Mainland Company Formation in Dubai without a Local Sponsor

Mainland Company Formation in Dubai without a Local Sponsor

by Priyadarshini Balamurugan 29, Nov 2023

Mainland company formation in Dubai is offering several opportunities for entrepreneurs. Dubai’s economy is booming due to the unfair advantages like:

  • Strategic Location
  • Modern Infrastructure
  • Business Conducive policies

Thanks to these factors, Dubai has received ~ AED 54.5 billion (USD 14.7 billion) in FDI in 2021. A 5.5% jump from 2020. In 2023 AED 29.5 billion (USD 8 billion) in foreign direct investment (FDI) in the first half of 2023. It's a 9.4% growth from the same period in 2022.

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Jurisdictions in UAE

UAE has its 3 main jurisdictions offering a variety of opportunities –

i) Mainland:

Starting a mainland company helps you do a vast extended business. You get to operate your business within and beyond the UAE.

ii) Freezone:

Freezone companies get restricted to that particular region. They cannot operate outside the same freezone.

iii) Offshore:

Offshore companies are different from the other two. In this, the parent company is in a different country. And only its offshore corporation is set up in an offshore jurisdiction.

Let's talk about mainland company formation in Dubai without a local sponsor.

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Important Note

It's no longer mandatory to appoint a local sponsor for a mainland business setup in Dubai. So that foreign investors get to enjoy 100% ownership over the business.

Ofcourse, there are terms and conditions. Since some activities need a local sponsor, according to the UAE Government. 

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Advantages of Mainland Company Formation in Dubai -

The benefits of mainland company formation in Dubai (without a local sponsor) –

a) Complete Ownership:

Under the traditional mainland company setup with a local sponsor, they own up to 51% of the business. But, a mainland business setup in Dubai without a local sponsor can get you 100% ownership. This also benefits other management factors.

b) Control:

An advantage of not having a local sponsor is having more control over:

  • Decision-making,
  • Strategic direction and
  • Everyday business operations. 

c) Flexibility:

Working without a local sponsor offers flexibility in business activities. And the ability to adapt to market changes. Business owners can do business without the conditions imposed by the local sponsor.

d) Access to Local Market:

A mainland company can provide better access to the local market. These companies enjoy:

  • Easy engagement of government-related entities,
  • UAE customers and businesses,
  • Biddings for projects, etc.

e) Global Impression:

It enhances the global image. It adds credibility to the brand and attracts international clients. Operating in a booming business centre leads to high profitability and development.

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Licenses for Mainland Business Setup in Dubai - 

Licenses are a tool for approvals and permissions from the authority. Setting up a company in Dubai requires specific licenses. These are important for a hassle-free functioning of business operations. The necessary licenses are as follows –

i) Industrial Licenses:

Companies involved in manufacturing services and industrial services should opt for industrial licenses.

ii) Commercial License:

Companies purchasing and selling products and services must have commercial licenses in Dubai. 

iii) Tourism Licence:

This license allows your company to organise tours and trips in and out of Dubai. If an investor plans to open a travel company in Dubai, this license is mandatory.

iv) Professional License:

It's for ensuring that your company is following the local regulations. It maintains a balance between foreign investment and the protection of national interests. A professional license helps entrepreneurs do certain types of business activities. Activities falling under the “professional services'' category. 

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Process of Obtaining a Professional License in Dubai

For a mainland business setup in Dubai, you should get a professional license

Here's the process for getting your license –

  • Getting a professional degree such as: engineering, medicine, law, or accounting. With some experience.
  • Hire business partners with the same degree and experience.
  • Keep the entire summary of the company activities.
  • Get a local service agent to handle the local government entities.
  • Get all the approvals from the Department of Economic Development.
  • The company should have a unique name.
  • The selected name should have DED approval.
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A Dubai mainland company setup without a local sponsor changes the business landscape. This benefits foreign investors, giving them freedom and control over their business activities. It facilitates an environment of innovation, creativity, and competition. They're free from the conditions imposed by the local sponsor. This has made it an even more welcoming destination for businesses. But, the mainland company formation can become complex. This happens when you haven’t done your research and planning. Thus, the need for a consultancy firm is important due to their experience and guidance 

One such consultancy firm is Commitbiz. We’re handholding entrepreneurs in their business setup journey. Let us get in touch.

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Can a corporation be established on the Dubai mainland without a sponsor?

According to the new Law, you do not require a sponsor to establish a company in Dubai Mainland. However, if a foreign citizen wishes to provide services or consultation, a local UAE national will act as the company's agent rather than as its 51% shareholder.

How can I get rid of a local sponsor in Dubai?

To change your local sponsor in Dubai, you must update your Memorandum of Association (MOA) and trade permits to reflect the new ownership and share structure. A board resolution from current shareholders agreeing to this change is required for this to happen.

Can I own the entire firm in the UAE?

The UAE Government revised the federal Commercial Companies Law, allowing foreign investors to acquire 100% of certain enterprises. This implies that foreign investors' shares will no longer be limited to a maximum of 49% but can now be up to 100%.

Where can I locate a local sponsor in Dubai?

Finding a local sponsor in Dubai may take a lot of work for young entrepreneurs and businesses. A UAE national (often known as an Emirati) or a corporate organization must be the local sponsor. The business company must be 100% owned by UAE nationals and have a board of directors.