How to Change a Local Sponsor in Dubai
Once one of the main prerequisites for doing business in the UAE, local sponsors were, and still are to a large extent, a major part of the business landscape. But what happens when you are no longer satisfied with your current agreement? What's the solution if your local sponsor isn't as responsive as they used to be?
This articles describes local sponsorship in Dubai, detailing how to change a local sponsor if required.
What is a Local Sponsor?
A local sponsor is an Emirati citizen/national or a corporate entity that enables a foreign investor to start a mainland company in the UAE. This is through them being a 51% shareholder within the LLC they invest in, as prescribed by the law. However, for many businesses, 100% foreign ownership is now possible.
Some local sponsors are active partners in the business, while others are not real partners and simply provide on paper partnership as a service for an annual fee.
For more information on this difference, click here: https://www.propartnergroup.com/faq/difference-between-a-local-partner-and-a-local-service-agent/
What is a Local Sponsor's Responsibility?
Local partners are usually given the option of a set annual fee or percentage of the company’s profits. In return, they are expected to provide signatures on contracts, and process government and business regulation formalities. The latter can include closing bank accounts, terminating employee work visas, and settling outstanding debts.
How to change a Local Sponsor in Dubai
To change your local sponsor in Dubai, you must amend your Memorandum of Association (MOA) and trade licenses to reflect the new change in ownership and shares. For this to occur, a board resolution from existing shareholders agreeing to this change must be acquired.
After, the new MOA must be registered at the Dubai Economic Department (DED), with subsequent fees paid.
What to do if there is conflict with your Local Sponsor
When there is a conflict with your local sponsor, it's always wise to try and calmly talk the matter through before taking legal action. However, if the conflict is unresolvable, the matter can be settled in a court of law. To do so, the following documents are required:
- The MOA from the disputed agreement.
- The power of attorney from the disputed contract.
- Receipts of annual sponsorship fees paid.
- Other documents depending on your situation.
Be sure to have your new sponsor ready for this stage, as if things progress well, a new agreement and MOA will be in order.
How can PRO Partner Group help?
It's always better to rely on a corporate sponsor instead of an individual. A professional corporate sponsor like PRO Partner Group exists solely to serve your local sponsorship needs, providing support and assistance while ensuring the foreign party retains full security and control of the local business.
If you need guidance on changing a local sponsor in Dubai, obtaining a corporate sponsor, or or any other related company setup, restructuring, local partner or PRO support matter in Qatar, Abu Dhabi, Dubai, the wider UAE or Oman, then please do get in touch with us on +971 (0)4 456 1761 for Dubai or +971 (0)2 448 5120 for Abu Dhabi, email us at email@example.com or complete the contact form below and we will be delighted to assist you.