Finding the ideal local sponsor in the UAE can be crucial to your business success in Dubai’s dynamic commercial environment. The importance of this strategic alliance cannot be overstated. 

To make informed decisions, you must effectively navigate local sponsorship requirements. Whether you’re an established enterprise or a new entrepreneur, understanding sponsorship mechanics is essential for compliance and operational success.

This guide explores Dubai’s local sponsorship landscape, beginning with definitions of sponsor roles and progressing through practical implementation strategies. We clarify distinctions between individual/corporate sponsorships and explain local service agent partnerships. 

So, continue reading further to learn more. 

What is a Local Sponsor in Dubai?

In UAE commercial law, local sponsors (also called nominee shareholders or local service agents) facilitate foreign-owned businesses through mandatory partnerships. For limited liability companies, Federal Law No. 32/2021 requires collaboration with Emirati partners holding 51% shares.

Crucially, this majority stake doesn’t mandate profit-sharing or operational involvement. Sponsors act as silent partners while foreign investors retain full management control through legally binding side agreements.

Types of Local Sponsorship

Foreign entrepreneurs establishing mainland businesses without 100% ownership eligibility must secure sponsorship. Three primary options exist:

1. Corporate Local Sponsor

Registered UAE entities (including government-affiliated organizations) may sponsor foreign businesses. These corporate partners assume 51% shareholding and statutory liabilities while remaining uninvolved in daily operations.

2. Individual Local Sponsor

Emirati citizens not actively engaged in commerce can serve as sponsors. Through notarized power of attorney arrangements, foreign partners maintain full operational control in exchange for fixed sponsorship fees.

3. Local Service Agent Sponsorship

Required for professional licenses (medical, engineering, artistic), these sponsors provide regulatory compliance oversight without equity participation. Annual fixed fees typically apply.

How to Find the Right Local Sponsor for Your Business

1. Strategic Research Methods

• Digital Discovery: Leverage Dubai Chamber’s business directory and LinkedIn
• Industry Engagement: Participate in relevant trade associations like DMCC
• Local Publications: Consult Gulf News’ business listings and MEED Insights
• Referral Networks: Tap into expat entrepreneur communities through groups like InterNations

2. Networking in Dubai’s Commercial Ecosystem

• Attend major expos: GITEX Global, Arab Health, Gulfood
• Join business councils: British Business Group, French Business Council
• Engage through platforms: Dubai Business Events, Dubai Startup Hub

3. Professional Consultancy Advantages

• Regulatory Navigation: Experts interpret evolving commercial laws
• Sponsor Vetting: Comprehensive due diligence services
• Contract Optimization: Tailored MOA drafting and negotiation support

Steps to Change a Local Sponsor in Dubai

Once you have a corporate, individual, or local service agent as a sponsor, your business can usually move on without any problems. 

What can you do if you’re unhappy with your current arrangement or if your local sponsor stops responding? How about switching your sponsor entirely?

If you wish to change to a different sponsor from your existing one, you must follow these steps:

1. Recognizing Transition Triggers

• Non-compliance with service level agreements
• Reputational risks from sponsor misconduct
• Strategic misalignment in growth objectives
• Unresponsive communication exceeding 30 days

2. Structured Transition Process

• Conduct competitive sponsor analysis
• Negotiate exit clauses per UAE Commercial Companies Law
• File DED notification through tasheel service centers
• Execute dual-signed termination affidavits
• Register new sponsorship via Dubai Trade Portal

3. Legal Imperatives

• Validate existing contract sunset clauses
• Notify immigration authorities regarding employee visas
• Update Chamber of Commerce membership details
• Re-register with economic free zones if applicable

Benefits of Partnering with a Local Sponsor

For companies in the United Arab Emirates, there are several benefits to working with a local sponsor rather than an individual one. These benefits include:

1. Managing the Important Stuff

The local sponsor of your business would be responsible for more than just holding a 51 percent investment in the company. 

They also help with things like closing bank accounts, paying off debts (if any), renewing licenses, translating documents (in Arabic), signing contracts and government applications on behalf of foreign business owners, renewing or canceling visas, and making recommendations to help you expand your company in the United Arab Emirates.

2. No Business Interference

Even if the local sponsor owns a somewhat higher percentage of the company shares, entrepreneurs can still have complete control over their enterprise while benefiting from the advantages of a corporate sponsor.  

Business owners have total control over managing their staff, clients, and services because the corporate local sponsor usually doesn’t get involved in day-to-day operations.

3. Protection for Your Business

Local sponsorship can help with side agreements, which can be challenging to manage. Some local sponsors offer carefully crafted agreements drafted by knowledgeable attorneys, guaranteeing the protection of the company’s owner and shareholders’ interests. 

The local sponsor will be responsible if the sponsored business defaults on any debts or promises.

4. A Simplified Incorporation Process

Working with a local sponsor who is knowledgeable about the specifics of establishing a company in Dubai can help you start your company smoothly.  

JSB Incorporation, the leading business setup experts in Dubai and the UAE, do all the necessary tasks to get your firm up and running. Over time, we save you time and money by managing the entire interaction process with the numerous government authorities.

Cost for Sponsorship-Related Services in Dubai (2025)

Get a Local Sponsor in the UAE Today

One of the most essential parts of starting a business in the United Arab Emirates is local sponsorship. You can make sure that your business is compliant and that experts handle all the crucial procedures once you’ve selected the right sponsor.

Contact JSB Incorporation to learn more about local sponsors in the UAE and how we prioritize your rights as an investor.

Book your free consultation call today with the experts of JSB Incorporation to get started.