Last updated on August 25th, 2019 at 08:38 am
‘Local sponsor’ is a general term used in the UAE to refer to local service agents and nominee shareholders (sleeping partners) in mainland companies with foreign investment. A sponsor has to be an Emirati (UAE national) with a family membership card (Gincia). Operating a business in the Dubai Mainland area requires a local sponsor to be mandatorily appointed.
Nominee Partner (Sleeping Partner) in LLCs
As per the UAE Companies Law and UAE Civil Law, to start a company with limited liability in a mainland, that is, a non-offshore company in a non-free zone, a minimum of 51% local equity is a must. Despite foreign equity in such a company not exceeding 49%, the profit distribution from it can be mutually agreed upon by concerned parties. Complete operational powers can also be granted to the foreign partner(s) or a third party on the memorandum of association. Only UAE nationals or companies owned wholly by UAE nationals may be considered for being nominee partner and paid a lump sum amount per year.
Local Service Agent
Branch of foreign companies and civil companies (single owner of a partnership) with foreign investments needs to have a local service agent appointed to comply with the regulations. These agents do not have any share in the firm also are not normally involved in the operations of the company and are paid a lump sum fee per annum – see what is the normal sponsorship fee
Normal Market Practices
Sponsors normally do not interfere in any of the Company’s activities. Although operational powers are being vested with the managing director/manager; local sponsors still holds power to sign on Immigration and Labour related affairs of the company. As there is normally no limitation on the number of companies they can sponsor; some UAE nationals are the sponsors of hundreds of companies.
The Misconduct in the Market
No Access to Sponsor
There are many business owners in the market who do not have access to the local sponsor directly but through and PROs/consultants/lawyers. In such cases, the relationship between the PROs/consultants/lawyers and the client is crucial.
There are sponsors works in busy schedules and not available when required.
Most of the company owners are not registered with the labor department thus sponsors e-signature card is required for applying for work permits.
Our corporate nominee sponsorship wipes out all the above issues.
Sponsorship Fee Calculator
We offer highly professional accounting services for a reasonable price in the UAE. Do try our sponsorship fee calculator on the right to get an estimate of the price of local sponsorship services.
Disclaimer: The rate is calculated not based on any official data but what we charge as sponsorship fee and what we have learned from the market.
We also offer corporate nominee services sponsorship for the same rate.
Corporate Nominee Sponsorship
Corporate nominee sponsorship can be availed by all limited liability companies across the UAE. The sponsor in such a case should be a corporate entity instead of an individual.
Important benefits of the local partner being an entity and not an individual is that the difference of personal relationship based traditional sponsorship to agreement based new system. The entity that acts as the nominee is built with a board of directors and holds power of attorney to act on behalf of the Company.
Thus, from the standpoint of corporate governance, for transparency and other factors, this implies sundry benefits for a foreign party, one of the most important ones being succession planning. Companies, while entering the market, often worry about the accountability of a local partner – as to the ramifications of the local partner changing his/her mind. With a corporate entity, the contractual terms still hold, thus imparting more robustness to the arrangement vis-à-vis having an individual national as the local partner. A nominee arrangement shall be executed.
Note: Corporate nominee sponsors can work only for limited liability companies – and not for branches of foreign companies or civil partnerships.