sponsor in Dubai

When you are in a business country such as the UAE, you need to be up-to-date with the different terms that are common in the business area. One of those terms might be “sponsor”, which many people are still not acquainted with, so here we will explain to you everything you need to know about a sponsor in Dubai and UAE.

The word “sponsor” normally means that someone (it could be a person or a company) provides financial support to someone else. However, in the UAE, there are two different meanings for this term: the first one refers to the standard sponsor we all know, and the second one refers to a special sponsor in the country, called “a local sponsor”.

1. What is exactly a local sponsor?

A sponsor in Dubai and UAE is usually a local citizen or a government body that is required to set up a company on the main territory of the country or to obtain residency visas. As for local companies, the local sponsor is the one who holds 51 percent of shares of the local company. This person or company also acts as an authorized representative by the UAE government authorities.

But there are cases where foreigners set up their businesses in Dubai’s free zones, and they can have 100 percent ownership of their companies. However, when they apply for the residency visa, their local sponsor will be then the free trade zone authority in the place where their companies are established.

Local sponsors do not only work as representatives, since they are also liable for your actions. Now, on the other hand, there is the possibility of signing another agreement in which you can describe your local sponsor’s power limitations. Usually, local sponsors do not have any roles in business. Their only function is to contact local authorities when it is needed, like when you need to renew your license, for instance.

In some other cases, a sponsor in Dubai and UAE has another important role, which is to have clear records in the UAE and some professional qualifications in order to make sure operations are performed within the applicable regulatory framework. This happens when you, as a local company, apply for some specially regulated licenses.

2. What type of sponsorship options do you have for a Limited Liability Company in the UAE?

An important fact you should always keep in mind is that a sponsor in Dubai and UAE has to be an Emirati (UAE national). You will discover two types of sponsorship in Dubai and the UAE, and next, we will show a summary of them.

2.1. Corporate sponsorship.

It is the perfect choice most of the time, and in this one, a company sponsors the business rather than an individual. It is availed by all Limited Liability Companies across the United Arab Emirates.

2.1.1. Advantages

  • Official relationship, the UAE local is not directly involved, and a lawyer will handle the paperwork.
  • There are multiple signatories, so there will be always someone from the company available to attend signings when required.
  • There is better succession protection. In the case of the death of someone from the sponsor company, this will not affect your company’s business activities.
  • Due to the wide range of Emiratis with the required family books and no conflict or PEP status, it is valid for this type of sponsor to offer countless solutions for many activities, locations, and approvals.

2.1.2. Disadvantages

  • It can claim 51 percent of shares if the side agreement is not signed.
  • This type of sponsorship has more expensive fees.
  • More complicated paperwork in case of corporate structures.
  • This type of sponsorship only works for Limited Liability Companies (LLC). Therefore, if your company is a branch of foreign companies or civil partnerships, this option will no longer be an option for you.

2.2. Individual Local Sponsor.

It is the most common type of sponsorship, especially in Dubai. An individual UAE citizen becomes your sponsor. He/she can hand over the POA (Power of Attorney) to the foreign partner in return for a fixed annual fee.

2.2.1. Advantages

  • You can get a better personal relationship.
  • It will take less time to finish the license transactions.
  • It requires less paperwork to finish all the approvals.
  • It can push the government approvals if delayed.
  • This type of sponsorship does not have expensive fees.
  • The sponsor’s experience can be a good factor to avoid any problems that might appear.

2.2.2. Disadvantages

  • It should have 51 percent of shares in mainland LLC companies.
  • It can claim 51 percent of shares if the side agreement is not signed.
  • This type of sponsorship can cause significant issues and delays if the local sponsor leaves the country or is unavailable for signature.
  • Probably this one will not be the case, but in the case of the death of the individual local sponsor, his/her heirs will split the assets. New contracts and agreements will be required. During this time, your company will not be able to do business.

3. What is a local sponsor in Dubai and UAE in case of residency visas?

There are some other cases where a sponsor in Dubai and UAE works as an important intermediary. For example, if a company in the United Arab Emirates employs you, your sponsor for your visa is the company that employed you.

Once you get your visa (investor visa or employment visa), you can apply for visas for the people you live with (wife, children, etc.), and you would become the sponsor for their UAE visas.

Now, if you register your company in a UAE free zone, your local sponsor will be the free zone authority, and hence it will not charge you any extra fees apart from the ones related to the regular residency visa processing.

If you need more information about a sponsor in Dubai and UAE, feel free to contact the experts and you will find the most suitable option for you.

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