What exactly are corporate sponsorship services?
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.
Furthermore, corporal sponsorship is one of the various ways of sponsorship in the UAE. As implied by its name, corporal sponsorship is where instead of an individual holding a 51% share in your business; a UAE-owned and registered company holds it. As with regular sponsors, the sponsoring company does not have any say in the decision-making of a company.
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.
Benefits of Corporate Sponsorship in the UAE
- Streamlined process: Acquiring a local sponsor for your company can prove to be an involved undertaking. For this and other reasons, is more profitable to seek corporate sponsorship services and work with a corporate sponsor that has procedures in place to ensure the process runs as smoothly as possible.
- Zero interference: Most individual sponsors will not want to be involved with the day-to-day running of your business. Nevertheless, nothing ensures that this will not change down the line. However, corporate sponsors will not get involved with your business. This will allow you to maintain total control of your staff, clients, offering, and future direction.
- Financial guarantees: A reputable and trustful corporate sponsor will charge a set annual fee. In other words, if your profits increase, a good corporate sponsor will not want to stake a claim for a more significant share as payment for their services. Consequently, this allows you to retain 100% of your company´s profit.
- Clear succession plan: If an individual sponsor passes away or retires, their company shares are passed down to their heir automatically. Even though this can be mitigated with succession planning, it is not always legally sound and can be expensive. Nevertheless, a company can never die or retire, so there is not any concern regarding it.
- Legal protection: Even if you have adequate legal protection in place, entering into a business arrangement with an individual sponsor can prove to be risky. Nevertheless, working with a corporate sponsor can bring peace of mind to that matter. Reputable corporate sponsors only work with contracts drafted by first-tier legal counsel. In other words, your shareholder rights are always protected.
Which businesses require a UAE national sponsor in Dubai?
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:
Other types of sponsorships in the UAE
Even though corporate sponsorship 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.
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Individual Local Sponsor
When we mention an individual local sponsor in the United Arab Emirates, 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.
Local Service Agent
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.