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Local Sponsorship

Local sponsorship in Dubai refers to the requirement for foreign businesses or investors to partner with a local sponsor or Emirati individual or company when establishing a business presence in Dubai or the wider United Arab Emirates (UAE). This sponsorship arrangement is a legal requirement for certain types of businesses and activities, particularly those that operate outside of designated free zones. Key points to understand about local sponsorship in Dubai include

About Local Sponsorship

  • Ownership and Control
  • Business Types
  • Legal Agreements
  • Profit Sharing
  • Protection of Local Interests
  • Free Zones
  • Professional Service Providers

Explanation About Local Sponsorship

It's important to note that laws and regulations can change, and the specific requirements for local sponsorship may vary based on the nature of the business and the Emirate in which you are operating

If you are considering setting up a business

in Dubai, it's recommended to consult with legal experts or business consultants who are familiar with the most current regulations and requirements.

In many cases, a local sponsor is required to hold a majority share (at least 51%) in the business. This means that the local sponsor has a significant level of ownership and control over the company's operations.

Local sponsorship is commonly required for businesses that operate in sectors such as retail, trading, construction, and various services that cater to the local market. However, businesses established in free zones are generally exempt from this requirement.

The relationship between the local sponsor and the foreign investor is typically formalized through a legal agreement. This agreement outlines the roles, responsibilities, and financial arrangements between the two parties.

In many cases, the local sponsor receives an annual fee or a percentage of the company's profits as compensation for their sponsorship. The specifics of this arrangement can vary.

The local sponsorship requirement is designed to protect the interests of Emirati citizens and promote economic cooperation between local and foreign entities.

Dubai offers a number of free zones where businesses can be fully owned and controlled by foreign investors. These zones have been established to encourage foreign investment and offer various incentives, including exemption from the local sponsorship requirement.

Certain professional service providers, such as law firms and consultancies, might also require a local service agent who is an Emirati national. However, this arrangement is different from full sponsorship and usually involves a fee for providing administrative support rather than sharing ownership.