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.
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 cancelling permits such as work visas.
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:
- Oil exploration and production
- Security and military services
- Banking, financing and insurance activities
- Pilgrimage and Umrah services
- Water and electricity provision
- Fishing and related services
- Post and telecoms services
- Road and air transport
- Printing and publishing
- Commercial Agency
- Medical retail (including pharmacies)
- Blood banks, quarantines, and venom/poison banks
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.
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