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Any foreign entrepreneur who wants to set up a business in the UAE mainland (not free zone) is required to have a local sponsor who will hold about 51% shares of the company.
The local sponsor can either be an individual or a company. This is an important prerequisite for you to obtain a trade license and other requirements.
The local sponsor will not interfere in any of the financial matters, decision making or daily business activities related to the company. He will only assist the entrepreneur in any government-related transactions such as getting trade licenses, permits, and labour cards and visas as his signature is needed in almost all legal forms.
Any sponsorship documentation should be formally made with a written and notarised legal agreement. In this agreement, the local sponsor is generally paid a yearly sponsorship fee for giving a helping hand in all business administration.
Never proceed with your business sponsorship until a mutual understanding is drawn up and both sides have understood what to expect from each other.
It is always advisable to choose a sponsor with a vast network in the business sector to give your company an edge over your competition.
• Foreign ventures need a sponsor to set up in UAE
• Local sponsors are paid a yearly sponsorship fee
• They assist the firm in government-related tasks
Source: Asha Das, Special to Classifieds
The writer is a freelancer