Basic Things You Need to Know About Local Sponsors to Start Business in Dubai?

Local Sponsor Dubai is a UAE

Compared to earlier days when non-GCC nationals were required to have a local sponsor to start a business, these days, 100 % foreign ownership is allowed in UAE. However, there are specific industries where local sponsors are still mandatory. The good news is that one can quickly get a reliable local sponsor with the proper assistance. 


Understanding the concept of Local sponsorship


Local Sponsor Dubai is a UAE national who holds a 51% partnership in a business carried out in the UAE. They, however, do not interfere in day-to-day operations and have no decision-making powers. Local Sponsors can be individual or corporate and usually charge annual fees for their services instead of taking 51% profit. 


Industries where a Local sponsor is required


One will require a local sponsor Company Formation in Dubai in some of the following sectors:


  • Oil exploration and production
  • Haj and Umrah Pilgrimage services
  • Security and military services
  • Water and electricity provision
  • Banking, financing, and insurance activities
  • Post and telecoms services
  • Printing and publishing
  • Road and air transport
  • Medical retail (including pharmacies
  • Commercial agency


One can have 100% ownership outside these industries, but approval is required from DED.


How to find a Local Sponsor?


Appointing a Local Sponsor in Dubai is not to be taken lightly, and like any business decision, it needs careful consideration. There has to be a trust factor on both sides. The local sponsor is not a business partner in day-to-day operations and profit sharing, but they must be cooperative and reliable. The best way is to take the help of Business Setup Consultants in Dubai. They can access local sponsors and suggest the right one for a new entrepreneur. 


Categories of Local sponsor 


There are many categories of local sponsors that one can choose from. They can be corporate, individual, or a local service agent. Individual sponsors must be UAE nationals, Male or female, and above the age of 21. They should be and above professionals, government employees, or business owners. A local sponsor need not have the same expertise in the business of their foreign partner.


Corporate entities can also be local and registered sponsors to do business in Dubai. 

Professional service businesses require local service agents owned 100% by foreign nationals. The service agent must liaise with government departments and pay a fixed annual fee for their services.


Local Sponsors duties 


The local sponsor's work is to liaison with government bodies for all official work related to the business. Local sponsors act as representatives of the company and use their expertise as local UAE nationals to translate and interpret official documents in Arabic for the convenience of their overseas partners. They handle bank accounts opening and closing, getting work visas, cancellations, etc. 


Things to check when hiring a local sponsor 


It is significant to check the local sponsor's credentials before hiring him. First, they must be residents and UAE nationals; otherwise, they will be operational problems. Also, their past business dealings track record with other investors must be certified by the business consultants. So, there are no issues later. It is imperative that all agreements and understandings, including the scope of work and fees payable to the local sponsor, are agreed upon at the beginning. 


Finally, there must be an understanding that in the event of termination or change of sponsorship, the local sponsor will cooperate and attend court to dissolve the sponsorship. The local sponsor should not hold back the NOC. 


Why choose a Business Consultant?


For an outsider, it is difficult to locate a good local sponsor. Taking the assistance of Business consultants like Absher Business consultancy helps take care of this aspect of the business start-up.