The landscape of business ownership in Dubai has undergone significant changes in recent years, particularly regarding the requirement for local sponsors. While previously, any non-GCC national establishing a business in the Dubai mainland needed a local sponsor, the rules have evolved, allowing for 100% foreign ownership in many cases. However, this liberation isn’t universal across all industries, and even where permitted, it demands official approval that isn’t guaranteed.
For those situations where a local sponsor is still a requisite, the process of finding one has become more streamlined with the right guidance. This article delves into the essential aspects of local sponsorship in Dubai, addressing key considerations such as:
Local Sponsor in Dubai – What Does It Mean?
A local sponsor, holding a 51% stake in a UAE business, is appointed by foreign investors. Despite this majority ownership, sponsors lack decision-making power and refrain from interfering with day-to-day operations. Rather than claiming 51% of profits, sponsors receive an annual fee for their services, and they can be either individuals or corporate entities.
Do I Need a Local Sponsor in Dubai?
In specific industries such as oil exploration, security services, banking, and more, a local sponsor is mandatory for setting up in Dubai or other parts of the UAE mainland. However, outside of these sectors, foreign businesses may retain 100% ownership, subject to approval from the Dubai Department of Economic Development (DED).
Finding a Local Sponsor in Dubai
The process of identifying and appointing a local sponsor is a critical business decision that necessitates careful consideration. While not traditional business partners, a strong and trusting relationship with the sponsor is crucial.
Types of Local Sponsors
Dubai offers various types of local sponsors, including individuals, corporations, and local service agents. Individual sponsors must be UAE citizens over 21, while corporate sponsors can be any registered business in the UAE. Local service agents are mandatory for professional services businesses, enabling foreign entrepreneurs to retain 100% ownership.
Duties of a Local Sponsor
The primary duty of a local sponsor is to represent the foreign business in dealings with government and official bodies. Additionally, they assist with tasks such as interpreting Arabic business documents and managing administrative processes.
What to Be Aware of When Hiring a Local Sponsor
Before engaging a local sponsor, thorough background checks are essential. Factors like residency in Dubai, credibility, and prior business dealings should be assessed. Clear documentation outlining expectations, duties, and fees is vital to avoid misunderstandings.
How to Change a Local Sponsor in Dubai
In cases where a change in local sponsor is necessary, expert assistance can streamline the process. Notifying the current sponsor, gathering required documents, and attending court together are key steps.
Getting a Dubai Trade License Without a Local Sponsor
Options for obtaining a trade license without a local sponsor include starting a professional services business with a service agent, setting up in a Dubai free zone for 100% foreign ownership, or applying to the DED for permission in specific mainland industries.
