HOW TO GET A LOCAL SPONSOR FOR BUSINESS IN DUBAI, UAE?

How to Get a Local Sponsor for Business in Dubai, UAE?

How to Get a Local Sponsor for Business in Dubai, UAE?

Blog Article

A local sponsor is a UAE national or a UAE-based entity who (or that) officially partners with a foreign investor to establish a mainland company. Historically, federal law mandated that the local sponsor own at least 51% of a Limited Liability Company (LLC), but recent reforms – notably the UAE Commercial Companies Law (CCL) 2021 – have eased foreign ownership restrictions for many business activities.

That said, industries like banking, insurance, and oil and gas may still require a local partner for compliance. Additionally, certain business forms (like professional licenses or representative offices) might allow 100% foreign ownership, yet they still need a Local Service Agent (LSA) for admin and government liaison work. In all scenarios, the right sponsor can provide administrative support, help you acquire permits, and ensure your business abides by UAE legal frameworks.

Core Responsibilities & Legal Obligations of a Local Sponsor


While UAE Commercial Companies Law reforms have reshaped local sponsorship, many obligations remain. A local sponsor may:

  • Sign official documents and government contracts, acting as your authorized representative.

  • Facilitate visa applications, labor status approvals, and trade license renewals.

  • Provide financial guarantees or assume liabilities in certain arrangements, depending on your MoU or side agreement.

  • Engage with government authorities to keep your business compliant with legal frameworks like labor laws and corporate governance.


Liability & Risk: In some cases, the sponsor might be partially liable for financial or legal issues arising from your company. This varies with the sponsor agreement and structure. Some corporate sponsor agreements minimize their direct involvement or risk, while an individual sponsor might have more personal liabilities if they sign certain documents on your behalf.

Steps For How to Find a Local Sponsor in Dubai


Below is a five-step blueprint to secure a reputable local sponsor for your mainland business:

STEP 1: Define Your Business Activity & License




  • Check if your activity requires a UAE national sponsor or if 100% foreign ownership is allowed.


STEP 2: Decide on Sponsor Type



  • Individual local sponsor for simpler structures and if trust is established.

  • Corporate sponsor if you prefer formal legal agreements and want an entity with robust market credibility.

  • Local service agent if you’re opening a professional services venture or a representative office.


STEP 3: Perform Background Checks



  • Verify the sponsor’s credibility, legal standing, and track record.

  • Confirm if they have government connections or relevant industry ties to benefit your business.

  • Use business advisors or law firms for due diligence if necessary.


STEP 4: Negotiate Fees & Side Agreements



  • Clarify the fixed sponsorship amount, annual fees, or one-time charges.

  • Draft a Memorandum of Understanding (MoU) or Power of Attorney that outlines each party’s rights and obligations, plus how profit distribution is handled.

  • Ensure the sponsor’s role in daily operations (if any) is well-defined.


STEP 5: Obtain Approvals & Sign Official Documents



  • Submit relevant documents to the Department of Economic Development (DED).

  • Secure your trade license, employment visas, and immigration formalities.

  • Document the sponsor’s shareholding (if required by law) and finalize official registration.


How to Change or Remove a Local Sponsor


Business circumstances can evolve, requiring sponsor replacement or removal. Here’s how:

  1. Communicate: Speak with your existing local sponsor to see if there’s a mutual understanding or if you need to settle any pending disputes.

  2. Consult Shareholders: If you have co-founders or investors, align on why you need to change sponsors.

  3. Gather Legal Documents: Prepare a notarized Memorandum of Association (MoA), your trade license, labor/immigration paperwork, and any relevant side agreements.

  4. Court Acknowledgment: Officially file the change in court or via a DED application. The sponsor typically must appear or sign off on the removal.

  5. Find a New Sponsor: Ensure your new sponsor meets your updated business needs. This step can be time-consuming, so plan carefully to avoid service disruptions.


If your business has a Power of Attorney (PoA) clause allowing you to remove the sponsor unilaterally, the process can be simpler. However, confirm that your sponsor recognized and legally signed this clause.

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