'Local sponsor' is a general term used in the UAE to refer to local service agents and nominee shareholders (sleeping partners) in mainland companies with foreign investment.
A local sponsor in Dubai has to be an Emirati (UAE national) with a family membership card (Gincia). Operating a business in the Dubai Mainland area requires a local service agent to be mandatorily appointed.
Local Service Agent - Dubai
The branch of foreign companies and civil companies (single owner of a partnership) with foreign investments needs to have a local sponsor in Dubai appointed to comply with the regulations. These agents do not have any share in the firm also, are not normally involved in the operations of the company, and are paid a lump sum fee per annum - see what the normal sponsorship fee is.
Normal Market Practices
Sponsors normally do not interfere in any of the Company's activities. Although operational powers are being vested with the managing director/manager, local sponsors still hold power to sign on Immigration and Labour related affairs of the company.
As there is normally no limitation on the number of companies they can sponsor, some UAE company local sponsors are the sponsors of hundreds of companies.
Nominee Partner (Sleeping Partner) in LLCs
As per the UAE Companies Law and UAE Civil Law, to start a company with a limited liability company in Dubai, that is, a non-offshore company in a non-free zone, a minimum of 51% local equity is a must. Despite foreign equity in such a company not exceeding 49%, the profit distribution from it can be mutually agreed upon by the concerned parties.
Complete operational powers can also be granted to the foreign partner(s) or a third party on the memorandum of association. Only UAE nationals or companies owned wholly by UAE nationals may be considered for being nominee partners and paid a lump sum amount per year.
The Misconduct in the Market
The following issues are often faced by businesses while appointing a local sponsor in Dubai:
No Access to the Sponsor
There are many business owners in the market who do not have access to the local sponsor directly but through PROs/consultants/lawyers. In such cases, the relationship between the PROs/consultants/lawyers and the client is crucial.
There are sponsors who work busy schedules and are not available when required.
Most of the company owners are not registered with the labor department; thus, sponsors' e-signature card is required for applying for work permits.
Our corporate nominee sponsorship wipes out all the above issues.
Sponsorship Fee Calculator
We offer highly professional services at a reasonable price for a business setup in Dubai & the UAE. Do try our sponsorship fee calculator on the right to get an estimate of the price of local sponsorship services.
Disclaimer: The rate is calculated not based on any official data but on what we charge as a sponsorship fee and what we have learned from the market.
We also offer corporate nominee services sponsorship for the same rate.
Corporate Nominee Sponsorship
Corporate nominee sponsorship can be availed by all limited liability companies across the UAE. The sponsor, in such a case, should be a corporate entity instead of an individual.
An important benefit of the local partner being an entity and not an individual is the difference between personal relationship-based traditional sponsorship and an agreement-based new system. The entity that acts as the nominee is built with a board of directors and holds power of attorney to act on behalf of the Company.
Thus, from the standpoint of corporate governance, for transparency and other factors, this implies sundry benefits for a foreign party, one of the most important ones being succession planning. Companies, while entering the market, often worry about the accountability of a local partner – as to the ramifications of the local partner changing his/her mind.
With a corporate entity, the contractual terms still hold, thus imparting more robustness to the arrangement vis-à-vis having an individual national as the local partner. A nominee arrangement shall be executed.
Note: Corporate nominee sponsors can work only for limited liability companies - and not for branches of foreign companies or civil partnerships.
Why Do You Need a Local Sponsor for Business in Dubai?
The importance of the local partner in Dubai can be measured by the fact that the government has mandated by law to have a sponsor for foreigners for doing any activity from entering into the country to ending the business in UAE.
Importance of Selecting the Right Local Sponsor in Dubai, UAE
With the booming business industries in Dubai, UAE, entrepreneurs from around the world are looking to make the most of the business boom. It is important to have the right partner due to the local laws and restrictions in place for foreign-owned companies and investors in the UAE.
Hence, you require a partner who can add value to your investment and protect your rights in the business and in the UAE. This partner should help in the smooth establishment of your business. He or she should inform you of local compliance and laws and provide connections.
This will help you to make your business a success. Considering the diversity of the market makes it even more important to have a well-connected agent on the ground.
The Agent should add real value to support your company.
Finding a Local Sponsor in Dubai? Connect with Us
We at Commitbiz handle all your local sponsor in Dubai-related requirements proficiently, so you can concentrate on your business growth! Right from business incorporation to office space, we cover it all.
Our business setup consultants in UAE have years of experience in this field and can make the process hassle-free. Contact us today for our services in the UAE.