Sponsorship as a term in Dubai refers to a process in which a local business or individual holds a 51% stake in an organization. Nevertheless, sponsors do not have any say in decision-making, and they do not receive a profit share. Traditionally, local sponsorship was the only way that non-UAE nationals could operate a UAE Mainland business.
Corporate sponsorship in UAE is an alternative form of sponsorship, where a UAE-registered company, instead of an individual, holds the mandatory 51% share in your business. Crucially, the sponsoring company acts as a silent partner and is legally barred from interfering in your company’s management or decision-making processes.
Even though individual sponsorship offers cheaper sponsorship options, corporate sponsorship is safer. If you want to ensure legal clarity, a smooth process, and total control of your business, corporate sponsorship is the more advisable option. A corporate sponsor can put long-term protections in place to protect a business’s profits, assets, and powers of administration and decision-making.
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There are several businesses that require corporate sponsorship services in Dubai. For example, Mainland businesses that have an LLC (Limited Liability Company) as a legal structure fall under this necessity. In other words, having a national sponsor is a legal requirement for these types of businesses. In addition to this, there are several business initiatives these corporate sponsorship services, they are listed as follow:
Even though corporate sponsorship in UAE is required in a lot of businesses, it is not the only type of sponsorship in the UAE. Aside from corporate sponsorship, there are individual local sponsors and local service agents. That is why it is important to know the differences between these types of sponsorships and corporate sponsorships.
When we mention an individual local sponsor in Dubai, UAE, we refer to a UAE national that holds at least 51% shares of the company. In addition to this, the remaining 49% of shares goes to the foreign national. Moreover, the local sponsor does not have any gender-based restrictions.
Nevertheless, this individual local sponsorship needs to be commended to another reliable, trustful, and accountable individual. This is done to ensure the business functions smoothly. On the other hand, the individual partner is not obligated to partake in the business operations regarding the company.
Simply put, this type of corporate sponsorship is the most optimal one for any entrepreneurs establishing commercial endeavors and manufacturing firms in the United Arab Emirates.
Benefits of an Individual Local Sponsor:
Drawbacks of an Individual Local Sponsor:
Unlike an individual local sponsor, the local service agent does not hold ownership rights in the business. Furthermore, they also do not partake in day-to-day business affairs for the company it works with. In other words, 100% ownership rights are held by the foreign national.
A Local Service Agent (LSA) serves as an intermediary between the business or company, and the government agencies. They facilitate official talks and meetings on behalf of the business concern. Moreover, they offer their services for annual fees based on an agreement, with the renewal procedures initiated by them. They are ideal for sole establishments, professional companies, and branch companies.
Benefits of an LSA:
Drawbacks of an LSA:
Corporate sponsorship is when a UAE-registered company acts as a local sponsor for a foreign-owned business. It allows foreign investors to legally operate on the UAE mainland while keeping full operational control.
Corporate sponsorship is offered by established UAE companies. It’s needed by foreign businesses setting up on the mainland that require a local sponsor or representative for licensing and government dealings.
The sponsor assists with legal procedures, company registration, and government communication. The sponsored company manages business operations, decision-making, and finances.
A legal agreement is signed between both parties to define rights, responsibilities, and profit arrangements. This ensures compliance with UAE laws and protects both the sponsor and the foreign investor.
Costs depend on the sponsor’s role and the type of business activity. The process usually takes one to three weeks. Visa quotas are based on office size, company type, and Ministry of Labour approvals.
Corporate sponsorship allows companies to trade freely across the UAE mainland. In contrast, Free Zone companies offer 100% ownership but are restricted to operating within their zone or through a local distributor.
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