'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.
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.
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