Business
Why You Might Need a Local Sponsor in Dubai
Dubai has become one of the world’s most sought-after destinations for business opportunities, thanks to its strategic location, thriving economy, and investor-friendly policies. However, if you plan to set up a company on the mainland, you may require a local sponsor.
In this article, we’ll explore why you might need a local sponsor in Dubai, how they play a critical role in your business setup, and the best ways to find one.
What Is a Local Sponsor?
A local sponsor is a UAE national (Emirati) who acts as a partner or representative for foreign businesses wishing to establish a mainland company in Dubai. Depending on the business structure, the sponsor may hold a formal ownership stake or simply act as a service agent.
Key takeaway: Local sponsors are a legal requirement for many mainland businesses but can offer more than just compliance—they can open doors to valuable connections.
Why You Might Need a Local Sponsor
1. Compliance with UAE Laws
For mainland businesses, the UAE requires that foreign investors partner with a local sponsor for specific business activities.
Example:
Certain industries, such as trading, require a UAE national to hold 51% ownership in the company.
2. Access to the Mainland Market
Unlike free zone companies, mainland businesses can operate anywhere in the UAE, giving you access to the local market and government contracts. A local sponsor is essential to gain this freedom.
3. Navigating Bureaucratic Processes
Local sponsors can help with:
Licensing and registration.
Dealing with government authorities.
Ensuring compliance with UAE regulations.
Pro Tip: A well-connected local sponsor can simplify administrative processes and fast-track approvals.
How to Find the Right Local Sponsor
Finding a reliable local sponsor is crucial for your business’s success. Here are the steps to identify the best partner for your needs:
1. Define Your Business Needs
Understanding your industry and operational goals will help you identify the type of sponsor you need.
Types of sponsors:
Individual Sponsor: Ideal for businesses requiring personal connections and hands-on support.
Corporate Sponsor: A UAE-based company that sponsors your business, offering professional services and infrastructure.
2. Leverage Trusted Networks
Referrals from trusted business contacts can connect you with reputable sponsors. Experienced sponsors often have strong networks that can add value to your business.
What to ask during referrals:
Have they worked in your industry before?
Are they familiar with the specific requirements of your business type?
3. Conduct Due Diligence
Before finalizing a sponsor, ensure they have a proven track record of reliability and professionalism.
Steps for due diligence:
Check their business experience.
Verify their reputation in the industry.
Discuss terms clearly to avoid misunderstandings later.
4. Use Business Setup Services
Partnering with a business setup consultancy ensures you find the best sponsor for your business. These experts match you with sponsors aligned with your goals and handle the legal aspects of the agreement.
Why choose a consultant:
Save time and effort.
Ensure compliance with UAE laws.
Gain access to a pool of trusted sponsors.
Types of Agreements with Local Sponsors
The nature of your agreement with a local sponsor depends on your business structure.
1. Ownership Agreement
For certain industries, UAE law requires the sponsor to hold 51% ownership. However, legal agreements can be structured to give full operational control to the foreign investor.
2. Service Agent Agreement
In this case, the sponsor acts as a representative for administrative and government-related processes but has no ownership or profit share in the business.
Common for:
Professional service companies.
Branch offices of foreign companies.
Advantages of Having a Strong Local Sponsor
Market Insight: Sponsors often have invaluable knowledge of the local market and business practices.
Networking Opportunities: A well-connected sponsor can introduce you to influential contacts.
Streamlined Processes: With a sponsor’s guidance, licensing and registration become easier.
Credibility: Having a local sponsor enhances your business’s legitimacy in the UAE market.
FAQs About Local Sponsors in Dubai
1. Is a local sponsor mandatory for all businesses in Dubai?
No, businesses in free zones do not require a local sponsor. However, mainland companies in certain industries must have one.
2. Can I retain full control of my business with a local sponsor?
Yes, legal agreements can be structured to ensure you retain full operational and financial control while complying with UAE laws.
3. How do I choose between an individual and corporate sponsor?
Choose based on your business needs. Individual sponsors provide personal connections, while corporate sponsors offer a professional approach and infrastructure support.
4. What industries benefit most from having a local sponsor?
Industries such as retail, trading, construction, and manufacturing often require local sponsors for mainland operations.
At Haimami Capital, we specialize in connecting businesses with the right local sponsors and ensuring a seamless setup process. With our expertise, you can focus on growing your business while we handle the complexities.
Ready to find the perfect sponsor? Schedule your consultation today! Book Your Call