Local sponsorship remains to be one of the key prerequisites for foreign investors while planning company formation in Dubai mainland. It is a mandatory requirement that a local sponsor (UAE national) should hold at least 51% shares in a mainland Limited Liability Company (LLC) and the rest (49%) stays with the foreign investors.
Appointing an individual as a partner may pose some hassle while the expatriate investors pursue to navigate the legalities of business set up in Dubai, but it can be done more efficiently by appointing a company owned by a UAE national as the local sponsor instead of an individual. As opposed to individual sponsorship, foreigners can have more control over ownership while opting for corporate sponsorship in Dubai mainland LLC. The best business setup consultants in Dubai provide corporate sponsorship services with which the entrepreneurs can ease the incorporation process.
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Why Does a Foreign Investor Need Corporate Sponsorship in Dubai?
Setting up a business in Dubai mainland is an entirely different process compared to the free zone and offshore company formation. While the latter two types of business setup in Dubai allow the expatriates to have 100% ownership, a mainland LLC rules mandate the appointment of a local sponsor. In most cases, the local sponsor will be an individual UAE national but the idea of having an unknown person as a partner deter the expatriate businessmen. Businessmen often want zero interference in the decision-making process of their LLC business setup in Dubai and corporate sponsorship appears to be more feasible.
In a corporate sponsorship, the UAE national company will hold 51% of shares and the foreign investor will own 49% shares. The corporate sponsor will receive a set fee or a profits share for the services it renders and the foreign owners can retain full control or ownership based on agreements signed during the LLC company formation in Dubai mainland. By having a strong corporate sponsor, the businessmen can run their company more professionally. The expatriate investors can benefit from the industry experience and local expertise of the corporate company that will make a big difference in the Dubai mainland business setup.
How Does a Corporate Sponsor Scores over an Individual Sponsor?
While forming a company in Dubai mainland with a corporate sponsor, the risk factor is minimal. In contrast to individual sponsorship, corporate sponsorship gives foreigners a clear and structured process right from the go. Security and legal protection are guaranteed while partnering with a UAE national company as the agreements will be reviewed by top legal counsel and the terms will be set right from the first day.
Benefits of Corporate Sponsorship in Dubai Mainland
While steering the process of business setup in Dubai mainland, an expatriate investor is bound to ask for the benefits of corporate sponsorship. The foreign investors can expect the following aspects from a corporate sponsor in Dubai:
1. Minimal Interference & Financial Benefit
A corporate sponsor is a national company and its interference on the daily affairs of the foreigner’s company will be zero. On top of this, the investors can still have full ownership in their company and this let them reap all the monetary benefits. To avail the services of corporate sponsorship, consult with the best business setup consultants in Dubai, UAE.
2. Better Legal Protection Ensured
Foreign investors are always bogged down by the complications of entering a legal agreement with an individual who is stranger to them. In plain view, it may seem to be riddled with potential risk in the future, which calls for the need for a more secure legal binding. Generally, corporate sponsorship agreements are considered to be more secure. Business setup consultants in Dubai ensure that the legal agreements are carefully drafted to secure the interests of the expatriate investors.
3. A More Structured Regime
UAE citizens are known to be avid travellers, especially businessmen. The Emiratis constantly hit the roads for either work or leisure and this often deters the businessmen from going for individual sponsorship. This constant non-availability takes off the sheen from local sponsorship while the corporate sponsorship is more structured. From visas to bank references, the association with a corporate sponsor is more hassle-free and seamless.
4. Eliminate Succession Planning
Early retirement or unexpected death of the UAE individual partner is a pressing worry for the investors. The expatriates often undertake the succession planning route to overcome the risks of such unforeseen events. It is a costly affair that also snatches away the precious hours of the businessmen. While working with a corporate entity, there are no such risks and succession planning is not needed.
5. Protection of Ownership
In extreme cases, an individual local sponsor can turn against the investor and legally interfere in the ownership structure of the company. Article 91 of the Federal Law on Commercial Companies allows sponsors ‘all the rights associated with the description of the partners’. There are cases where the individual partners take full use of this clause and may even claim ownership of the company. To avoid such a risk, the foreign investors often enter into a side contract but a more efficient alternative is to partner with a corporate entity owned by a UAE national. With the help of best business setup consultants in Dubai, the investors can enter into secure legal agreements with a corporate sponsor.
Corporate Sponsorship Services in Dubai, UAE
Corporate Sponsorship services in Dubai let the foreign investors enjoy the full protection of their ownership structure while ensuring the financial benefits as well. Local sponsorship is a mandatory requirement for business setup in Dubai mainland and due to the immense benefits associated with it, the expatriates often prefer corporate sponsorship over individual sponsorship. While partnering with a UAE national company, the investors need not worry about succession planning, legal protection and a structured regime is ensured. However, finding the right partner may appear to be a tedious process but the best business setup consultants in Dubai such as Jitendra Business Consultants (JBC) provides the entrepreneurs with assistance in entering into a legal agreement with a corporate entity.
JBC holds the reputation of being one of the most experienced business setup consultants in Dubai. JBC has a strong team of company formation specialists who possess the legal know-how and experience in dealing with the government authorities. While entering into an agreement with the corporate entities, JBC’s business setup consultants in Dubai ensure that the interests of the investors are adequately protected. JBC handles all the documentation and approval requirements on behalf of the investors and therefore there is no room for errors or delays. Apart from assisting with the process of business setup in Dubai, JBC provides reliable services including trademark registration, Audit & Accounting, PRO services etc. Achieving the business goals is now easier, affordable and quick with availing JBC’s business setup services in Dubai, UAE.
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