Finding a Local Sponsor in UAE?
What is the process of finding a local sponsor in the UAE?
To conduct business activities in Dubai without risks, it is crucial to establish a partnership with a trustworthy local sponsor in UAE. Here are some guidelines to help you find the ideal business sponsor:
Step 1:
Verify the credibility of the sponsor, especially when collaborating with an individual sponsor. Before entering into a contract, conduct a thorough background check to ensure their legitimacy. Proceed with the agreement only when you are completely satisfied with your research findings. The most reliable individual sponsors in the UAE are corporate sponsors who belong to reputable families and hold high standing in society. Additionally, you can seek assistance from the business advisors at MARKEF to meet your incorporation requirements.
Step 2:
Tailor your search for a UAE-based company local sponsor according to your operational needs. For example, if you intend to explore government projects, it is advisable to hire government personnel as your local sponsors. Furthermore, inquire about their language proficiency to prevent any language barriers that may cause unnecessary confusion.
Step 3:
Engage in detailed discussions regarding the local sponsor fees in Dubai, as well as the compensation and benefits associated with the sponsorship contract. Keep thorough documentation of the progress made during these discussions. Additionally, ensure that you do not exceed the standard compensation fee.
You may encounter individuals who boast about having an extensive business network. However, it is your responsibility to scrutinize their claims and make an informed decision based on thorough research.
Type of Local Sponsors
To conduct business in Dubai, expatriates who do not meet the criteria for complete foreign ownership on the mainland must secure a local sponsor. This condition is specified in the commercial Companies Law, and failure to comply can lead to repercussions. It is crucial to have a comprehensive understanding of the different types of local sponsors available in Dubai to ensure you are well-informed. Here are the various categories:
Corporate Local Sponsor:
Incorporating your business requires a corporate sponsor in Dubai, which can be a government institution or a local organization that agrees to form a partnership with you. According to Article 10 (A) of Federal Law No.2 (2015), an Emirati individual acting as a local sponsor for a foreign business must possess a minimum of 51% equity shares in their own company. The nature of your venture and the desired company structure also play a pivotal role in finalizing the corporate sponsorship agreement in Dubai.
Individual Local Sponsor:
Incorporating your business requires a corporate sponsor in Dubai, which can be a government institution or a local organization that agrees to form a partnership with you. According to Article 10 (A) of Federal Law No.2 (2015), an Emirati individual acting as a local sponsor for a foreign business must possess a minimum of 51% equity shares in their own company. The nature of your venture and the desired company structure also play a pivotal role in finalizing the corporate sponsorship agreement in Dubai.
Individual Local Sponsor:
For establishing a limited liability company (LLC) in the Dubai mainland, you have the option to collaborate with an individual local sponsor in the UAE. Many entrepreneurs prefer an individual local sponsor as they typically do not involve themselves in the operational activities of the business. Similarly to a corporate local sponsor, the individual local sponsor must hold at least 51% ownership in the foreign company. The UAE government actively promotes gender equality, enabling both males and females to become local sponsors for setting up businesses in Dubai.
Local Service as a Sponsor:
If your goal is to obtain a professional business license and cater to customers in the mainland region, opting for a service agent as your local sponsor is the way to go. This agent must be a resident of the UAE.
Roles and Responsibilities of a Local Sponsor in Dubai
Your sponsor’s responsibilities go beyond holding a 51% ownership stake in your company. Local sponsors provide assistance in various areas, including:
- Managing the procedures for closing a bank account
- Resolving any outstanding debts, if applicable
- Assisting with license renewal and providing translation services (in Arabic)
- Acting as the authorized signatory on behalf of the foreign business owner for contracts and government applications
- Handling the cancellation of employees' labor status and work visas
- Offering insights on local law enforcement and providing suggestions to help your business thrive in the UAE.
How to Replace a Local Sponsor in Dubai?
To change your local sponsor in Dubai, follow the steps outlined below:
1. Communicate with your current sponsor:
Initiate a discussion with your existing sponsor to address any misunderstandings or disputes. Attempt to find common ground and seek solutions that can resolve the issues without involving legal proceedings.
2. Involve other shareholders:
Ensure that all your partners are aligned regarding the future of your current sponsor. Engage in discussions with them and share your collective opinions and concerns about the situation with your current local sponsor.
3. Prepare the necessary documents:
Gather and prepare the required documents, such as notarized Memorandum of Association (MOA), labor and immigration documents, and other relevant paperwork. Ensure that these documents are submitted within the designated timeframe to facilitate a smooth transition of sponsors. Confidentially share all the paperwork with the appropriate court or jurisdiction handling your case.
4. Seek legal intervention:
Proceed by submitting an application to the court, formally requesting a change of your current local sponsor. It is important that your UAE sponsor also acknowledges and formalizes this transition through the court. Once the verification process is completed, the legal authorities will file a new application to regenerate your trading license.
5. Find a new local sponsor:
After the above steps have been legally approved, you can search for a new local sponsor for your business in Dubai. It is crucial to choose a reliable sponsor, such as MARKEF, as changing sponsors in the UAE is a time-consuming and complex process that requires significant effort and financial resources.
What is the Local Sponsor Fee in Dubai?
The cost of a local sponsor in Dubai usually averages around AED 8,000 per year. However, there are various factors that need to be taken into account before determining the final fee for a local sponsor. These factors include:
- The nature of your business: The type and industry of your business can influence the fee charged by the local sponsor.
- The extent of the local sponsor's involvement in legal procedures: If the local sponsor is required to participate in legal formalities on behalf of your business, it may affect the fee.
- The level of the local sponsor's engagement in day-to-day business activities: If the local sponsor is actively involved in the daily operations of your business, the fee may be adjusted accordingly.
- Duration of the partnership: The duration of your partnership with the local sponsor can impact the fee structure.
At MARKEF, we act as your silent partners and provide our services for an annual compensation. This arrangement allows you to have complete operational ownership of your business while we support you behind the scenes.
Does your business require a local sponsor?
According to the law, those wishing to establish an LLC company must have a partnership with a UAE national. Mainland companies operating under a limited liability company structure are subject to local sponsorship in the UAE.
Certain business activities such as general trading, contracting, real estate, advertising, technical services, industrial and manufacturing licenses, cargo and logistics industries, textile businesses, cosmetic and perfume businesses, electronic industries, cleaning equipment industries, fuel and petrochemical industries, and jewelry businesses require local sponsorship in the UAE.
The most effective way to find a local UAE sponsor:
Are you in search of a local UAE sponsor in Dubai? The most reliable method to find one is through MARKEF BUSINESS SETUP.
At MARKEF Business Setup, we can secure your partnership. We become your contracted local partner on your terms, guaranteeing complete protection. This requirement is not applicable to all business activities, but it certainly applies to commercial and trading businesses. As a business setup company, we ensure that your business is entirely yours, and you solely enjoy all the profits.
Through a legally binding court agreement known as the Investor’s Right Protection Contract, we provide you with 100% operational ownership of your business. Our lawyers meticulously draft protection contracts to safeguard investors’ interests and ensure their full protection at all times. As your local UAE partner, MARKEF Business Setup charges only a nominal annual partnership fee.
We assist you with the legal aspects of establishing a business in the UAE and offer PRO services for the year if your company is under MARKEF sponsorship. Speak with a business setup consultant today! You can follow the link www.markef.com or call us at +971 4 589 2828. You can also reach us via email at info@markef.com or through WhatsApp at +971 50 105 4241.
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MARKEF is a leading Accounting Firm offering wide range of services including Accounting and Bookkeeping, Audit and Assurance, VAT and Corporate Tax, Business Consulting, Management Consulting, and Business Setup Services in Dubai and across United Arab Emirates.
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