The law in UAE mandates that a local sponsor must be involved in the business setup of a limited liability company (LLC) in the mainland. Many companies belonging to the trading and commercial business category requires local sponsors. In UAE, businesses such as general trading, contracting, real estate, advertising, technical services, industrial and manufacturing licenses, textiles, cosmetics and perfumes, electronics, cleaning equipment, petroleum products, and jewelry need local sponsorship. The sponsor can be an Emirati national, or a corporate entity owned by Emirati nationals. They do not involve in the day-today operations of the company and their services are paid annually in lumpsum. Local sponsors hold 51% of shares and liabilities of the company while the foreign partners hold 49%.Working with local sponsors provides several benefits including gaining access to local expertise, and representative dealings with the government departments.Types of SponsorshipsOperating a company in Dubai Free zones won’t require a local sponsor and offers 100% ownership to the foreign investors. However foreign investors who intend to operate in Mainland UAE are required to have either a local Emirati sponsor or a local service agent.The local sponsor could be a corporate, individual or a local service agent.Individual Sponsors are Emirati nationals who can provide sponsorships to foreign nationals within their capacity. These sponsors will hold the 51% shares and liability of the company, but they can transfer the power of attorney to their foreign partners in the exchange of the decided fees which they will charge for their services. It is not necessary for these local sponsors to do the investment in the business because they charge the fees of the services which they provide in form of taking responsibility of foreign investors.Corporate Sponsors are UAE-owned companies and will hold 51% shares and liabilities of the business. They operate just like the individual sponsors and can be any local or government authority. These authorities can have different fee structures depending upon business factors.Local Service Agents are the representatives of professionals like Doctors, Engineers, and Artisans etc. Local agents do not hold any shares or liabilities in the business and will merely act as representatives of the company. They charge pre-approved fees from the professionals in return for their service.Finding a reliable sponsor is crucial to setting up the business. Our experts at YABS have years of local expertise and connections with local nationals. We can secure the right partner for your business and deal with the legal paperwork’s through our PRO team.