Local Sponsorship
Local sponsorship in Dubai refers to a common practice where a local Emirati individual or a company (the sponsor) is required for certain types of businesses to operate within the United Arab Emirates (UAE), including Dubai. This requirement stems from the UAE's laws and regulations governing foreign ownership and investment.
how it works
- Types of Companies: In Dubai and the UAE, there are different types of companies, such as mainland companies and free zone companies. The rules regarding local sponsorship can vary based on the type of company you wish to establish.
- Mainland Companies: For a mainland company, which operates outside of free zones, a local sponsor is usually required. The local sponsor must be an Emirati national or a company that is 100% owned by UAE nationals. The local sponsor will typically hold a certain percentage of shares in the company, although the exact percentage can vary depending on the nature of the business and the agreement reached between the parties.
- Free Zone Companies: In some free zones in Dubai and across the UAE, there is no requirement for local sponsorship. These free zones offer foreign investors the opportunity to fully own and operate their businesses without the need for a local sponsor. However, companies established in free zones are typically restricted to operating within the free zone or conducting limited business outside of it, depending on the rules of the specific free zone.
- Agreement and Responsibilities: When entering into a sponsorship agreement, it's essential to outline the rights and responsibilities of both parties clearly. While the local sponsor may not be involved in the day-to-day operations of the business, they may have certain legal and financial responsibilities, depending on the terms of the agreement.
- Legal Considerations: It's crucial to seek legal advice when establishing a business in Dubai or anywhere in the UAE, especially concerning sponsorship arrangements. This ensures that you understand the legal implications of the sponsorship agreement and that your business is compliant with local laws and regulations.
- Choosing a Sponsor: Selecting the right local sponsor is a critical decision. It's essential to find a sponsor who is reliable, trustworthy, and aligned with your business goals. Researching potential sponsors and seeking recommendations from trusted sources can help in this process.
Overall, local sponsorship is a common requirement for foreign investors looking to establish a presence in Dubai and the wider UAE. Understanding the local sponsorship regulations and seeking professional guidance can help navigate the process effectively and ensure compliance with local laws