Local Sponsor in Dubai

Choosing the right Local Sponsor is one of the most important decisions when setting up a business in Dubai. Whether you’re entering the UAE market as a foreign investor or planning to expand your operations, understanding how a local sponsor functions and how to choose the right one is essential for legal compliance and long-term success.

In this guide, we break down what a local sponsor is, the different types available, the services typically offered, and how business management consultancy firms offer local sponsor services professionally and structured.

A local sponsor in Dubai is a UAE national (Emirati) or a company that holds a 51% share in a business operated by a foreign investor in the mainland jurisdiction. UAE law mandates this arrangement for certain types of companies, particularly those set up outside free zones.

The local sponsor does not typically engage in day-to-day operations or profit-sharing unless otherwise agreed. Their primary role is to fulfill the legal requirement and offer local representation before government authorities.

The UAE’s business framework distinguishes between free zone companies and mainland companies. While free zones offer 100% foreign ownership, companies that want to operate across the UAE mainland must involve a local sponsor. This is particularly relevant for businesses in sectors like:

• Retail
• Construction
• Hospitality
• Manufacturing
• Real estate

Choosing the right sponsor ensures you maintain complete operational control while complying with local laws.

There are three main categories of local sponsorship services in Dubai:

An Emirati individual who acts as a silent partner holding 51% of the shares. They may charge an annual sponsorship fee, and their involvement is usually limited to signing official documents.

A UAE-based company acts as your sponsor. Larger firms often use this option to seek more professional oversight and additional corporate services.

A local service agent is required instead of a shareholder for professional licenses (e.g., consulting, legal, or medical services). They do not hold equity but assist with licensing and government liaison work.

Most local sponsor services in the UAE go beyond just fulfilling the legal requirement. Here’s what’s typically included:

• Legal documentation and PRO services
• Government approvals and permits
• Business licensing
• Assistance with visa processing
• Annual agreement renewals
• Local market insights and business introductions

Many investors prefer to work with business management consultancies that offer local sponsorship services. These firms ensure that:

• Contracts are professionally structured
• There’s complete transparency and legal clarity
• The sponsor relationship is formalized through binding agreements
• Investors retain operational and financial control
• Risk is minimized through trusted intermediaries

These consultancies often have a roster of vetted Emirati sponsors familiar with the legal and administrative aspects of sponsorship.

Choosing a reliable and trustworthy sponsor is crucial. Here’s a checklist to guide your decision:

• Reputation: Ensure the sponsor has a clean legal record and good standing in the community.
• Experience: Sponsors with prior business exposure can provide valuable guidance.
• Transparency: All terms and fees should be documented.
• Legal Protection: Use a detailed sponsorship agreement to outline roles and responsibilities.
• Flexibility: Choose a sponsor willing to sign side agreements that protect your rights and profits.

A local sponsor in Dubai typically charges between AED 10,000 and AED 50,000 annually, depending on the business type, industry, and level of engagement.

A local sponsor in Dubai is more than a regulatory requirement—it can be a valuable ally if chosen wisely. Partnering with a professional sponsor through a business management consultancy ensures that your business remains compliant, protected, and well-positioned for growth.

Whether launching a new venture or expanding an existing one, understanding your options and engaging the right professionals can save you time, money, and legal headaches.