Dubai is a land of golden opportunities. They city where business dreams turn into reality. That’s why it is called a global hub for entrepreneurs. If you’re a foreign investor and want to start a business in the Dubai Mainland, there’s one essential step you must take. You guessed that right! Partnering with a local sponsor is the first stepping stone.
Don’t let the idea overwhelm you. We’ve written this guide to dive deep into every little detail. You’ll get insights on what a local sponsor means, why you need one, how to get a sponsor in Dubai, and what costs to expect. All in simple, clear language with Al Buraq!
Why Do You Need a Local Sponsor in Dubai?
About to set up a company in the Dubai Mainland? The UAE law requires foreign investors to have a UAE national sponsor who holds 51% of the company shares. This rule exists to support local participation in the economy.
But here’s the good news: you can still keep full control over your business operations and profits through the right legal agreements.
When Do You Need a Local Sponsor?
You’ll need a sponsor if your business falls under these categories:
- Trading and retail businesses (buying/selling goods)
- Manufacturing and industrial operations
- Mainland services that aren’t part of free zones
You won’t need a sponsor if you’re setting up in a free zone where 100% foreign ownership is allowed. Don’t require a sponsor if you’re a consultant, doctor, or legal advisor. You only need a local service agent. Similarly, if you fall under the UAE’s FDI law, which allows full ownership in specific sectors
Meet the Sponsor: Who They Are & What They Do
Types of Local Sponsorship in Dubai
| Type | Description | Ownership | Best For |
| Individual Sponsor | A UAE citizen (Emirati) acts as a sponsor | 51% (on paper) | Small to medium businesses |
| Corporate Sponsor | A UAE-owned company sponsors you | 51% (contractually agreed) | Larger businesses, long-term ventures |
| Local Service Agent | A UAE national handles admin work only | 0% | Professionals like doctors, engineers, and consultants |
Let’s dive into each type a bit more.
1. Individual Sponsor (Emirati Citizen)
An individual sponsor is a UAE national who legally owns 51% of your company on paper. You still control the business with a side agreement.
It is a common choice for general trading and retail businesses. Individual sponsorship often comes with a fixed yearly fee. Sponsors in Dubai usually stay out of daily operations
However, it is must to sign a clear agreement to secure your rights. Individual sponsorship is better for small and medium businesses
2. Corporate Sponsor (UAE Company)
Instead of an individual, you partner with a UAE-owned company. These sponsors offer more professional and secure arrangements. The corporate sponsorship comes with clear contracts and legal protection. This reduces the risk of disputes or interference. Ideal for large corporations and industries.
This type of sponsorship has a more stable partnership. It has easier legal procedures and a predictable fee structure.
3. Local Service Agent (For Professionals Only)
If you’re setting up a consultancy, medical practice, or other professional service, you don’t need a full sponsor. You just need a local service agent. No ownership is given to the agent, and you have to pay a small yearly fee. The agent helps with licensing and government paperwork. It is best for consultants, doctors, engineers, and lawyers.
What to Look for in a Good Sponsor
Finding the right sponsor can make or break your business journey. Here’s what to check before you commit.
Do a Background Check
It is a compulsory step. Firstly, confirm if they’re a UAE citizen or not. Check for legal disputes or financial issues. See if they’ve sponsored other businesses
Ask the Right Questions
- Are they familiar with your industry?
- Will they sign a side agreement to give you full control?
- Do they prefer a fixed fee or profit sharing?
- Can they provide business references?
Red Flags to Avoid
There are major red flags that don’t need to be ignored. If the other party refuses to sign a legal agreement, it means there’s something fishy. Check on deals that sound “too good to be true”. Sometimes, unclear terms or hidden fees are attached. You must keep an eye on them. Don’t blindly go for someone with no experience in business sponsorships.
What Will It Cost?
Sponsorship costs vary depending on the type of sponsor, your industry, and how the deal is structured.
Local Sponsor Cost Breakdown
| Sponsorship Type | Estimated Cost (AED/year) | Fee Structure |
| Individual Sponsor | 45,000 – 50,000 | Fixed annual fee |
| Corporate Sponsor | 30,000 – 100,000 | Negotiated contract |
| Local Service Agent | 8,000 – 10,000 | Fixed fee, no ownership |
Fixed Fee vs. Profit Sharing: Which is Better?
Choosing the right payment model is important for peace of mind.
Fixed-Fee Sponsorship
In a fixed-fee sponsorship, you pay a set amount yearly. You have full control of profits and decisions. This model is most preferred by experts.
Profit-Sharing Sponsorship
The profit-sharing sponsorship involves a sponsor who takes a percentage of profits. It can lead to disputes and complications. This model is less predictable, not ideal for startups
Legal Agreements: Protect Your Rights
Once you’ve found the right sponsor, draft a legal agreement to protect your business.
What to Include in the Contract:
The contract must include the confirmation that you keep 100% of the profits. The sponsor has no control over business operations. Add fixed fee terms and payment details. An exit clause in case you want to switch sponsors
Always consult a legal expert or business setup company to create a contract that follows UAE laws and protects your interests.
Why Corporate Sponsorship is a Smart Choice
For many businesses, corporate sponsors offer more than just compliance. They offer peace of mind as they are reliable and follow transparent legal procedures. Their assistance reduces the risk of personal disagreements. You can hire them as they are better suited for long-term or high-investment ventures.
How to Get a Sponsor in Dubai
You don’t have to search alone. Work with reputed business setup consultants who already have partnerships with trustworthy sponsors.
What a Consultant Can Do for You:
The right consultant will connect you with verified individual/corporate sponsors. On your behalf, they handle legal paperwork and licensing. They help you choose the right sponsorship model. Their presence assures that your business setup is fast and smooth.
Final Tips Before You Begin
- Don’t rush into a sponsorship deal. Take your time.
- Ask for a clear contract before making any payments.
- Understand your ownership rights and protect them.
- Choose experience and transparency over low-cost offers.
Ready to Launch Your Business in Dubai?
Partnering with the right sponsor is the first step toward building a successful business in Dubai. It is essential if you’re launching a retail store, a trading company, or a consultancy. However, the support of the professional team makes this process much easier. Get in touch with Al Buraq today. We can help you find the perfect sponsor and start your journey stress-free.
Let us handle the complexities so you can focus on growing your dream business.
We’ve tried to shed light on how to get a sponsor in Dubai. If you need more similar information, read our articles here.
FAQs
Q: Can I start a business in Dubai without a local sponsor?
Yes, but only in free zones or if you’re offering professional services (then you’ll need a local service agent instead).
Q: Will I lose control of my company to the sponsor?
You can keep full control over finances and operations with proper agreements.
Q: Is corporate sponsorship safer than individual sponsorship?
Yes. Corporate sponsors offer more structured and secure partnerships.
Q: Can I change sponsors later?
Legal help is essential during the transition if your contract includes an exit clause.
