UAE Local Sponsors are required to set up a limited liability company (LLC) in the mainland of Dubai, UAE. For an LLC company in the UAE, a UAE national must act as the sponsor with a minimum shareholding of 51 %. The rest, 49 %, can be held by the foreign investor. The LLC appoints a UAE national sponsor on a yearly contract basis by paying a sponsorship fee.
The local UAE national will assist and liaison with Government departments to obtain approvals for business licenses, employee visas, and other administrative services. They have no role in the day-to-day business operations, which is looked after by the foreign partner. Local sponsors can be of two types. They can be individuals of UAE nationality or a corporate entity owned by UAE nationals.
For a foreign investor, it is imperative to choose the right local sponsor in the UAE. Without the assistance of a business setup consultant in UAE, it would be challenging to get access to a local sponsor.
Business consultants like Absher help their clients find the right local sponsor after assessing their business set plans.
Many local sponsors are ready to be a part of the mainland business set up of the foreign investor in return for a fixed fee. They have no role in business operations.
However, a few things are essential that a consultant can help with.
Build rapport with sponsor
The local sponsor help is required from time to time. For setting up the business, Liasoning with Government Services is crucial. Getting license approvals, applying for new employee visas, immigration, expansion, diversification of business, and new territories is required. Therefore, building a rapport with the UAE national Sponsor is essential.
There must be no miscommunication between the foreign investor and the local sponsor. The business consultants act as a mediator to ensure that shareholder agreement, fees, and responsibilities are well-communicated between the two shareholders.
Before signing up with a UAE national for a local sponsor, the documentations need to be perfect to avoid any dispute late. The agreements, Power of Attorney, clarity on shareholding and assets, and other terms and conditions must be agreed upon and documented. Business setup consultants play a vital role here for their clients.
Local service Agent in the UAE
For some company structures as described within the UAE law, a local service agent is required instead of a local Sponsor. Civil Work Companies or a branch of a Free Zone Foreign company, Representative Office of Free Zone Foreign company has to appoint a Local Service Agent while registering the company with the authorities in the UAE.
The Local Service Agent is not entitled to any profit-sharing but is paid a fixed fee for acting as a company's local representative when dealing with Government authorities for Visa and Administrative services.