9/10 times setting a business in UAE mainland requires a tie up with a local sponsor or a local service. Local Sponsors in Dubai, UAE take care of continuity of the company in UAE. A fact about the Local Sponsor or LSAs is that you cannot expect any civil responsibilities from their end towards the business they are sponsoring. The Local Sponsor could not be held responsible for either achieving soaring profits or the growth of the business. On the contrary, the Local sponsor for business in Dubai ensures to provide facilitation over the business continuity in UAE.
Any foreign company willing to establish a branch in Dubai mainland or other parts of UAE needs to have support from the local service agents in Dubai.
Who are called as Local Service Agents?
Local Sponsors or service agents are UAE nationals, called Emirati who deal especially with the governments’ official and ministry work for the company. They can help in establishing external relations and strengthening the economy of UAE by bringing foreign Investors in the form of new businesses. However, you should be careful about choosing the right Local Sponsor for business in Dubai;
Local sponsor in UAE
Many people amongst us get confused among the responsibilities and functions of a local service agent. They could not differentiate between a local service agent and a local sponsor. A local sponsor for business in Dubai is a business partner who is a native Emirati and is willing to sponsor an international firm. The local sponsor will take a significant amount of 51% of the total shares of the company, in lieu of services rendered. In some cases, the company may offer some share of profits. This is a special case with a local sponsor and depends on the agreement made with the sponsor at the time of incorporation. In the case of a Local service agent, the person is provided with an annual fee for a business partnership.
The Local sponsor which is appointed by the foreign companies is generally structured as an LLC (Limited Liability Company). The need of having a local sponsor highly varies upon the company’s structure and nature.
How to find a reliable Local sponsor or LSA?
Now, this is an important thing to get answered. Lots of evidence testifies why there is an acute need of appointing a local sponsor or local service agent for setting up a business in Dubai mainland. Local sponsors for business in Dubai should be reliable and trustworthy so that the branch can rely on them. For Dubai company incorporation and formation, a company can choose an option among individual sponsors, corporate sponsors, and local service agents based on the activity the company will be carrying out. The local sponsor can be an individual or a UAE based company.
Another way from which anyone can come in contact with a professional reliable local sponsor or LSA is through networking. This method is generally recommended. People who own their businesses have particular knowledge about the business flow and operations. No one can rely completely on a random person willing to offer sponsorship services.
It is recommended to opt for local sponsors or agents through consultancy firms as they have presence in the region, are aware of the local laws and obligations and have a reliable network of sponsors they have worked with over the years.
The best locations in UAE for local sponsors are to hire them from major cities such as Dubai and Abu Dhabi. These are the premium locations where big foreign businesses and enterprises love to invest and hence these regions are flooded with locals who are willing to be Local sponsors and service agents.
High profile LSAs are also available but at a little bit premium rates. They generally offer their services via the method of networking and mostly try to provide exclusive services as compared to the local crowd.
Individual or corporate sponsor
Instead of choosing an individual Emirati one can assist a UAE based company. Due to the obvious reason, that via assisting a company, obstacles such as death or retirement may not have any powerful impact on the business flow.
On working with an individual make sure to clear the disputes based on certain assurances related to events like death and retirement. Such assurances give reliability for a longer period.
In the end, you can consider some criteria for choosing the best local partner in the UAE.
These sponsors charge the business, according to the type of business and the sponsorship option. In most cases, the average annual sponsorship starts from AED 25,000.
All the agreements between the local service agents or local sponsor and the company should be registered in the concerned courts of Dubai or other parts of UAE. This is the only way by which you can counter in case a legal dispute happens.
Final verdict
Using a local sponsor is not an easy job. In UAE, investors end up getting a reliable trustworthy Local service agent or local sponsor through one of the ways mentioned aboveFew considerations are obvious to mark since not all the random Emirati is compatible with the position of Local Service Agent.
There is a long list of advantages of appointing a local sponsor or a Local service agent in Dubai, UAE. Apart from the main advantage of facilitation in business movements, LLCs which are formed by local partnerships. do not have any strict restrictions on opening and operating multiple branches throughout the UAE.When developing a strong relationship with reliable sponsorships and partnerships in UAE, business hurdles can be overcome without hampering the overall profitability of the business.
