Do You Really Need a Local Sponsor to Start a Business in the UAE?

 

UAE Business Setup Consultants

Starting a business in the UAE can be exciting, but many people are unsure whether they need a local sponsor or not. Let’s clear that up.

What is a Local Sponsor in the UAE?

A local sponsor is a UAE national who used to be required for starting a business in the mainland. They often held 51% of the company, while the foreign investor had 49%. But now, the rules have changed for many businesses.

Do All Businesses in the UAE Need a Local Sponsor?

Not anymore. Thanks to recent updates in UAE laws, not all businesses need a local sponsor. It depends on your business type and where you open your company.

Here’s a quick breakdown:

  • Free Zones – No local sponsor needed. You can own the company fully.

  • Mainland – Some activities still need a sponsor, but many don’t anymore.

  • Offshore – No sponsor required for offshore companies.

What Changed in the UAE Business Law?

The UAE government wants to attract more foreign investors, so they’ve made changes:

  • You can now own 100% of many types of mainland businesses.

  • The list of activities allowed for full ownership keeps growing.

  • This makes it easier and safer for foreigners to do business.

If you’re unsure about your activity, you can always consult with UAE Business Setup Consultants who know the latest updates.

How to Start a Business Without a Sponsor

You have a few options:

  1. Go for a Free Zone
    There are many free zones in Dubai and other emirates that give you full control.

  2. Pick the Right Business Activity
    Check if your service (like IT or marketing) qualifies for 100% ownership.

  3. Get a Professional License
    This lets you run a service-based business as a full owner, with only a local service agent (no shareholding).

Why Do Some Entrepreneurs Still Use Sponsors?

Even with the new laws, some business owners still choose to have sponsors. Here’s why:

  • Their business activity still needs one (like trading or logistics)

  • They want to access government contracts

  • They prefer having local connections for market entry

Tips for Choosing a Local Sponsor (If Needed)

If your business still requires a sponsor:

  • Make sure the sponsor is trustworthy

  • Sign a clear agreement to protect your business

  • Work with a licensed consultancy to handle everything legally

FAQs About Local Sponsors in the UAE

Do free zone companies need a sponsor?

No. You get 100% ownership in any UAE free zone.

Can I fully own a mainland business?

Yes, for many activities. But it’s best to double-check with experts.

What is a local service agent?

It’s a UAE national who helps with government-related tasks but doesn’t own shares in your company.

Who can help me with business setup in the UAE?

UAE Business Setup Consultants can guide you through legal steps and give you the right options.

Summary

The UAE business sponsor requirement depends on your company type, location, and activity. Many business owners today are choosing options that allow 100% ownership, especially through free zones.

If you're unsure which path to take, talk to a setup expert who can guide you clearly and legally.

Location: Dubai - United Arab Emirates

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