The UAE Companies Law and UAE Civil Law, advise investors to start a company with limited liability in a mainland, with a maximum of 49% investment, whereas the rest of 51% will be done by the local sponsor upon the mutual agreement between parties. That is any non-offshore company in a non-free zone can be formed with a minimum of 51% local equity and 49% foreign equity. Most of the local sponsors in Dubai, act as sleeping partners, and operational powers required for the business will be granted to foreign investors on the memorandum of association. Local sponsor in Dubai need not be a person only, any companies owned wholly by UAE nationals also can become sponsor or nominees for business setup in Dubai. Usually, local sponsors are being paid a lump sum amount per year as their sponsorship fee.

Local sponsor is an inevitable part of any non-free zone company setup in UAE. In the majority of cases, these sponsors will remain as sleeping partners and do not get involved in any of the company’s operations or activities. But they are given certain powers and authority like signing on immigration, labor affairs, etc. But operational powers will be vested with the managing director or manager of the company. In UAE, Emiratis can sponsor any number of companies in this country.

There are two types of local sponsor in Dubai Individual Nominee Sponsorship Here, the local sponsor will be an individual, residing in UAE with a family card. Corporate Nominee Sponsorship Here, the local sponsor will be an entity hold by a local sponsor or group of Emiratis. Corporate nominee sponsors can be partners of limited liability companies only. They cannot sponsor branches of any foreign companies or civil partnerships ventures.