Change of local Sponsor

12+ Years Experience

Importance of Local Sponsors in Business

Foreign investors are frequently obliged to locate a local sponsor who will hold the majority of the company’s shares when establishing a business in Dubai. In order to obtain a mainland license in Dubai, Abu Dhabi, and other UAE Emirates, this is an essential prerequisite. There is, however, an extremely rare exception to this rule.

Occasionally, events may occur that call for a business to have a new local sponsor. Here is a summary of the things you should consider. additionally, the process for switching Dubai’s local sponsor.

Every business may need a sponsor, and in the United Arab Emirates, the type of sponsorship a company receives will depend on where it was founded. This sponsor could be a big company or a small one. A sponsor is not necessary if the company is based on the designated free zones, but a sponsor is mandatory at times if the business is based on mainland.

For licensing purposes, foreign business owners wishing to open a company in Dubai’s mainland must locate a local sponsor. On the Dubai Mainland, establishing a business requires local sponsorship. There are three ways that local support can be provided. You can use a local service agent, corporate sponsorship, or individual sponsorship to launch a business in Dubai Mainland. The kind of business you’re planning will dictate what kind of support you’ll need.

Who are local sponsors and how important is this part?


UAE-based local sponsor are individuals who holds/ can hold 51% of your business shares in papers.


Local sponsor in UAE is one Emirati national and is not permitted to interfere in the day-to-day business affairs of the company.


Male or female UAE residents over the age of 21 could be a Local sponsor.


It's not necessary for an individual sponsor to have prior business experience in the field of choice. Conversely, the sponsor ought to be a government worker, a business owner, or a professional.


For a fixed agreed annual fee, the local sponsor will transfer to the foreign investor full ownership of the business, including full power of attorney and day-to-day operations.


Instead of going through the local sponsor, all profits are retained under the company's name.


A local sponsor is mandatory for commercial and industrial licenses.

What circumstances emerges the requirement to change a local sponsor?

No aspect of the business operations is impacted by a local sponsor. The director or manager has operational authority, but a local sponsor is required to still sign off on immigration and labor-related matters for the company. But problems do arise frequently. Businesses require local sponsors for a variety of reasons, and occasionally you might find yourself in a position where you have to make changes.

No Direct Communication with the Sponsor

Connecting with local sponsors during emergencies can be challenging for entrepreneurs, as direct communication is often hindered. Typically, resolutions are reached through intermediaries such as PROs, consultants, or legal advisors. However, a lack of direct sponsor information, including location and contact details, can cause business tensions

Limited Rights will Lead to Changing the Local Spons

Not having major rights for the business setups to represent the shares of the sponsor shall be an inconvenience when it comes to major operations. On emerging circumstances where there is a requirement for the sponsor’s presence, this could lead to increase in ongoing costs.

Dispute Resolution

It is always advisable to settle any disputes amicably between you and your present sponsor. On the off chance that things don’t turn out to be, at that point, change your sponsor. But if your present sponsor disagree sponsorship changes in amicable terms, at that point, you might have to seek legal assistance to proceed through the courts.

Lack of Process Clarity

Occasionally, the owner is not given a thorough explanation of the process or the associated costs by the PRO or spokesperson. They might not even provide the required services in a timely manner, let alone the original government receipts. What needs to be done in these situations is to begin switching sponsors or local service agents.

How to initiate the change of local sponsor ?

Talk to Your Present Local Sponsor

Even though it might seem easy, a lot of people overlook the fact that    this is a crucial step in replacing your LLC business’s local sponsor in the Dubai mainland. Everyone will be happier and you can resume running your business more quickly if they approve the change, which will make the entire process much simpler.However, if a disagreement has emerged between you and your sponsor, attempt to work things out before switching sponsors (ideally with the current sponsor’s help). All the parties can work through their issues and come to an agreement with the aid of mediation and even casual conversation.

Gather Important Documents

Foreign investors need to provide the court with a few documents in order for the change of local sponsors to go smoothly. A Memorandum of Association (MoA) between the foreign investors and local sponsors, a power of attorney, and receipts for yearly sponsorship payments are a few examples of these documents.

Present the Court with the Current Sponsor's Documents.

Once your documents are ready and your current sponsor approves the modification, you will meet at the court, where a representative will go over everything you’ve submitted and verify that your current sponsor is on board. Then, new paperwork will be issued for your company to show your new sponsor, such as an updated trade license and a Memo of Agreement.

At Fimkin , we recognize that working without a comfortable sponsor can be unsettling for many business owners. As a result, they now own 51% of the business. You can feel completely at ease knowing that our Corporate Sponsorship service consultancy is accessible for you.

We offer a top-tier corporate representative to serve to find your local sponsor in Sharjah, Abu Dhabi, and Dubai.