Setting Up a UAE Company
First-time entrepreneurs often ask whether they need a local sponsor (nominee shareholder) in the UAE. There are a lot of factors that will determine if corporate sponsorship is a requirement, including the type of business you want to set up and your nationality.
Non-Gulf Cooperation Council (GCC) nationals who want to secure an industrial or commercial licence in the UAE will need a local sponsor as part of the company setup. But if you want to set up your business in a free zone or if you have a professional service licence, then this is not a requirement.
If you do require a local sponsor or you would like to access the benefits of a mainland sponsorship, then Start Business Advisory is available to help. We can find a notable corporate nominee that will act as your 51% sponsor in the UAE, so you don’t have to spend time searching for and building a relationship with a potential sponsor.
What Are The Benefits Of Corporate Sponsorship In The UAE?
What is the Corporate Sponsorship In The UAE?
Corporate sponsorship in the UAE refers to a business arrangement where a local Emirati individual or entity (the sponsor) partners with a foreign company (the sponsored entity) to facilitate the establishment and operation of the foreign company in the UAE.
The local sponsor typically holds a minority ownership stake in the sponsored entity, often 51%, while the foreign company holds the majority ownership stake.
LLC Sponsorship In The UAE
Our sponsorship services are designed to ensure you have complete financial and operational control of your business while working with a notable corporate nominee who will act as your 51% local sponsor in the UAE.
We offer a market-leading service that ensures your business has robust legal protection and a corporate sponsor that gives you all the security you need to get started in the UAE.
At the same time, we’ll provide you with all the required documentation. Like this everything is in order and ready to go.Moreover, if required, we can also help you set up a civil company, branch, sole establishment or representative office in the UAE.
- Our Strategy
Determine the Business Activity
Getting you the best advise
First, identify the specific business activity or sector in which you plan to operate. Second, understand whether 100% foreign ownership is allowed in that sector or if sponsorship is required.
Find a Local Sponsor
Research and identify potential local sponsors who have a good reputation, knowledge of the industry, and relevant connections.
Engage in discussions and negotiate the terms of the sponsorship agreement, including profit sharing, responsibilities, and other relevant aspects.
Agree on Terms
Doing the admin for you
Fisrt, we have to identify a suitable local sponsor. Secondly, both parties need to agree on the terms and conditions of the sponsorship agreement.
Moreover, it is recommended to consult with legal advisors or business consultants. This will ensure that the agreement is in compliance with UAE laws and protects the interests of both parties.
Sign the Sponsorship Agreement
Being your support
We draft the sponsorship agreement that outlines the roles, responsibilities, profit sharing, decision-making authority, and other relevant terms. We ensure that the agreement is legally binding and signed by both parties.
Obtain Required Approvals
Being your support
We will submit the necessary documentation and applications to the relevant authorities, to obtain the required approvals and licenses for your business activity.
This may involve submitting documents such as a Memorandum of Association, Articles of Association, lease agreement, and other supporting documents.
Fulfill Legal Requirements
Being your support
First, we make sure that you comply with all legal requirements. This includes obtaining necessary permits, licenses, and clearances from government departments and regulatory bodies.
Secondly, we will get the right approvals. This may include approvals from the Department of Economic Development (DED), the Ministry of Economy, the Dubai Chamber of Commerce, and other relevant authorities.
Being your support
We will register your business entity with the appropriate government authorities. In the UAE is the DED or the relevant free zone authority. Moreover, this involves submitting the required forms, supporting documents, and paying the registration fees.
Obtain Sponsorship Documents
Being your support
First, we make sure that the registration was completed properly. Secondly, we will obtain the necessary sponsorship documents from the local sponsor. This will include the Power of Attorney or Local Service Agent Agreement.
These documents formalize the sponsorship arrangement and enable the foreign company to operate in the UAE.
- Frequently asked questions
The role of a local sponsor in corporate sponsorship in the UAE is to fulfil legal requirements and act as a representative for a foreign company within the UAE.
The local sponsor provides their Emirati nationality and local connections. This will assist the sponsored entity in navigating the legal and regulatory framework. Moreover, it will help in obtaining licenses and permits and ensuring compliance with local laws. They may also provide guidance, support, and local market insights.
In most cases, the local sponsor in the UAE holds a 51% ownership stake in the sponsored entity, while the foreign company holds the remaining 49%. This ownership structure is a result of the requirement for 51% local ownership in many business sectors in mainland UAE.
However, it’s important to note that profit-sharing and decision-making authority can be agreed upon and documented in the sponsorship agreement to ensure a fair and mutually beneficial partnership.
The local sponsor does not typically have control over the management of the sponsored entity. Additionally, the day-to-day operations and management of the business are generally handled by the foreign company or its appointed executives.
However, it’s important to have clear terms and conditions outlined in the sponsorship agreement to define the roles, responsibilities, and decision-making authority of both parties.
Yes, a sponsored entity can terminate the sponsorship agreement with a local sponsor under certain circumstances, as defined in the agreement. However, it is important to follow the agreed-upon termination process outlined in the agreement to avoid any legal complications.
Moreover, it is advisable to seek legal advice to ensure compliance with the contractual obligations and applicable laws when terminating a sponsorship agreement.
While corporate sponsorship can be beneficial, there are some potential risks to consider:
a. Limited control. The local sponsor may have certain rights and obligations that could affect decision-making and operations.
b. Dependence on the local sponsor. The success of the business may be influenced by the reliability and competence of the local sponsor.
c. Profit sharing. The distribution of profits as per the ownership structure may affect the financial returns for the foreign company.
d. Changing regulations. It’s essential to stay updated on any changes in regulations or laws that may impact the sponsorship arrangement.
e. Selection of a reputable sponsor. Choosing a trustworthy and reputable local sponsor is crucial to mitigate risks and ensure a successful partnership.