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What Type of Sponsorship Options do I have for an LLC in the UAE?
Corporate sponsorship*: This is the preferred choice of local sponsorship within the UAE. A UAE national company (Local Sponsor) holds a 51% share and obligations of an organization and the remaining 49% is owned by an individual or group of foreign investors. In this type of sponsorship, the business is sponsored by a company, rather than an individual.
Individual Sponsorship*: Individual sponsorship is a more common type of local sponsorship in Dubai. A UAE national (Local Sponsor) in his/her individual capacity becomes your sponsor and holds a 51% share and liability of the company. Whilst the Emirati sponsor is the main shareholder of the company, he/she can hand over the Power of Attorney (POA) to the foreign partner in return for a fixed annual fee. *Depending on entity type
Corporate Nominee vs Individual Sponsor
When setting up a local company as per the UAE Companies Law and UAE Civil Law, the expatriate shareholders are required to nominate a Local Service Agent or a Local Partner (Sponsor), who must hold the majority share of 51%, when establishing a company.
Individual Sponsor / Local Partner
Multiple Signatories – PPG are always available to attend signings when required
Single Signatory – This can cause significant issues and delays if/when the individual leaves the country or is unavailable for signature
Succession Protection – In the case of a death or incapacity of one of the PPG local shareholders the Company or Branch that PPG sponsor will not be affected
In case of the death of the Individual Sponsor then Sharia law comes into play and all company files and licences can be frozen whilst probate is undertaken. The heirs will split the assets and new contracts and agreements will be required. The company will be unable to do business during this time and this can lead to massive disruption
Side Agreements – The agreements are with a Corporate Entity (PPG) not an individual and therefore have a stronger basis in Companies Law. They are legally binding providing full protections to the foreign party
With an individual Local Shareholder or Sponsor, the side agreements are seen as less robust – powers of attorney can be revoked by the sponsor unilaterally and in case of a dispute, the Sharia Courts will have final decision which can often fall in favour of the Local Sponsor
Number of Sponsorship Control
Controlled number of clients – PPG limits the number of companies that we partner with in any one Corporate entity which reduces cross partner risk and safeguards clients day-to-day activities. In addition PPG maintain a level of oversight to ensure that there are no labour blocks or issues that might affect other partnered clients
Uncontrolled number of company sponsorships – Often individual local partners / sponsors will partner will many ‘unknown’ other companies with no oversight. If there are any issues with any of these other companies, it can cause the client company significant issues, such as labour blocks, court cases, delays and fines
PPG is physically located in all Emirates, with a team of over 35 Operations and PRO staff and multiples e-cards and signatories – PPG are always available to assist the client and staff with signatures, PRO services and support
An Individual Sponsor may have to travel from/to different Emirates, or his/her e-signature card may be being used in multiple locations by multiple unconnected companies and PROs causing time delays and further problems
PPG has a full range of Emiratis with the required family books and with no conflict or PEP status. This allows us to offer a multitude of solutions for different activities, locations and approvals – e.g. ADNOC/SPC approval, Dubai Municipality Approvals, Insurance, Recruitment, RERA etc
If an individual sponsor is from another Emirate it could limit the companies on what they can achieve in certain instances. Certain activities require local partner exclusivity and external approvals that the individual may not be able to obtain
90 day exit / sale / transfer clause with no penalty. PPG provide the client with a clear exit plan and ensure the foreign party has 100% control of IP, Brand and Profit & Loss, thus allowing the foreign client to build a business which they fully own and control
With an individual in practice there is no exit clause that can be enforced and this presents a significant risk to the foreign party in the event of a sale of the business (for example). It is much more difficult to fully secure 100% control and ownership
** Municipality approvals are required for certain activities. This will limit the use of Corporate Nominees as the sponsor on some occasions.
How can PRO Partner Group help with company sponsorship?
PRO Partner Group have vast experience in offering the Local Partner service as a ‘Corporate Nominee Partner or entity’ rather than an individual UAE national. We add a layer of security to the client by limiting the number of clients under the company name, the shareholding of the 51% falls under one of many entities of the PRO Partner Group rather than an individual. It is extremely beneficial to choose a Corporate Nominee rather than an individual due to many reasons. With the initial set up, PRO Partner Group provide a structured Board Resolution and a Power of Attorney, so that the Foreign Investor has full legal rights over operations, provide full profit share and complete AGM voting rights.