Local Sponsor

Local Sponsor and Its Role in Dubai

Foreign entrepreneurs who want to operate on the UAE mainland must legally partner with an Emirati shareholder or a UAE–owned company. Federal Law No. 2 of 2015 requires that at least 51 % of shares in a limited liability company (LLC) be held by a UAE national.

This “local sponsor” provides the legal and cultural bridge your business needs, enabling you to obtain licenses, approvals and visas. The Emirati sponsor can be an individual or a corporate entity and holds the shares on your behalf while you retain operational control.

This arrangement does not mean profits must be split equally—modern investor-rights contracts allow you to retain full economic benefit of the business.

A local sponsorship agreement is therefore both a legal requirement and a protective mechanism that ensures your company complies with UAE regulations while allowing you to focus on growth.

Who Can Be a Local Sponsor for Your Business?

There are three recognized categories of local sponsors in Dubai.

Roles & Responsibilities of a Local Sponsor

A qualified local sponsor does much more than appear on your trade license. Key responsibilities include.

Legal Representation

Sponsors hold the mandatory 51 % shares and sign license applications, court agreements and other official documents.

Government Liasion

They represent your company in government departments, ensuring your licenses and permits remain current.

Visa & Immigration Support

Sponsors can obtain or cancel work visas for employees and act as the point of contact for labour authorities.

Financial & Legal Guarantees

Depending on your agreement, the sponsor may provide financial guarantees, assist in clearing debts and ensure the business complies with local laws.

Non-Interference in Operations

Professional sponsors typically do not engage in the business’s daily management, allowing you full control.

Facilitating Network & Market Access

A well-connected sponsor can introduce you to key industry players and offer insights to grow your business.

A strong contractual agreement should clearly define these responsibilities and protect your interests.

Advantages of Having a Local Sponsor

Partnering with a reliable sponsor offers numerous benefits beyond legal compliance.

Full Market Access & Credibility
Only mainland companies with a local sponsor can trade directly within the UAE market; the partnership improves your brand’s authenticity and local credibility.
Streamlined Administration
Sponsors handle paperwork such as license renewals, translations and government approvals, saving you time and reducing the risk of errors.
Operational Control
Well-drafted investor-rights agreements grant you complete management rights, ensuring the sponsor has no role in daily operations.

Legal & Financial Protection
Corporate sponsors often provide professionally drafted contracts and assume liability if the business defaults on debts, safeguarding both parties.
Strategic Partnerships
A respected sponsor can open doors to government projects, supply chain opportunities and strategic alliances.
Cost-Effective Marketing & Brand Awareness
Their reputation can boost your company’s profile, build customer trust and facilitate local marketing.

How DSA Helps

Dubai Setup Advisors (DSA) simplifies every step of your UAE business formation journey from initial planning to long-term operational support. We’re not just consultants; we’re your on-ground execution partners with deep expertise in UAE legal, regulatory, and commercial frameworks.

Business Planning & Jurisdiction Comparison

Trade Name Reservation & Licensing Approvals

Legal Documentation, Drafting & Translation

Workspace & Tenancy Solutions

Bank Account Opening & Compliance Setup

Visa & Immigration Processing

PRO & Legal Documentation Services

Post-Incorporation Support & Growth Enablement

Why Choose Us?

At Dubai Setup Advisors (DSA), we go beyond basic company registration. We provide strategic guidance, legal clarity, and operational support tailored for global entrepreneurs and investors entering the UAE market. Here’s why clients from over 30 countries trust us to build their presence in the Emirates.

Extensive Experience

End-to-End Service

Transparent Pricing

Global Perspective

Personalized Approach

Comprehensive Network

Frequently Asked Questions (FAQs)

Yes. UAE law requires that mainland LLCs have a local partner or corporate sponsor owning at least 51 % of shares. Free zone companies can be 100 % foreign-owned, but they cannot trade directly within the mainland.

A local sponsor holds 51 % of the shares and is named on your trade license. An LSA acts as your representative for professional licenses; they do not take any equity and are paid a service fee.

Absolutely. Investor-rights contracts allow the foreign shareholder to retain all profits and management authority while the Emirati sponsor fulfils the statutory ownership requirement. The sponsor does not interfere in daily operations.

Sponsors typically handle legal formalities signing applications, acting as your liaison with government bodies, securing employee visas and helping close or open bank accounts. They do not manage staff or run the business.

Fees vary by business type and sponsor involvement. Market rates generally range from AED 8,000 to AED 15,000 per year. Our advisors help negotiate fair terms and ensure transparency.

Verify that the sponsor is a UAE resident with good reputation and relevant industry connections. Check their background, language ability, and ensure your objectives align. It is wise to have legal counsel review the sponsorship contract.

Not necessarily. While the sponsor holds 51 % of the equity on paper, the profit-sharing arrangement is defined in your investor-rights contract. Many sponsors accept a fixed annual fee instead of a profit share.

Yes. If your current sponsor becomes unresponsive or your business needs change, you can amend your Memorandum of Association, update your trade license and appoint a new sponsor. Our team can manage this transition smoothly.

Mainland activities such as retail, general trading, contracting, real estate, manufacturing, logistics, textiles, electronics and media require a local sponsor. Free zone activities are exempt but cannot directly service the mainland market.

The sponsor’s liability depends on the contract. Corporate sponsors may provide financial guarantees and can be held liable in case of default, whereas local service agents typically have limited liability. Always define responsibilities clearly in your agreement.