There has been some confusion surrounding the appointment of a Local Service Agent/Partner in Dubai. Some investors mistakenly believe that an Emirati is usually the one managing the company. However, it is important to note that the requirement for a Local Service Agent applies only when establishing a business outside of a free zone. The organization of the business and the chosen activity are the key factors determining the necessity of a local partner.
In Dubai, local sponsorship is compulsory for business formation in accordance with the Commercial Company’s Law and Civil Law of the United Arab Emirates.
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What is Local Service Agent in UAE?
A local service agent in UAE is a Emirati national who supports entrepreneurs and investors in starting their sole proprietorship, a civil business, or a branch office business in UAE. These local service agents act as representatives of the company, offering support and guidance throughout the business setup process.
To establish a Limited Liability Company on the mainland, the foreign investors are allowed to hold only 49% of the shares while the local sponsor holds 51% of the shares. Total profits belong to the investor while the local sponsor is paid by terms in the contract.
The local service agent in Dubai is responsible for representing the company in all dealings and meetings with regulatory bodies and government representatives. However, it’s important to note that the Local Service Agent is not responsible for facilitating license renewals.
What Does a Local Service Agent Do?
When you hire a local service agent, you expect some actions from them. A local service agent has no legal or financial obligations toward the company. However, they are obligated to provide the service they were hired for
Here are the primary duties of a Local Service Agent in Dubai:
- Must act as a liaison between their employer and the respective authorities, including the labor and immigration ministries.
- Make sure that the business of his employer is running smoothly
- Must deal with the government when obtaining licenses, visas, and approvals for the company
- Attend meetings with the regulatory body on behalf of the company
- Agent act as a buffer when inconveniences arise and solve the problem as soon as possible
- service agent Must not interfere with the management of the company and its business operations
- Must be explicit about the contract and the fees for their service.
Local service agent in Dubai are reasonable and honest. A POA is taken from them and they are bound by a side agreement. With a local partner it is common to tweak the conditions in favor of the foreign owners of the company. Visit companysetup.ae for more details.
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Benefits of Local Service Agents in Dubai
Considering the benefits of hiring a Local Service Agent, the cost is nothing. Starting a company in a new country can be very hectic. The rules and regulations may confuse you. So, it would be a wise decision to hire a local service agent when starting a company in Dubai.
Here are the benefits of hiring a local service agent in Dubai:
- Time-saving: Hiring a local service agent should save you a lot of time as they would deal with the local government and regulatory bodies on your behalf. This would allow you to focus on your company.
- Accelerated process: An experienced local service agent can accelerate the process of obtaining licenses, visas, and approvals as they are familiar with the process.
- Documents and renewals: The local service agent would take care of the documentation when applying for the licenses and approvals. They will also take care of the renewals of the licenses in time and save you from all the hassle.
- Contract: You will be hiring on a contractual basis. You will not have to pay if they don’t meet their contractual obligations.
Some Doubts When Hiring a Local Service Agent
As an ex-pat, it is very common to have some doubts when hiring a local service agent. The new and unfamiliar environment only escalates the problem. Here are some doubts that might arise when hiring a Local Service Agent in Dubai:
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- Finding an experienced local service agent can be a big obstacle
- The local service agent might turn out to be unreliable
- The service agent might take advantage of your lack of experience and charge you unfairly
- They might leave without giving a proper notice
- Their lengthy absence may hinder the process of obtaining licenses, visas, and approvals, as the papers would require their signature
Company Setup Consultants has been in the business for many years and is one of the most reliable consultation service firms in the UAE market. You can put your doubt to rest by hiring Company Setup Consultants when starting a company in Dubai.
Cost of Local Service Agent in Dubai
The approximate annual cost of a local sponsor in Dubai is around 8,000 AED. However, before finalizing the payment and drafting the agreement, it is crucial to consider several factors, including:
- The type of business you are establishing.
- The extent of the local sponsor’s involvement in formalities and administrative procedures.
- The level of the local sponsor’s engagement in day-to-day business activities.
- The duration of the partnership.
At company Setup Consultants, we offer the service of acting as your sleeping partners for a nominal annual fee, allowing you the freedom to independently operate your company according to your own terms.
Business Activities Requiring a Local Sponsor in Dubai
- IT consultancy
- Legal consultancy (where a UAE national lawyer as a shareholder is mandatory)
- Consultancy activities requiring external government approval
- Architecture business
- Labour recruitment services
- Banking and financial services
- Restricted business activities (high-risk businesses)
- Fire equipment-related business
- Civil partnership company
What is Local Service Agent (LSA) Agreement?
The Local Service Agent (LSA) agreement, resembling a service contract, establishes the terms governing the company’s relationship with UAE citizens appointed as service agents. This agreement becomes particularly important in the absence of a local partner and applies to various business setups, including individual businesses, sole proprietorships, foreign company branches, and free zone company branches. Execution of this agreement takes place in the presence of a notary public at the Dubai courts. It is essential to submit the agreement to fulfill all business setup procedures in Dubai. Furthermore, the company retains the right to terminate or replace the local service agent as needed.
What is the role of a local agent?
The Local Agent serves as the company’s representative in dealings with Governmental departments and plays a pivotal role in facilitating registrations with various municipalities.
What is a national service agent?
For both a Branch and a Representative Office (RO), the mandate is to designate a National Service Agent (NSA), who must either be a UAE national or a company entirely owned by UAE nationals. The appointment of an NSA is formalized through a written agreement, necessitating the signatures of the involved parties before a notary public in the respective Emirate.
What is Local Service Agent in UAE?
A local service agent in UAE is a Emirati national who plays a vital role in assisting sole proprietorships, civil businesses, or branch offices in establishing their business activities. These local service agents act as representatives of the company, offering support and guidance throughout the business setup process.
When do you need Local Service Agent?
As per the legal requirement, it is mandatory to select a Local Service Agent who will represent your business to the authorities for all professional license activities registered under the specific Emirate’s Department of Economic Development (DED). The Local Service Agent acts as the Emirati representative within your company structure, but does not have decision-making authority or affect the capital of your business.
How can We Help You?
If you need a local service agent in Dubai to start a company in the UAE, but you do not know where to get started, then you are in the right place. This is because Company Setup Consultants have helped more than 20,000 companies make a name for their brands in the UAE marketplace. Our experienced business consultants will answer all your business-related queries. Contact us today and hit the ground running.
Click here to book a free consultation with our experts and learn more about local service agents in Dubai; call +971582595164. You can also send a WhatsApp message at +971582595164. For email assistance, mail your query at info@companysetup.ae
