Local Sponsor - Dubai Mainland, always required?

10-11-2015

The answer is no! When starting a business in the United Arab Emirates, people often think that there are only two options: Setup in a Free Zone where you will hold 100% ownership or establish a Limited Liability Company (LLC) in the UAE mainland where a UAE national, also called a Local Sponsor, will hold 51% shares of your company. It is also a commonly thought that the LLC is the only type of business license available in the mainland. This often makes companies back out, as the knowledge of a Local Sponsor who will need to have 51% of the shares of the company scares people.

Well then, why settle for a company in UAE mainland if I can settle for a Free Zone Company with 100% ownership? This mainly depends on your scope of business and your target market. Mainland and Free Zones offer different advantages depending on your business type and activities. If it is your intention to do business directly with the UAE market or sell products in UAE mainland, or if you are setting up a business for which you need many employment visas, a mainland license would be the way to go.

The Watermill Consultants is happy to inform today that there are also possibilities of setting up your company in the UAE mainland, without a Local Sponsor having 51% of the shares! The main forms of business in UAE mainland are an LLC, professional license/civil company, branch of a local or foreign company or a partnership. 

We will explain you the main differences between an LLC and professional license/civil company. Limited Liability Companies are restricted to trading and industrial activities, and civil companies are established for practicing professional activities. 

LLC licenses require a Local Sponsor and the owners have a limited personal liability. The LLC can be seen as a partnership between the expatriate who will own 49% of the shares and the UAE national, who will own 51% of the shares. However, when you have a trustworthy Local Sponsor, an LLC setup still allows the foreign owner to have significant control over the business. The Local Sponsor will receive an annual sponsorship fee for his services. 

With a professional license, the expatriate will retain 100% ownership of the company. For most professional licenses it is compulsory to appoint a Local Services Agent (LSA). The LSA will have no role, interest or legal rights of your business or branch. This will be stipulated in an agreement. The LSA will receive a fixed annual fee for his services.  It must be noted that when registering a professional company, you may not engage in any commercial business. 

The Watermill Consultants will be able to inform you whether a Free Zone Setup or Mainland Setup will be most suitable for your. Depending on your business activities we will also provide you with advice regarding which legal form would be most suitable for you, and we will connect you with a suitable Local Sponsor or Local Services Agent or perhaps your professional license activity doesn’t require one at all!

So... What are you waiting for… Contact us today! 

  • UAE 11:55
  • NL 9:55
  • AED 4,3090

Agenda

More information coming soon.