How to choose a Local sponsor in UAE

The Limited Liability Company L.L.C. is a popular legal structure for setting up business in UAE. Every foreign investor or shareholder must have an Emirati Sponsor or Service Agent for setting up an LLC. The appointment of the local sponsor is one of the most crucial decisions that needs to be taken by a foreign Investor.A local sponsor or a service agent is a citizen of United Arab Emirates. Based on the business activity of the proposed company the Foreign investor is required to appoint either a Local Sponsor for trading related activities and local service agent if the nature is of Professional/Consulting services.

LLC licenses require a Local Sponsor and the owners have a limited personal liability. The LLC can be seen as a partnership between the expatriate who will own 49% of the shares and the UAE national, who will own 51% of the shares. However, when you have a trustworthy Local Sponsor, an LLC setup  allows the foreign owner to have complete control over the business. The Local Sponsor will receive an annual sponsorship fee for his services.

Once the local service agent or sponsor is finalized then both the party enter into a local service agent agreement or Memorandum of Association is executed by the parties to the agreement before the notary public in Dubai court. Further the said agreement provides for the Annual Fees to be payable to the sponsor or the service agent as agreed between the parties. Thereafter the said legal document has also submitted for registration in Department of Economic Development.

The local sponsor serves as a guide or guarantor for the business in UAE and facilitate the foreign investor in all the administrative and legal matters with the regulatory authority like obtaining visa, opening a bank account, representation before the local regulatory authority.

Types of sponsor:

The local sponsorship can be classified into three categories based on the business activities:

  1. Local Service Agent:

In case of professional services such as Consulting, Law, Engineering, Medical and Artisans a local service agent needs to be appointed. In the given type of sponsorship type, the local agent is paid a fixed sum of annual services. Also, he does not have any percentage in the shareholding of the company.

  1. Local Sponsor:

Individual sponsorship is a type of sponsorship in Dubai in which based on the business activities of the proposed entity a local Emirati national holds 51 percent of the shares in the company and remaining shares by the foreign Individual or company. In this type the business is carried on in the name of the company.Individual sponsor needs to be appointed in case the proposed business is a limited liability company engaged in trading or manufacturing.

  1. Corporate Sponsorship:

When a UAE national company owned by Emiratis holds 51 per cent of the share and liabilities of a company owned by an individual or group of partners of foreign origin. In this case, the business is sponsored by a company, rather than an individual.

We at IMC, can assist you to in selecting the sponsor or the service agent based on your proposed business requirement along with assistance with complete business set up. For more click on IMC’s Business Sponsorship services.

We have a panel of reliable and trustworthy local sponsors. To help you find the right local sponsor for your business write to our consultants at bc@intuitconsultancy.com