Local Sponsors in the UAE

A local sponsor in the UAE is an Emirati national who partners with a foreign investor to form a limited liability company (LLC). The local sponsor must hold at least 51% of the shares in the LLC. Their role is essentially to provide the UAE government with a local presence and to ensure that the LLC complies with all applicable laws and regulations.

Local sponsors are typically paid an annual fee by the foreign investor. The amount of the fee will vary depending on the nature of the business and the experience of the local sponsor.

No Need for a Local Sponsor in Dubai

The recently amended commercial companies Law, allowing foreign investors and entrepreneurs to establish and fully own onshore (mainland) companies, will come into effect on June 1, 2021, the UAE’s Ministry of Economy has announced.

Source: Arabian Business

So it does not require a local partner for a commercial license in mainland company formation. But a local service agent is still needed for professional support on the mainland.

Type of Local Sponsor in UAE

There are three types of local sponsors in UAE,

Individual sponsorship

An individual sponsor is an Emirati national who has the individual capacity to become the local sponsor of a company.

Corporate partnership

In a corporate partnership, a UAE Company holds at least 51% shares and liabilities of a company owned by partners of foreign origin or individuals.

Local Service Agent

A local service agent is a UAE national who merely acts as a representative of the company in all dealings with government departments. LSA is mainly applicable to professional companies where they don’t hold any shares of your company.

There are a few more articles you may like on our website: Product Registration in Dubai

Frequently Asked Questions

Why do I need a local sponsor in the UAE?

To set up a business in UAE Mainland it is mandatory to have a local UAE National business partner in an LLC company with a 51% shareholding. Note this is a general requirement recently the UAE government, which make it easy, and now all commercial businesses can have 100% foreign ownership without having a local sponsor.

What are the responsibilities of a local sponsor in the UAE?

The local sponsor is responsible for the following:

  • Representing the company in all government departments if needed.
  • provide necessary documents, signatures, and content to manage a business in UAE.
  • Signing all legal documents on behalf of the company whenever needed.

How do I find a local sponsor in the UAE?

If you are new in UAE, so the best option will be to find a business consultancy firm, that will find a suitable local sponsor for you business.

Is it Safe to have a local national as 51% shareholding in the company?

Yes, in UAE this is common and safe to have a Local sponsor with 51% shareholding, only thing is you should choose the local Partner through a consultancy firm.