Role and Requirements of Local Sponsorship for Mainland Company Formation in Dubai

Role and Requirements of Local Sponsorship for Mainland Company Formation in Dubai

Dubai is a global business hub due to its strategic location, government policies, diverse business prospects, and facilities. Foreign companies set up companies here and enjoy tax benefits and business expansion.

Local sponsorship can be mandatory for mainland company formation in Dubai. It helps in sustenance, and there are many benefits of having a local sponsor for any foreign company planning to set up business on the mainland. The local sponsor usually holds 51% of the share, and foreign companies hold 49%.

Securing local sponsorship plays a pivotal role in establishing and operating mainland businesses. The local sponsor helps the overseas company with trade licenses, employee visas, and other required legal paperwork.

811 Accountancy provides consultancy services for company setup and maintaining your successful UAE business. Our services also include local sponsorship services and help you to ensure legal compliance. The essential requirements of local sponsorship are:

The Role of Local Sponsorship

When a foreign investor partners with a UAE national or a company owned by UAE citizens to establish a company on Dubai’s mainland, it is called local sponsorship. The local sponsor acts as an intermediary between the foreign investor and the regional administration to help in various administrative processes and ensure compliance with laws and regulations.

The role of a local sponsor in the UAE can extend beyond sharing company shares. They are also responsible for managing the cancellation of labor status for employees, closing bank accounts,

signing contracts, etc. They also assist with license renewals and translations in Arabic and address any outstanding debts, if applicable.

Requirements for Local Sponsorship

Eligibility: The business sponsor must be a UAE national holding a family membership card or a company wholly owned by UAE/GCC citizens. Certain activities may require specific qualifications or licenses for the sponsor.

Legal Documentation: A sponsorship agreement is entered between the two parties. The deal outlines partnership terms, including roles, responsibilities, and profit sharing. Legal experts usually draft the contract and need knowledge of the legalities involved.

Financial Arrangements: The financial arrangements between the parties mentioned in the sponsorship agreement should be clearly understood to maintain a mutually beneficial partnership in the business setup.

Local Compliance: The local sponsor has to ensure the company follows all laws and regulations in Dubai. It includes obtaining necessary permits, licenses, and approvals, as well as adhering to corporate governance standards set by local authorities.


Foreign investors who want to set up a mainland company in Dubai should understand the local rules and the importance of local sponsorship. Local sponsorship helps foreigners to enter the local market and navigate local legal requirements.

By meeting all local sponsorship requirements, foreign investors can establish and run successful businesses in Dubai’s dynamic and thriving economy. They can seek help from reputed business setup companies for smooth documentation, financing options, and local compliance. Local sponsorship can also help foreigners get acquainted with local culture and the business environment.