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When setting up a mainland license in Dubai having a local sponsor is a mandatory formality.
The local sponsor would need to be an Emirati (UAE National) with a valid UAE passport, Emirates ID, and family book (Khulasat-al-qaid). The sponsor is referred to, depending on the type of sponsorship needed by the business, as either a local sponsor, a local service agent, or a nominal partner (sleeping partner) in the case of LLCs.
Having a local sponsor is mandatory, so choosing the right sponsor for your business may be a daunting task especially if you are new to the country. The local sponsor does not normally interfere in a company's operations and in many cases, depending on the arrangement, does not interact with the actual business they sponsor. They usually just take their sponsorship fees and businesses deal with them through their appointed agents or lawyers. The executive and operational powers are vested with the managing director/manager/owners of the business. The local sponsor has the power to sign documents regarding immigration and labor-related affairs of the business and this, in many cases, can be done through an agent with a power of attorney from the local sponsor.
Sole establishments and civil businesses (single owner of a partnership) with foreign investment require a local service agent to be appointed in order to comply with the regulations. Such agents do not have any stake in the business nor are they involved in the company's activities and are given a lump sum fee annually as a sponsorship fee
According to UAE Customary law, a minimum of 51 percent local equity is a must to set up a business with limited liability in a mainland non-offshore business in a non-free zone. While foreign ownership in such a business not exceeding 49 percent cent, the concerned parties will consent on the income allocation from it.
Comprehensive operating powers can be bestowed to the foreign partner(s) or a third party by means of a memorandum of association. The UAE nationals or companies wholly owned by UAE nationals may be considered nominee partners and paid a lump sum per year as a sponsorship fee.