When Do I Need A Local Sponsor or Corporate Sponsor / Corporate Nominee in Dubai & UAE?
When setting up a mainland or onshore business in Dubai and the UAE you will require a local sponsor to be involved for the company registration and license processing. The below describes the license options available and how Creation Business Consultants can provide a safe and trusted corporate sponsor / corporate nominee option for your business setup.
The Department of Economic Department (DED) in the relevant Emirate such as: Abu Dhabi, Dubai, Ajman, Fujairah, Ras al Khaimah, Sharjah, and Umm al Quwain are the regulatory authorities responsible for issuing a business with an industrial, professional, or commercial license. Due to the nature of certain business activities there may be additional external government approvals required for the business trade license to be issued and the company setup to be completed and operational.
The 3 main license types that are available for new business registrations are:
|BUSINESS ACTIVITY||Involves businesses selling tangible products. Often the legal license type is commercial. Examples of commercial licenses are general trading, garment trading, and electronic trading etc.||Involves companies specialised in manufacturing, casting, moulding, assembly, or processing activities. Also including any production from raw materials to semi-finished goods and supplies.||Involves businesses that is qualified with a certain skill set or knowledge in a certain industry or field in exchange for a fee. Examples of a professional license type include accounting, events organisation and medical.|
|OWNERSHIP||Foreign investors can hold 49% shares and 51% of the shares can be held by a UAE national or corporate nominee.||Foreign investors can hold 49% shares and 51% of the shares can be held by a UAE national or corporate nominee.||Foreign investor will have 100% ownership. License registration requirement is to have a local service agent.|
|SHARE CAPITAL||Minimum share capital is AED 300,000 (not paid up).||Minimum share capital is AED 300,000 (not paid up).||Company not limited by share capital.|
|LIABILITY||Commercial license is issued for a limited liability company (LLC). Shareholders are limited by the company debts and liabilities.||Industrial license is issued for a limited liability company (LLC). Shareholders are limited by the company debts and liabilities.||Provides the professional license holder the ability to establish a business with sole responsibility for all debts and liabilities (unlimited).|
|GOVERNMENT FEES||Commercial license type fees range from AED 8,000 to AED 20,000+.||Industrial license type fees range from AED 10,000 to AED 30,000+ (depending on approvals for certain business activities.||Professional license type fees range from AED 8,000 to AED 20,000+ (depending on approvals for certain business activities.|
Yes, all license types will require a local sponsor, corporate sponsor, or corporate nominee to complete the business license registration.
An individual local sponsor is where a UAE national in their own personal capacity holds 51% of shares in a mainland limited liability company. The Emirati sponsor – being the majority shareholder of the LLC may give a Power of Attorney to the foreigner in exchange for a fixed annual fee. There are a few business activities where the requirement is for a local sponsor to have certain qualifications and experience and they must hold 100% of the shares in the mainland company again in exchange for a fixed annual fee.
Referring to Article 10 – UAE Commercial Companies Law (CCL) specifies that a UAE mainland Limited Liability Company must have a minimum of 51% share capital owned by a UAE national. Often this arrangement is required for a mainland Department of Economic Development (DED) commercial license type or an industrial license business registration. Creation Business Consultants provide a corporate sponsor or corporate nominee agreement to satisfy this legal requirement.
Article 329 – CCL specifies that a professional license company must have an appointed agent. Often this arrangement is required for a mainland DED professional license registration. Creation Business Consultants provide a National Service Agent (NSA) also known as a Local Service Agent (LSA) to satisfy this requirement.
To meet the company registration requirements set by UAE Commercial Companies Law and by the Economic Development Department, investors and entrepreneurs seeking to open their company or a branch office in the UAE can choose between an individual sponsor or a corporate sponsor to meet their sponsorship requirements.
When you partner with an individual sponsor, there is the possibility that they may want to receive a percentage of the business profits. Additionally, they may want to be actively involved in business management, operations, and voting direction of your company. Furthermore, you will need to ensure you have a plan in place should the sponsor not be available, become difficult to work with, become sick, or pass away.
Among the many benefit of entering into a corporate nominee sponsorship include:
At Creation Business Consultants, we recommend opting for a corporate sponsor or corporate nominee program. However, the type of local sponsor you select will depend on your industry and the specific needs of your company. Some business activities may require a local sponsor to hold certain qualifications as part of the requirements to complete their Company Trade License Agreement. For example, architectural or engineering business activities may request a local sponsor to hold certain educational qualifications. As you set up your company in the UAE, it’s important to seek the advice of an expert who understands your industry, as well as the needs of your company, to help you find the safest option for local sponsorship requirements.
Should you wish to know more about setting up a mainland company in Dubai and the UAE or you want us to set up your business in Dubai and complete your UAE business registration contact [email protected] or call +971 4 878 6240 for your free consultation.
Creation ensures clients receive a seamless, cost effective and proficient entry to the GCC market. We provide clients with the foundations and best practices empowering them to build and control a successful business.
We continuously strive to exceed client’s expectations whilst making certain they are protected from undue risk at all times. Creation Business Consultants is the preferred and truly trusted business partners for the GCC.