Types of sponsorship
The three types of local sponsorship include corporate sponsorship, individual sponsorship and the association with a local service agent.
Corporate Sponsorship – When a UAE national company owned by locals holds 51 per cent of the share and liabilities of a company owned by an individual or group of partners of foreign origin. In this case, the business is sponsored by a company, rather than an individual.
It is a myth that the local sponsor will share on Qly the company’s profits; it is accountable for all the actions.
When – Works when you want to set up a limited liability company, a trading company or a manufacturing unit.
Individual Sponsorship – When an Emirati national in his/her individual capacity becomes your sponsor. It is not necessary that he/she is also operating a business in the same domain. The individual may be a professional, a government employee in the UAE or a businessman.
The Emirati will also hold a 51 per cent share and a 51 per cent liability of the company. In this type of sponsorship other options are also available. The local sponsor can hand over the power of attorney to the foreign partner and ask for a fixed annual fee.
When – Works when you want to establish a trading company or a limited liability company
Local Service Agent – When a professional – a doctor, an engineer or an artisan – wants to set up their business by offering professional expertise. In this case you will require to appoint a local service agent. This agent will merely act as a representative of the company in all administrative dealings with government departments (for immigration and ministry of labor formalities). He/she will not hold a 51 per cent share of your company.
The remuneration of the agent is normally agreed on an annual fixed fee basis and is a matter of commercial agreement. It can vary depending on the social and family prominence of the service agent and the precise contribution he/she makes to the business.
When – A local service agent can be appointed in following cases –
- For professional licenses
- For branch of foreign companies
For representative offices