Starting business or Company formation in UAE comes under different rules and regulations. The UAE business setup can be divided into two categories:
- The UAE Mainland Company
- Free Zone Company Formation
Starting a company in UAE and operating a business in the UAE Mainland area requires a local sponsor compulsorily. When a foreign investor setups a business in UAE, the UAE legislation states that a local sponsor be appointed for representative dealings with the ministries and the government for getting the various paperwork process.
A local sponsor is an Emirati or a UAE national, who acts as your service agent for your business in the UAE and he usually acts as a sleeping partner of your company.
Being a mandatory requirement, it’s a real, inevitable challenge for foreign investors to find the right local sponsor in UAE, appropriate for their line of business.
Usually the local service agent has no particular role or interest in the business but is appointed for the sole purpose of liaising with the government departments and authorities to obtain labor and immigration approvals, visas and complete other necessary paperwork for the company. The local service agent is to be paid an annual fee for his services.