How to Find Local Sponsor in Dubai, UAE? Complete Guide

Local sponsors in Dubai allow you to start your business in Dubai mainland or  other part of the UAE mainland where 100% ownership is not allowed for non-GCC nationals. Fortunately, the number of industries where Sole Proprietorship is not allowed is decreasing. Considering that just a few years ago, no foreigners were allowed 100% ownership of companies in the UAE, we have come a long way.

Currently, only the industries that are strategically important to the UAE do not allow Sole Proprietorship to non-GCC nationals. As a result, if you wish to start a company in any of these industries- Transportation, Oil production and exploration, Military and security etc.  

you are going to need a local sponsor to help you out. Additionally, GCC countries include the United Arab Emirates, the Kingdom of Bahrain, the Kingdom of Saudi Arabia, the State of Qatar, the Sultanate of Oman, and the State of Kuwait. So, if you are from any of these countries, you do not need a local sponsor.

What are Local Sponsors in Dubai?

A local sponsor in Dubai will hold 51% of your company in sectors where majority ownership is not allowed for foreigners. While they have the majority stake, they do not interfere in any decision-making processes or everyday operations of your company. Additionally, they do not take 51% of your profit. Instead, they will charge an annual fee for their services.

In addition, it’s important to note that local sponsors in the UAE do not claim 51% of the profits from businesses. Instead, they are compensated through an annual fee for the services they provide. Local sponsors can either be individuals or corporate entities.

When do I need a Local Sponsor in Dubai, UAE?

If you plan to establish a business in Dubai or any other part of the UAE mainland within specific industries, you will need to have a local sponsor.

• Transportation
• Oil production and exploration
• Military and security
• Umrah and pilgrimage services
• Banking, financing, and insurance activities
• Electricity and water provision
• Medical and drug retail
• Printing and Publishing
• Telecom and post services
• Fishing and related services

How to Find a Local Sponsor in Dubai?

Finding a local sponsor in Dubai is an important step when starting a business in the Transportation, Oil production and exploration, Military and security, Umrah and pilgrimage services, Banking, financing, and insurance activities, Electricity and water provision etc. sectors. While a bad local sponsor can break your business, a good local sponsor will make your business. As a result, this step should not be taken lightly. Even if, on paper, a local sponsor is not supposed to interfere in your business, you still need to have a trusting relationship with the sponsor.

If you do not know anyone in Dubai or this is the first time you are starting a business here, it is suggested that you let the professionals find a suitable local sponsor for you. Luckily, Company Setup experts are here to help you out. We know that peace of mind is extremely important to run a business successfully. As a result, we will ensure that you do not even notice that you have a local sponsor when running your business in Dubai.

Types of Local Sponsors in Dubai

As we have mentioned before, there are multiple types of local sponsors in Dubai. Even though 100% ownership is offered more freely in the UAE, once upon a time, you had to find a reliable local sponsor if you wanted to start a business here. As a result, various types of local sponsors started to be more common to meet the rising demand.

Here are the three types of local sponsors in Dubai that you can appoint:

1). Individual local sponsor 

Logically, any Emirati over the age of 21, male or female, can be a local sponsor for foreigners looking to start a business in dubai. However, it is suggested that you look for someone who has experience in the business world, or even better if he has experience in your specific industry of choice. As a result, you should look for individuals that are professionals, government employees, or business owners.

2). Corporate local sponsor

Corporate local sponsors are business entities that provide their services to help you start your business in the UAE by owning 51% of your business in specific industries. However, unlike individual local sponsors, any corporation cannot be a local sponsor if they want. Only corporate entities with the relevant license can sponsor your business in the UAE.

3). Local service agents as sponsor

There are various free zones in Dubai where you can start your business and own 100% of it. However, you cannot perform your business activities outside the boundaries of the free zone you are located inside. In such cases, you can appoint local service agents for an annual fee to act as local sponsors so that you can perform your business activities on the mainland.

Advantages of a Local Service Agent (LSA)

• The fees charged by the local service agents (LSA) are not much high.
• There will be more freedom to do daily operations inside Dubai having less interference of agent.
• No complications would be there while processing the different operations.
• Having a healthy and professional relationship with LSA’s.
• 100 percent ownership of the shares.

Disadvantage of a Local Service Agent (LSA)

• The local agent upon having any sort of trouble with the legal terms can remove its name from the license.
• Unavailability of the Local Service agent (LSA) can result in the delay of work or any related operation.

How to Change Local Sponsors in Dubai?

To change your local sponsor in Dubai, follow the steps outlined below:

Communicate with your current sponsor:

Initiate a conversation with your existing sponsor to address any concerns or disputes. Seek to find common ground and explore potential solutions outside of legal proceedings.

Engage other stakeholders:

It is crucial to involve all relevant partners and stakeholders in discussions about the future of your current sponsor. Share information and collaborate to reach a consensus on the decision to change sponsors.

Gather necessary documents:

Prepare the required documents, such as notarized Memorandum of Association (MoA), labor and immigration documents, and other supporting paperwork within the specified timeframe. Ensure that all documentation is shared confidentially with the court or relevant authorities overseeing the process.

Initiate legal proceedings:

File an application with the court to formally request the change of your current local sponsor. Your current sponsor must also acknowledge this transition officially in the court, establishing the legitimacy of the process. The legal authorities will then file a new application to renew your trading license.

Find a new local sponsor:

Once the above steps are legally processed, you can search for a new local sponsor for your business in Dubai. It is advisable to choose a reputable and reliable sponsor, such as company Setup Consultants, as changing sponsors can be a time-consuming and resource-intensive process.

Things to Know Before Hiring a Local Sponsor in Dubai

Even if you get the help of experts when hiring a local sponsor in Dubai, there are a few things you can ensure by yourself for your own peace of mind. Here are the things to check when hiring a local sponsor in Dubai:

• Do a background check on the sponsor and the sponsor’s family as well. This is because a local sponsor from a reputed family in the area will have a lot of goodwill there and can help you out in a pinch.
• Ensure that the sponsor lives nearby or at least inside Dubai. This is because he/she will need to sign various documents for some government formalities.
• A local sponsor who is a government employee will have various benefits because of his/her network and connections inside the government.
• Any foreign businessman or investor may have sponsorship deed agreements, so check carefully before signing any documents or contracts.
• Ensure that you check the scope of the services offered by the local sponsor and also be clear about the annual fees to be paid for the services.
• Local sponsors also seek advice or look for businesses to sponsor from business consultants in Dubai. Company Setup Consultants can help you find the right fit for your specific objectives.

What is the Local Sponsor Fee in Dubai?

The Local Sponsor Fee in Dubai can vary depending on various factors. On average, the cost for a local sponsor is approximately AED 8,000 per year. However, it is essential to consider several factors that influence the final fee for a local sponsor. These factors include:

• Nature of your business
• Local sponsor’s involvement in legal formalities
• Local sponsor’s involvement in day-to-day business activities:
• Partnership tenure

At company setup consultants, we offer services where we act as sleeping partners, providing you with operational ownership of your business while charging an annual remuneration. This arrangement allows you to have more control over your business while benefiting from our support and expertise.

FAQ on: Local Sponsor in Dubai, UAE

Why you need a Local Sponsor?

Any foreign investor who is not a resident or local of UAE would need a local sponsor in UAE for doing business inside the region. This can be hefty process by having a person who is not a real investor but gets about 51 percent of your company shares if its established-on mainland inside UAE. As you would only get about 49 percent of your total shares!

It’s an obvious question to ask. Why one should give about 51 percent of its company shares to some local Arab? But it has been made compulsory by the regulatory authorities of the UAE.

• Will try to make it simpler to process documentations and other legal terms which you might not process yourself.
• A guarantee that you are doing nothing illegal inside Dubai that is too what a sponsor would provide for you.

As long as the MOA is not been signed the local sponsor fee is refundable

How we Make Sure that our Sponsor is Trustworthy?

• The local sponsors have well reputed history with us which provides a strong sense of guarantee on their services.
• Any new sponsors without any evaluation are not provided to you.
• Our company’s personal relationship with the local sponsors can make it easy for you to handle most of the legal issues.
• The sponsor we provide have the best of professional and mental wellbeing as they would not be any disadvantage for your firm.

Can I get a Dubai trade license without a local sponsor?

You can start a business outside the regulated industries that are strategically important to the government of the UAE, as mentioned previously. There are various free zones in the UAE where a local sponsor is not required for 100% ownership of companies. Besides this, there are other benefits of starting a business in a free zone, like 100% tax exemptions, 100% repatriation, etc. Additionally, you will still have the option to hire local service agents who will help you sell your services outside the free zone.

After some amendments to existing laws, various sectors on the mainland also allow you to start and own 100% of your business without a local sponsor. If you need help starting any business in Dubai or the rest of the Emirates, do not hesitate to contact Company Setup experts.

What are the Benefits of the Right Sponsor?

• Documentation would be processed with in the due date.
• There would be more productive outcome from the business setup.
• There can be more investments attracted if you have the right sponsor to support your business inside UAE and Dubai.

What are the disadvantages of a Local Sponsor?

• What can be more of a disadvantage for you if the local sponsor is not cooperative in nature.
• If a local sponsor is no more than according to the law all of the 51 percent share would be then transferred to their heir.

Do you offer corporate sponsorship as well?

Yes, we have a number of packages which also includes Corporate Sponsor ship.

Is my business secure if I have a sponsor from UAE?

We guarantee you the security for your business inside Dubai

How much does a sponsor charge annually?

Quotes will be provided which would depends upon the interest and other demands placed by you on our portal.

Who is a UAE Local Sponsor?

The local sponsors are residents of the UAE who play as the guarantee for your business to be legal and authentic in nature.

The normal cost of sponsorship inside UAE?

It can run from about AED 3000 to thousands of AED’s depending upon the size of the businesses one runs.

How can we help you?

If you are looking for a local sponsor in Dubai but do not know where to get started, then you are in the right place. This is because Company Setup Consultants have helped numerous entrepreneurs get started in various industries in the UAE. We have the necessary experience and connections required to get you started on the right foot. So, contact us today and hit the ground running.

To Speak with our Experienced Business Consultants for further information and assistance, call us at +971-582-595-164. Send a WhatsApp Message for Chat Query on +971 582595164 or email us at info@companysetup.ae.