‘Local sponsor’ is a general term used in the UAE to refer to 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 membership card (Gincia). Operating a business in Dubai mainland area requires a local sponsor to be mandatorily appointed.
Nominee Partner (Sleeping Partner) in LLCs
As per the UAE Companies Law and UAE Civil Law, to start a company with limited liability in a mainland, that is, a non-offshore company in a non-free zone, a minimum of 51% local equity is a must. Despite foreign equity in such a company not exceeding 49%, the profit distribution from it can be mutually agreed upon by concerned parties. Complete operational powers can also be granted to the foreign partner(s) or a third party on the memorandum of association. Only UAE nationals or companies owned wholly by UAE nationals may be considered for being nominee partner and paid a lump sum amount per year.
Local Service Agent
Branch of foreign companies and civil companies (single owner of a partnership) with foreign investments needs to have a local service agent appointed to comply with the regulations. These agents do not have any share in the firm also are not normally involved in the operations of the company and are paid a lump sum fee per annum.
Normal Market Practices
Sponsors normally do not interfere in any of the Company’s activities. Although operational powers are being vested with the managing director/manager; local sponsors still holds power to sign on Immigration and Labour related affairs of the company. As there is normally no limitation on the number of companies they can sponsor; some UAE nationals are the sponsors of hundreds of companies.
Are you looking to perform business activities inside and outside the UAE without any restrictions? Then establishing an onshore company (mainland) is the best way for you. In the Mainland, it is compulsory to have a local sponsor (UAE national) involved when setting up a new business. A trading company must have legal documents to show that 51% of the shares are owned by a local. An expatriate may only own the remaining 49%. However, through a Memorandum of Understanding, these terms can be adjusted to suit the investor’s purposes.
Types of business licenses allowed:
• Commercial (trading)
• Professional (vocational)
• Industrial
ADVANTAGES OF SETTING UP A BUSINESS IN MAINLAND:
Opportunity to do business with other mainland companies with no restrictions
Opportunity to do business with government bodies
Market presence
Ability to trade internationally
Exemption from corporate tax
No limitation on the number of visas
Choose an office location anywhere in Dubai
More business activities allowed
CATEGORIES:
1. Joint Liability Company
2. Limited Liability Company (LLC)
3. Public Joint Stock Company
4. Private Joint Stock Company
5. Civil company
6. Branch of a local or GCC Company
7. Branch of a foreign company
8. Branch of a free zone company
9. Sole Proprietorship
How to Set Up Mainland Company in the UAE?
To incorporate a mainland company in the UAE, the process mentioned below needs to be followed:
