Setting up a mainland business in Dubai is easy. The mainland company is allowed to do business locally in Dubai and other regions of the UAE. For starting a business in Dubai, one requires a UAE national as a sponsor or partner.
Definition of Local Sponsors in the UAE?
A Dubai-based sponsor will possess a majority stake in your company; in sectors where, foreign ownership is not permitted. Despite having a majority stake, the sponsor will not be involved in decision-making or day-to-day operations. Furthermore, they will not take 51% of your profits; instead, they will charge an annual fee for their services.
Given that many foreigners move to Dubai to start a business, it is relatively easy to find a local sponsor. This sponsor can be either a corporate entity or an individual. However, you must research the entity or individual before engaging them as your company’s local sponsor in Dubai.
Why is Local Sponsor required in the UAE?
In the United Arab Emirates, businesses in industries of strategic importance to the government require a local sponsor in Dubai, UAE, to be formed or established. It is a governmental measure taken to ensure national security.
The process of commencing such operations follows the same procedure as other businesses but with the additional step of appointing a local sponsor.
The following industries that require the services of a local sponsor in Dubai to commence operations are mentioned below:
• Transportation
• Oil Exploration and Production
• Security and Military
• Hajj and Umrah Services
• Finance, Insurance, and Banking activities
• Water and Electricity provision
• Drug and Medical retail
• Publishing and Printing activities
• Postal and Telecommunication services
• Fishing and other related services
What is the process to find a Local Sponsor in UAE?
Securing a local sponsor in Dubai turns out to be a pivotal task when starting a business in the above-mentioned business sectors. A poor local sponsor selection can ruin your business, whereas a favorable sponsor will assist in its success. Thus, the choice should not be taken lightly, as even if a local sponsor is not expected to be involved in your business, you must still have a trusting relationship with them.
If you are unfamiliar with anyone in Dubai or beginning a business here for the first time, it is advisable to entrust experts to identify an appropriate local sponsor. At Company Setup, we understand the significance of peace of mind to maintain a successful business and will make sure that having a local sponsor does not affect your operations.
Different Types of Local Sponsors in the UAE
When appointing a local sponsor in Dubai, there are three types to consider.
Firstly, an individual UAE Local Sponsor should be an Emirati aged 21 or over, ideally with business experience in your industry. Alternatively, a corporate local sponsor is a business entity that helps you start your business in the UAE by holding 51% of it in specific industries; However, they require a relevant license.
Finally, there are various free zones where you can set up your business with the help of a local service agent.
Things to do before acquiring the services of a Local Sponsor
It is essential to be careful with your choice of a local sponsor. If you select the wrong sponsor, you may face difficulties. Locals will have more control and power than outsiders. You will need someone who has played such roles before. When considering a local sponsor for Dubai, it is significant to do due diligence to ensure peace of mind.
- Check the background of the sponsor and their family for reputation and good standing in the area.
- It is also crucial to confirm that the sponsor lives in or near Dubai, as they will need to sign documents for government formalities.
- Government employees may provide additional benefits due to their network and connections.
- Finally, carefully review all sponsorship deed agreements, details of services offered, and annual fees associated with such services.
How much does a Local sponsorship cost in Dubai?
Business Set-up consultants offer different packages, including UAE Visa Services. The cost of acquiring a sponsorship usually starts at AED 5000.
Setting up was made easier with the consultant’s help
Many professional agencies offer Business Setup Consultancy in Dubai. These agencies are experienced and well-acquainted with the existing laws of the land. One such professional agency is Absher. They can handhold a new investor to fulfill all the requirements for setting up a business. They guide a new investor on the process required for obtaining a business license for Mainland or Free Zone Company and recommend a suitable business activity. They also get all the necessary paperwork to start the business, including opening a corporate bank account. They are a one-stop-shop that provides end-to-end service – right from initial consultation to getting the business up and running.
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