Individual or Corporate Sponsor for Business Setup in Dubai

In the increasingly prosperous dynamic economic market of the United Arab Emirates an influx of entrepreneurs have gained interest in setting up businesses via business setup consultants in Dubai; our Business Link experts facilitate a timely smooth transition into the market, whether it be as acting Corporate Sponsors or by providing top notch PRO services in Dubai.

 

In respect to the UAE Commercial Companies Law that governs the criteria’s by which companies are set up it is a mandatory requirement that all companies established in the UAE should have a national partner acting as a local sponsor with 51% share in the company whilst the remainder 49% shares belong to the expatriate business owner.

However, the aforementioned can bear exemptions with regards to companies established in Free zones, Civil Companies and the likes. Having this said, business owners have the option of acquiring a local individual to represent that 51% or to have a corporate to act as the 51% shareholder, however any corporate acting as a shareholder must be 100% owned by a UAE national.

In both cases, the foreign investor will be the key person running the company while the local sponsor receiving a set fee or profit shares agreement. It is not uncommon that foreign investors and business owners face slight difficulty with regards to obtaining a UAE national they are familiar within the realm of business. Due to this commonality, we at Business Link are certified and licensed to act as a Corporate Sponsor for those interested in starting mainland company in Dubai.

When weighing out which sponsorship method best suits investors it is crucial to understand the characteristics and the benefits provided by each, individual sponsorship, local service agent, and corporate sponsorship. When considering pursuing a local sponsorship, business owners must first determine the type of business activity of the company.

Common considerations to take into account before starting a sponsor search include:

* Will the sponsor help the business?

* Should my sponsor have a high profile?
* What are possible worst-case scenarios with each sponsor type either corporate or individual local sponsor in Dubai?
* What are the key benefits?

Potential business owners interested in LLC company formation, trading company, or manufacturing companies are eligible to seek corporate sponsorship. Looking at it from a legal standpoint, having a corporate as a shareholder aids in overcoming various legal requirements when compared to individual shareholders.

From a financial standpoint the benefit of a corporate sponsorship is that it provides greater financial freedom and a sense of security. The support of an already established management team of a corporate is a benefit every entrepreneur must consider. Those considering appointing a local service agent usually is seeking professional licenses, the setup of branches of foreign companies, or setting up representative offices.

The choice of sponsorship is wholly dependent on the incorporator and the level of comfort of the interested party. The professional consultants at Business Link support our clients to select the most appropriate decision in business setup and guide them through complete procedures of Dubai Mainland company formation and Dubai Economic Department company registration. Contact Business link UAE for Dubai mainland business setup, for more details call +971556070118 or e-mail us in info@businesslinkuae.com.

All You Need to Know About Local Partner and Services Agent in Dubai

There has been a repeated confusion concerning the terms used in connection with the Local (Emirati) Sponsor, a mandatory requirement when establishing a business outside the free zones in the United Arab Emirates.

The mix-up merges two expressions into one (“sponsor”) without a proper distinction, which creates the impression that there is always an Emirati in full control of the business.

In fact the word “sponsor” is neither a job title or position nor a job description of the involved Emirati. However, it can be considered a status that a Local Partner or Local Service Agent gains after forming a company or after being appointed as a Service Agent for a certain entity.

Whether a Local Partner or a Local Service Agent is required depends on the kind of activity and the company structure that the entity will have.

In Dubai, trading and industrial activities require a Local Partner (who holds 51% of the company shares) and are usually structured as a Limited Liability Company (LLC).

However, a professional license in Dubai can’t use the LLC structure and can only be a civil company. In Dubai, all sorts of commercial activities can use the LLC structure.

The main difference between the entities under the CCL (Commercial Companies Law) and those under the Civil Code is that the activities which may be practiced in the CCL are of a commercial nature, whereas in the Civil Code they involve the use of intellectual faculties, acquired information or the use of skills.

Civil activities may not use the Limited Liability Company structure. Moreover, as mentioned earlier, the activities civil entities may be engaged in will be restricted to all those of a civil nature alone.
Professional companies may be 100% foreign owned. However, it is necessary to appoint a local Emirati Service Agent from the same Emirate.

Under the Civil Code, service or professional companies are de-fined as companies where two or more agree to be bound to carry out work and to be liable to third parties against payment of consideration, whether they share their work equally or unequally.

According to Dubai rules on licensing professionals and trader and in order to establish a business which practices services or professional activities, the business will be formed as a “Business Partnership”. Most of the services related to professional activities require a professional license.

A Local Service Agent has to be appointed while 100% of the company shares can be owned by foreigners. The Local Service Agent will deal with the government officials and Ministries on behalf of the company and facilitates the renewal process.

With a Dubai local Sponsor/Local Service Agent, it is common to arrange side agreements that redefine the conditions between the parties in favor of the actual owners/managers of the company.
For the last few years, there has been a discussion whether or not certain activities should be exempt from the requirement to have a Local Partner and a correspondent law is in the pipeline.