Why do you need a Local Sponsor in Abu Dhabi?

by Zaara 16, Sep 2021

Why do you need a Local Sponsor in Abu Dhabi?

The country of UAE is considered as a hub for logistics and commerce, and it is the dream of almost all the entrepreneurs and businessmen to set up a company in the Middle East. This provides the perfect amount of business opportunities to global cities such as Dubai and Abu Dhabi to attract entrepreneur and businesses from all over the world.

Abu Dhabi is the capital of the United Arab Emirates (UAE) and is the second most populated city in the country after Dubai. Though Dubai gets most of the limelight over the last few years, the global business presence of Abu Dhabi has gradually increased. This has helped to increase the inflow of companies coming in to register themselves in the emirates. This has also helped in reducing the dependency of the country on the revenue from the oil and gas sector. To set up a Limited Liability Company (LLC) in Abu Dhabi, a foreign company must a local agent or a domestic partner who will act as a sleeping partner in your company.

Let’s understand more about the role of a Local Sponsor in Abu Dhabi

Need for a Local Sponsor in Abu Dhabi

A local sponsor in Abu Dhabi will act as a sleeping partner, and according to the business regulations in the country, a domestic partner will be the owner of minimum 51% of the shares of the company. It is also required of him that he should be a resident of the United Arab Emirates and should possess a valid Dubai passport.

The rule of the requirement of a local partner only applies to an LLC which has registered itself in the mainland. The companies which are registered in the various free zones of Abu Dhabi are exempt from this requirement.

Key Benefits of a Local Sponsor

There are several benefits for a business to work with a local partner. These benefits are:

  • Any LLC which avails the services of a Local Sponsor is 100% tax-free
  • There is complete repatriation of profit and capital of the foreign entity
  • A company which avails the services of a local sponsor has the option of opening limitless branches throughout the UAE
  • A company can not avail many business opportunities if they do not avail the services of a local sponsor

One of the most significant advantages of availing the services of a local sponsor is that the entrepreneur will be conferred an investor status which will allow them to receive residence visas both for themselves and the people dependent on them.  

Types of Local Sponsors

There are three types of local sponsors available for a Limited Liability Company. In Abu Dhabi. These three types of sponsorships are given below:fr

  1. Individual Sponsorship

In personalized support, the Emirati sponsor will be a shareholder with a 51% stake in the company. This means that he will also have a 51% stake in the liability of the company. There are specific pre-requisites of an individual sponsor. These are:

  • The local sponsor should be a UAE citizen.
  • Twenty-one years has been set as the limit for the age of a local sponsor.
  • No previous experience is required in a similar sector.
  • The local sponsor can hand over his control of the business to the foreign investor for a set amount of annual fee.
  1. Corporate Sponsorship

Corporate sponsorship is very similar to individual sponsorship. The only difference is that in a corporate sponsorship the local agent is a resident company of the country. The foreign company will have a 51% share in the business, and in return, the local sponsor will receive a predefined amount of fee. 

  1. Local Agent

This sponsorship is required by professionals such as accountants, doctors, etc. These foreigners will be able to maintain 100% ownership of the business, but it is necessary that they appoint a local agent who will help in dealing with the relevant government departments of the country.

One more critical piece of information is that a local agent will not be a shareholder but will be paid a pre-decided fee.

An Abu Dhabi local sponsor will not only help in assisting the foreign company in the United Arab Emirates but will also help in dealing with the various government departments. They will also allow the management of the company to obtain all the necessary permit and licenses. If you are looking forward to setting up a company in the mainland in the United Arab Emirates, you should avail the services of a business setup consultancy.

“Commitbiz” is one such consultancy which will not only help you in the complete company setup process but will also allow the management to prepare for the future the company may face. It also has a slew of services such as Intellectual property services, sponsorship services, etc. To know more about the various services, contact us today.

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