Local Sponsor vs. Corporate Sponsor

by commitbizadmin 10, Jul 2020

Local Sponsor vs. Corporate Sponsor

The United Arab Emirates is considered a hub for businesses in the Middle East and setting up a company in the United Arab Emirates is a dream for many Businessmen and Entrepreneurs all over the world. The government of the country has understood the importance of the UAE in the business and has set up a number of free zones that have their own set of rules and regulations which assist a business is flourishing.

Depending upon the location where the business is set up, each business may require the assistance of a sponsor. This sponsor may be a local sponsor or a corporate sponsor. If the business is set up in the various dedicated free zones, there is no need for a sponsor, but if the business is set up in the mainland of the country, then the business must avail the services of a sponsor.

There are two main types of sponsorship which are given below:

  1. Individual Local Sponsorship
  2. Corporate Sponsorship

Both of the sponsorships, as mentioned above, are described below:

Individual Local Sponsorship

In this type of sponsorship, individual local sponsors are present who have an outstanding reputation in the country and are the potential investors in your business. Having an Individual Local Sponsor has its own merits which are mentioned below:

●Less Labour Intensive

If a company opts for an individual local sponsor, the amount of paperwork to be submitted is

comparatively less. This will help save both time and money for the business.

●Influential

The people who are chosen as a sponsor are usually very influential, and many people follow their example. Choosing them as the sponsor will allow the business to tap into a new market or a new demographic.

●Pocket-Friendly

In comparison to its counterpart, selecting an Individual Local Sponsor can be much cheaper.

●Easy to Find

Potential individual sponsors can be very easy to find. All one needs to do is to search the internet, and many sources can be made available.

Corporate Sponsorship

A corporate sponsor is very much similar to an individual local sponsor, but in the case of a corporate sponsor instead of an individual, an organization or a team of people help in running your business. the various advantages of availing the services of a corporate sponsor are:

●Freedom

The business availing the services of a corporate sponsor can handle the complete business and also partake in all the available financial benefits.

●Legal Protection

In comparison to the local individual sponsor, corporate sponsorship will be more secure and will be legally protected by the DED (Dubai Economic Department).

●Paperwork

The government has taken steps to make all the procedures transparent due to which all the paperwork for the sponsorship is done relatively quickly.

●Withdrawal

As the sponsorship is handled by a group of people or an organization, the risk of ownership problems will not affect the sponsorship. The ownership problems include an individual’s demise or the early retirement of the individual.

While setting up a business in the United Arab Emirates, foreign management needs to take care of availing the services of a sponsor. The type of sponsor will be chosen according to the business activities performed, the location of the business in the country and the preferences of the business.

According to the Dubai Economic Department (DED), before setting up a business in the country, the management needs to find a sponsor that will be the holder of 51% of shares of the business. In some instances, the control of the company may provide a predefined amount of funds to the sponsor. In return, the sponsor will assist the international management in understanding the customs of the UAE and also help navigate the various business setup procedures.

If you are looking to set up a business in the United Arab Emirates, then you must be ready to decide between a local individual sponsor or a corporate sponsor. If you require any assistance in determining a sponsor or any of the various business setup procedures, then you must take a look at the services provided by Commitbiz. Our experts at commitbiz will make sure that your company faces no problem in the future. For details on the various service offered by Commitbiz, Contact Us. We will be happy to help.