language right.
  • Keep the first preference for a local sponsor as a government employee as the benefits for the company are enormous.
  • Always verify the sponsorship agreement before the official signing date.
  • Venturing out on your own in search of a local sponsor in a new country with a fresh business idea is not an easy task. Visit a business consultant in Dubai to get a heads up on the latest updates on the terms and conditions of having a local sponsor.(Corporate Sponsor)
By | 2018-11-03T05:22:28+00:00 June 13th, 2018|Business|