Sponsor to Start a Company in UAE
There are two main options for setting up a business in the UAE: partnering with a UAE national or opting to set up a business in a free zone. However, in order to start a business that can sell or service UAE customers, a sponsor will be required.
A sponsor can be an individual or a company. In the case of an individual, the sponsor should be an Emirati national. Moreover, they should be above 21 years of age. However, this does not mean that they should have any business experience. If they do, they should be professionals. In case of a corporation, the sponsor must be a business owner. The sponsor can also be a government employee.
If you have no prior knowledge of UAE laws or have limited knowledge of the language and local laws, it is best to hire a local sponsor. Local sponsors can be UAE nationals or UAE owned companies. They are required to hold 51% of the company’s shares. This sponsorship is important for expatriate investors in the UAE as they are required to have a UAE national as their sponsor. Emirati nationals may be able to help you establish a business in UAE and can act as your representative in Dubai.
Do You Really Need a Sponsor to Start a Company in UAE?
Traditionally, foreign entrepreneurs were required to secure a sponsor in the UAE to set up their company. Generally, this sponsor would own at least 51% of the company and be the only owner. As a result, the sponsor would not share the profits and would instead take an annual fixed fee or a percentage of revenues. Sponsorship fees for a business in the UAE can range from US$4,200 for a small shop to several million dollars for a large multinational company.
Another option for a sponsor is through a local service agent. While these agents may have some knowledge of the language, they are not the company’s majority owner. Their role is to represent the company, and to represent the business when dealing with UAE government officials and Ministries. In exchange for this, they are paid a fixed fee per year, which varies based on the activities and services they perform for the business.
Whether or not a local partner is required for a foreign-owned business depends on a number of factors. For instance, a business may be based on an exclusive service in a free zone or require a license. A local partner will be able to advise the business owner on local law, which can help protect the business.
Alternatively, the UAE government provides financial assistance for business start-ups. Most of these financial support programs are only open to Emirati citizens, but the company must partner with an Emirati in order to qualify. For example, the Dubai SME Program provides start-up and advisory services for small businesses. It also offers financial support and marketing advice.