It is widely known that companies registered under the Limited Liability Company (LLC) Structure in Mainland Dubai will always require an Emirati Local Sponsor who will hold 51% of the shares of the company.
However, this is not always the case. It is important to understand that what is normally done may not always be the most effective strategy for your business.
Company Sponsorship consists of two types:
1. Individual Sponsorship:
Individual Sponsorship pertains to having a UAE Local Emirati Sponsor who will hold 51% shareholding rights in the company.
2. Corporate Sponsorship
Corporate Sponsorship means having a legal corporate entity hold 51% shareholding rights in the company.
But which is better? Find Out below how each sponsorship affects the important aspects of your business.
1- Legal Protection on Side Agreement
Local Sponsor UAE NATIONAL:
The risk lies wherein due to any misunderstanding, a UAE National can exercise his 51% rights as a shareholder of the company, or when any type of dispute may happen, and the possibility that courts may favour the UAE Sponsor is there.
Corporate Sponsor(Adam Consulting):
With a Corporate Sponsorship, the risk of disputes is minimized as the foreign national will be dealing with a professional representative who understands the legal and ethical boundaries of business.
2- Control & Involvement
Local Sponsor UAE NATIONAL
Locals may have an uncontrolled number of sponsorships being managed by different agents which can make the company a casualty of labour block issues.
Corporate Sponsor(Adam Global):
Corporate Sponsors will provide 100% Control to the Foreign Shareholder and ensure Independence from other companies hence untoward incidents like labour blocks will be avoided.
3- Succession Plans in the case of Death of Emirati Sponsor
Local Sponsor UAE NATIONAL
The death of an individual typically results in the freezing of his/her assets and bank account. This risk would impose itself aside from the expenses incurred and time required to proceed with the change of shareholders to the heirs of the deceased individual.
Corporate Sponsor(Adam Global):
A company is an entity that usually has no risks of ceasing operations. Having a corporate sponsor also excludes you from the possibility of freezing assets and accounts associated with the deceased individual.
4- Signatory & Their Availability
Local Sponsor UAE NATIONAL
There is only a Single Signatory. Because of this, there have been many instances where the processes can get delayed as the UAE National’s availability has to be considered.
Corporate Sponsor(Adam Global):
A corporate sponsor can have multiple signatories who can sign the documents on behalf of the company. As these signatories are based in Dubai and always in office, then their availability is not an issue thus eliminating any risk of delay.
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