Local Sponsor / Corporate Sponsor
This is a general term used in the UAE for local service agents and nominee shareholders (sleeping partners) in mainland companies with foreign investment. A sponsor has to be an Emirati (UAE national) with a family card (Gincia). Operating a business within the Dubai Mainland area requires an area sponsor to be mandatorily appointed.
As per the UAE Companies Law and UAE Civil Law, to start a corporation in the mainland, that is a non-offshore company during a non-free zone, a minimum of 51% local equity is a must. Complete operational power can be transferred to the foreign partner(s) or a 3 party based on the memorandum of association.
Local Sponsorship within the UAE and Dubai requires an area sponsor for several activities. Note that the Local Sponsor does not participate in investments for business development but only acts as a silent partner. Few industries are located in Dubai and Abu Dhabi, a “strong” local sponsor is important, especially if you would like to enter into business relations with the military, police, or ADNOC (Abu Dhabi National Oil Company). Those companies have strict registration processes, therefore the local partner plays a vital role in deciding the process. The formation process in the UAE is pretty fast and easy if administered properly and with expertise. Overseas entrepreneurs need to find an area sponsor to establish a business in the UAE that would hold a 51% stake in any business. These sponsors can either be local individuals or corporate entities. Corporate sponsorship is usually the simplest option, allowing knowledgeable and secure processes to take place.
With a corporate sponsor, long-term protections are often put in situ to guard your profits, assets, and powers of administration and decision making, allowing you to remain in total control of your business.
Whether or not you need an area sponsor will depend upon several factors including your nationality, your license, and the industry type.
If you’re a non-GCC national wishing to line up a UAE mainland LLC with a billboard or industrial license; or would like to undertake activities in any of the subsequent industries then you’ll have acquired the services of an area sponsor protection. There are plenty of advantages of corporate sponsors such as a streamlined process without any confusion and chaos, zero interference from the sponsor allowing full freedom to the company owners along with financial guarantees and legal protection.