UAE & Dubai - Business Setup Knowledge Series 1.0
Dubai offers a diverse and dynamic business environment, allowing entrepreneurs to explore various sectors. The specific type of business you can open depends on factors such as your expertise, investment capability, and market demand.
Local sponsor in Dubai – what does it mean?
A local sponsor is appointed by an overseas investor to hold a 51% stake in a UAE business. While the sponsor holds a controlling stake, they have no decision-making power and do not interfere with day-to-day operations.
They also do not take 51% of the profits. Instead, sponsors are paid an annual fee for their services. Sponsors can be individuals or corporate entities.
Do I need a local sponsor in Dubai?
If you are setting up in Dubai or any other part of the UAE mainland in the following industries, you will require a local sponsor:
If you are setting up in Dubai or any other part of the UAE mainland in the following industries, you will require a local sponsor:
Outside of these industries and others like them, you may be able to retain 100% ownership of your business. However, you will need to apply to the Dubai Department of Economic Development (DED) for permission to trade.
Types of local sponsors
There are several types of local sponsors to choose from in Dubai. You can appoint an individual, a corporate, or a local service agent.
Individual sponsors can be male or female, but they must be UAE citizens over the age of 21. Also, while they do not need any expertise in your field of business, they should be professionals, business owners, or government employees.
As the name suggests, corporate sponsors are business entities. They can be any local or government-registered business operating in the UAE. It is important to note that not any corporate entity can be a sponsor: they must be correctly licensed by the government to do so.
Finally, local service agents are required when starting a professional services business. In this case, overseas entrepreneurs can maintain 100% ownership but need a service agent to liaise with government departments. Local service agents are also paid an annual fee for their services.
Duties of a local sponsor
The primary duty of a local sponsor is to act as your representative in all dealings with government and official bodies. They carry out several other duties too, including interpreting Arabic business documents, closing bank accounts, and canceling permits such as work visas.
What to be aware of when hiring a local sponsor
There are many things to consider before hiring a local sponsor. When setting up in Dubai, you must ensure that your chosen sponsor is a resident in the emirate – otherwise, they will have to travel back and forth to sign and approve official documents.
You should also look into the background and prior business dealings of your sponsor to ensure they are legitimate and reliable. It’s also incredibly important that you set out all expectations, duties, and fees clearly in writing before committing to any sponsorship agreement.
When you work with BIZ, we do all this and more on your behalf, so you can have total confidence in your sponsorship arrangement.
How to change local sponsor in Dubai
From time to time the need may arise to change your local sponsor. Once again, with expert help, this can be a straightforward process.
The first thing to do is to approach your current sponsor and tell them of your intentions to make a change. With this taken care of, you’ll need to pull together your sponsorship documents such as your Memorandum of Association, power of attorney, and proof of your annual payments.
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Finally, you and your sponsor will need to attend court together to dissolve your sponsorship. New documents can also be issued at this stage to begin your new sponsorship. BIZ can guide you through this entire process.
Getting a Dubai trade license without a local sponsor
There are several options available if you wish to obtain a trade license in Dubai without a local sponsor. You could start a professional services business and maintain 100% of your company, working only with a service agent.
Alternatively, you could start a mainland business outside a regulated industry such as those listed above and apply to the DED to retain 100% ownership.
Another option is to set up a Dubai-free zone. Free zone businesses benefit from 100% foreign ownership, 0% tax on corporate and personal income, 100% customs tax exemption, and full repatriation freedoms.
How to Start a Small Business in Dubai, UAE The very first and foremost thing that you take into consideration is whether you want to operate your business in a free zone or a mainland one. Both have their pros and cons; hence you can choose as per your business’s nature and requirements. Before starting a small business in Dubai here are the business licenses to choose from. Types of Licenses in Dubai Moreover, you are also required to evaluate the type of licenses required to set up your business in Dubai. the Department of Economic Development (DED), is the concerned authority to issue licenses. There are four basic types of licenses that you may require as well including:
Commercial license
Industrial license
Professional license
Tourism license
Allowable structures
1 Limited liability company
2 General partnership company (UAE nationals only)
3 Limited partnership company (UAE nationals only)
4 Joint venture
5 Sole proprietorship
6 Branch of a foreign company
7 Representative office of a foreign company
8 Public shareholding company
9 Private shareholding company
10 Partnership limited by shares
11 Partnership-en-commandite
Follow for meaningful information for opening a business in Dubai & UAE Region.
I use my wisdom to help others achieve success using theirs | Professor International Business | Strategy Consultant & Coach | Mom x 2
1 年With pleasure ?? I've just gone through much of this myself