If you want to establish a business in the UAE, but you don’t know the process of getting a business license or regulation of the UAE government or a good location to establish a business then you need to get a local sponsor. That helps you to settle a business in the UAE and guides you to complete several paperwork. But finding a local sponsor in Dubai is tricky if you are new to this country. Finding a correct and experienced local sponsor is prime for your company because if you end up with the wrong sponsor, it will create difficulties in regulating your company. So before knowing how to find a local sponsor, it’s essential to know their work and why it is needed.
What is A Local Sponsor in UAE?
In the UAE, a local sponsor carries 51% of your company in sectors where prevalence license is not permitted for outsiders. While they have a majority stake, they do not obstruct any decision-making process or daily tasks of your company. If they charge an annual fee for their service then they do not hold 51% of your company. It’s essential to remember that in the UAE, local sponsors do not claim 51% of the earnings from your business, but they charge an annual fee for the service they deliver. Local sponsors are of two types: individuals or corporate entities.
Why Do You Need A Local Sponsor?
According to the UAE Commercial Companies Law, Setting up a limited liability company, ordnance you to have a business partner. To settle a business in some specific industries you need to get a local sponsor in the UAE.
- Transportation
- Oil production and exploration
- Military and security
- Umrah and pilgrimage services
- Banking, financing, and insurance activities
- Electricity and water provision
- Medical and Drug retail
- Printing and Publishing
- Telecom and Post Services
- Fishing and related services
How To Find A Local Sponsor in The UAE?
Here are some tips that help you to find a perfect local sponsor for your business.
1. First you make sure that the sponsor has a legal license, especially if you connect with an individual local sponsor. Research their background, check their working experience and if you are satisfied then sign a contract with them. In the UAE, corporate sponsors who live with family or are reputed in the market, are the best individual sponsors.
2. To choose a local sponsor, you should also move towards a UAE company local sponsor based on your operational requirements. For example, an entrepreneur who needs to discover the government sector and acquire such projects to hire government bodies as their local sponsor.
3. Before hiring them, you need to discuss everything like local sponsor fees, compensation, and benefits of the local sponsor contract or make sure that you do not pay an extra charge more than the standard compensation, etc.
Types of Local Sponsors
There are various types of local sponsors in the UAE. If you want to establish a business here then you need to get a local sponsor to smoothly complete the process. Here are three kinds of local sponsors in the UAE.
1. Individual Local Sponsor- Any Emirati over the age of 21, capable of being a local sponsor for foreign entrepreneurs who want to start their business in Dubai. Choose a person who has familiarity in the business world or it’s also better if he has knowledge in your explicit enterprise. So choose an individual who is professional or experienced.
2. Corporate Local Sponsor- In the UAE, a corporate local sponsor helps you to establish a business by carrying 51% of your business profit. In the UAE, only corporate commodities with the applicable license sponsor your business.
3. Local Service Agents as Sponsors- In the UAE, there are several free zones, where you can establish your business and get 100% of it. But you cannot accomplish your business actions outside the confines of the free zone you are stable inside. In such chances, you can hire a local service agent for an annual fee that acts as a local sponsor so you can easily conduct your business movements on the mainland.
Advantages Of A Local Service Agent (LSA)
- Their fee chargers are low
- You get more freedom to do daily operations
- No complication would be there while processing the different operations
- Having a good and professional relationship with LSA
- 100% ownership of the shares
How To Change Local Sponsors in Dubai?
These are some steps to change a local sponsor in Dubai
- Communicate with your Current Sponsor- Have a conversation with your current sponsor or try to clear out any confusion. Listen to their points and then come to a suitable solution.
- Involve Other Stockholders- It is decisive to appertain all the partners and stockholders in the discussion about your current sponsor. Convey details and cooperate to reach a concord on the determination to switch sponsors.
- Gather Necessary Documents- Prepared all necessary documents like notarized memorandum of association, labor and immigration documents, and other related papers. Share all the necessary documents with the court to consider the process.
- Initiate Legal Proceedings- Make an application with the court and request to change the current local sponsor. The legal sources complete and then file a new application to renew your trading license.
- Find a New Local Sponsor- After completing all the legal processes, you can search for a new local sponsor for your business in the UAE. Choose a reputed and experienced sponsor.
