Local Sponsorship is a mandatory condition where the expat is required to submit their 51% company shares to an Emirati or GCC national when setting up an LLC business in mainland UAE. The type of sponsorship depends on the company activity and legal structure.
Type of Sponsorship
There are 3 types of local sponsorships investors can avail of in the UAE, individual sponsorship, corporate sponsorship, and Local Service Agent (LSA) as explained below.
1) Corporate Sponsorship
In a corporate sponsorship structure, an Emirati-owned company or a GCC company owns 51% shares of a company that is owned by a group or a foreign national. Since the foreign-owned business is sponsored by a company, trading companies, manufacturing units, and other Dubai mainland LLC businesses can benefit from the corporate sponsor in terms of professionalism and transparency.
2) Individual Sponsorship
Individual sponsorship is where a UAE national (Local Partner) is over 21 years of a company owned by an individual or a group of partners of foreign origin in their own individual capacity., a professional or a government employee and own 51% shares of the company, or the transaction of the foreign partner to the foreign partner to discuss terms and conditions. Local Service Agent Local Service Agent liaisons with the government departments as the company’s representative but will not own 51% shares or any liability of the company.
3) Local Service Agent
Local Service Agent liaisons with the government departments as the company’s representative but will not own 51% shares or any liability of the company. An LSA is required when a foreign professional, artisan, engineer, or doctor plans to set up a business in UAE and offer his/her professional expertise. As per the commercial agreement, the LSA will be paid a fixed annual fee in most cases; however, it may also depend on the agent’s social and family prominence in UAE. Other than professional licenses, an LSA can also be appointed for a branch of foreign companies and representative offices.
For any queries on local sponsorship and set up a company in Dubai, please feel to contact our Business Formation experts for a free consultation.