Establishing new venture in the United Arab Emirates can be competitive as the economy growing faster which is attracting the whole bunch of industry specialists and professionals to the region. Setting up a mainland company will be a wise move for those who are wishing to gain from benefits of the economy from zero personal and corporate TAX to be able to bid for tenders/contracts from the government. There is a major decision to make with regards to local sponsor before you hit the ground running.
It is a common question among the entrepreneurs and investors in UAE if they need a local sponsor to be a partner in their company, well as per UAE Companies Law and UAE Civil Law any commercial and industrial company in UAE needs a local partner with majority shares, there are some professional activities as well, which also need 51% local shareholding or only allowed for 100% local ownership. Further, it depends on the type of activity of the company and the nationality of the shareholders.
We understand as an investor it is a major concern to involve an individual as partner with no investment. The point to be noted is that the local sponsor will have no shares in the profit of the company neither involved in the financial part and day to day running of the business. There will be a fixed fee charged annually for the nominee service.
Well, we at ADAM Global have been facilitating this requirement from last 17 years and has been part of success stories of more many MNCs and entrepreneurs in the UAE as we have a panel of sponsor and assist our clients as per their requirement.
We will help you to analyze if at all you need to involve a local as majority shareholder or as a local service agent.
There are two types of sponsorship for you to choose:
- Individual sponsorship: one of the most common types of local partnership in UAE. In this, an individual UAE national will hold 51% shares in the company and 49% can be held by an expat individual/s or a corporate. The local will delegate immigration and labor power to the expat to freely issue or cancel the visa.
- Corporate sponsorship: This is recommended and more secure type of sponsorship. In this, instead of an individual (UAE national), a corporate entity owned 100% by UAE nationals will be the sponsor/majority shareholder in the company. This corporate will be managed by ADAM Consulting as the managing director and authorized signatory of the company are ADAM’s Representative.
Making your decision
Having explored both the options of local sponsor in the UAE, it is important to ponder upon selecting right option for your business as per your strategy as it will play a vital role in long run of your business. There is no one right path from above two options – it varies from company to company. The choice of individual sponsorship is suggested if the entrepreneur/owner knows and trusts individual local and decide to make him a majority shareholder. However, to avoid any uncertainty and complications which might arise in individual sponsorship, you may opt for corporate sponsor which is a safer choice. Again having an expert advice is always a wise idea before taking the decision.
For detailed information, professional advice, and cost-effective assistance to start a business in Dubai or anywhere in the UAE. Contact us today!
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