Local Sponsor in Dubai, UAE

Local Sponsors in Dubai — A Complete Guide for Foreign Investors

Setting up a business in a foreign country is never simple, and Dubai is no exception.
While its booming economy attracts entrepreneurs worldwide, mainland companies with commercial
or industrial activities must appoint a local sponsor who legally holds 51 % of the shares.
This guide explains what local sponsors do, why you need one, and how to choose the right partner.

What Is a Local Sponsor in Dubai?

A local sponsor (sometimes called a local service agent) is a UAE national or
UAE-based corporate entity that complies with mainland ownership rules.
While the sponsor legally owns 51 % of the shares, day-to-day control is usually handed to the foreign
partner via a carefully drafted side agreement. In return, the sponsor receives a fixed annual fee.

Types of Local Sponsors

Corporate Local Sponsor

A UAE-registered company (often holding company or government-related entity) owns 51 % of shares—ideal
for Limited Liability Companies (LLCs).

Individual Local Sponsor

An Emirati citizen (male or female) acts as sponsor. Popular for retail, trading, or manufacturing
licences where a personal relationship matters.

Local Service Agent (LSA)

Required for professional or service licences. The LSA does not hold equity—only
liaises with authorities for a fee.

Why Do You Need a Local Sponsor?

• Legal compliance – Mandatory under UAE Commercial Companies Law for
  mainland entities.
• 100 % profit repatriation – You keep full profits and pay no corporate
  or personal income tax.
• Wider market access – Trade across the UAE, bid for government contracts,
  and open multiple branches.
• Residency visas – Obtain investor status and sponsor family or staff visas.

Key Responsibilities of a Local Sponsor

• Signing and attesting incorporation documents.
• Assisting with labour cards and visa cancellations.
• Dealing with government departments when disputes or closures arise.
• Interpreting or co-signing Arabic contracts when required.

How to Find a Reliable Local Sponsor

• Do your homework – Check reputation, business background, and financial stability.
• Consider government connections – Sponsors who hold public-sector roles
  can speed up approvals.
• Put everything in writing – Clearly spell out annual fees, exit clauses,
  and non-interference terms. Use a lawyer.
• Work with a consultant – Firms like Smart Business Creation
  vet sponsors and draft watertight agreements for you.

Corporate vs Individual Sponsorship: Which Is Better?

Corporate sponsors often suit larger ventures that need stability and formal governance:

• No personal disruptions (holidays, illness, succession).
• Detailed legal framework protecting shareholder rights.
• Minimal interference in daily operations.

That said, a well-connected individual sponsor can open doors and offer
valuable market insights—so the “best” choice depends on your industry and risk profile.

Which Businesses Require a Local Sponsor?

• Branches of foreign companies (representative or full).
• Professional licences (consultancies, service firms) – require an LSA.
• Civil companies where partners can be 100 % foreign-owned but still
  need an LSA.