In the United Arab Emirates, you will have many opportunities to start setting up your own company along with many benefits, but you also should do it along with sponsorship. If you set up your firm in Dubai, the most popular of the UAE’s cities, you will see that a reliable sponsor in Dubai for your company will do well for it.
There are many reasons why you need a reliable sponsor in Dubai for your company, starting with the fact that it is mandatory to have one when it comes to business setup in the mainland. But it also depends on the type of business you will establish in Dubai Mainland. Here you will learn why you need a reliable sponsor for your business.
1. What is exactly a sponsor in Dubai?
If you are an investor or an entrepreneur, you have to be acquainted with the meaning of the many terms that businesspersons use in a country like the United Arab Emirates, specifically in the city of Dubai.
We all know that a sponsor is someone or a company that provides financial support to some other person or firm. However, in the case of a sponsor in Dubai, the correct term is “local sponsor”. A local sponsor is a UAE national business partner, (it could be an individual or a corporate entity), who does not interfere with the daily operations of your company, instead, it has another important role.
Local sponsors are sleeping partners that work as representatives and are liable for your company’s actions. Therefore, we can state that their main function is to contact local authorities when it is necessary, for instance, when you, as the owner of the company, need to renew some licenses or any other paperwork. But as said before, they do not interfere in the operations nor participate in any of the businesses.
You have to choose what type of company you will set up, and according to that information, you will figure out what type of business partner will be a reliable sponsor in Dubai for your company. So here, we are also going to show you what types of sponsorships are available, and you have to decide which one is the most suitable for you.
2. What types of local sponsorships are available for your company?
There are three main types of local sponsorships, and all of them are applicable only in the Dubai Mainland area, not in the Dubai free zone regions. The appropriate and reliable sponsor in Dubai for your company has to be one of these:
2.1. Individual Sponsorship
It is probably the most commonly required sponsorship. It is a local resident with a valid family membership card, but he/she must be a businessperson, a professional, or a UAE government employee. It is a suitable option if you are opening a commercial business or industry in the city. This sponsor should hold 51 percent of the total equity shares. One good advantage of this sponsorship is that it does not have expensive fees.
2.2. Corporate Sponsorship
In this case, a company offers you sponsorship services with more advantages. It is the preferred choice for most of the Limited Liability Companies in the UAE, thanks to the many benefits it provides, such as countless solutions for a variety of activities, locations, and approvals. It holds 51 percent of the shares, just like the individual sponsorship, and the foreign shareholders hold the remaining 49 percent of total shares.
2.3. Local Service Agent
It is a suitable option for those professionals who want to set up their businesses in the United Arab Emirates and offer their service. A local service agent represents your company in every administrative work or deals with the government members. And unlike corporate and individual sponsorships, the local service agent does not hold 51 percent of the shares, but instead, they get a fixed annual payment, which varies according to their activities performed or services
3. Is it really necessary to count on a local sponsor in Dubai for your company?
If we analyze the advantages and disadvantages of a local sponsor in Dubai, you may think it is not necessary to have any, but it is the best choice to count on one if you want to settle your company correctly and along with a local sponsor that will help you to be up-to-date with paperwork.
Having a reliable sponsor in Dubai for your company is also necessary if you want to do business directly with the local UAE market. If you do not meet the requirements for a professional service license, your reliable local sponsor will help you with it too. Let’s observe what advantages do local sponsors offer you:
3.1. Advantages of having a local sponsor in Dubai at your service
- It helps the company carry out trade locally within the UAE market.
- Limited Liability Companies with local sponsors are 100% free-tax.
- The foreign investor can choose to repatriate 100% of their profits.
- With a local sponsor, your company can have limitless branches throughout the UAE.
- Your company can pitch for a host of private and government projects that free zone companies and professional services companies without a local sponsor cannot.
- You, as a foreign investor, can get entitled to the investor status, which will allow you to apply for and obtain residence visas for you and your dependents.
As you can see, a local sponsor will not help your business in any way since that is not its role, but it definitely will help you to set up your company in the mainland of the city of Dubai or any other thriving city in the United Arab Emirates.
You also have to keep in mind that it is mandatory to appoint a sponsor to the new companies, but you are free to choose what type of local sponsor you need. Contact a professional expert advisor if you need more information about this topic.