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Who or What is a Sponsor? E-mail

When setting up or incorporating a company in the UAE, by law, you are required to appoint a Sponsor for your company. A Sponsor can either be a person who is a UAE Citizen or a Sponsor can be a company incorporated in the UAE as long as the company is 100% owned by a UAE Citizen or UAE Citizens.

The role, rights and privileges of the Sponsor can change depending on the type of company you wish to incorporate. For example, if you are to incorporate a company in Dubai to engage in Commercial Activities, the company should have a Sponsor who owns a minimum 51% share of your company. On the other hand, if you wish to incorporate a company in Dubai to engage in Professional Activities, your Sponsor will not own any share of your company. Instead, the Sponsor takes on the role of a "National Service Agent." A National Service Agent's role is to interact with the UAE government for incorporation, registration, visa and work permit related issues on behalf of the company.

Ultimately, the Sponsor in UAE law has quite a lot of power over your company. Therefore you will have to choose your sponsor wisely and put into place legal agreements that protect your investment. There are many issues regarding a Sponsor that a newcomer to the United Arab Emirates will fail to consider. For example;

  • You may find yourself a very reliable and trustworthy Sponsor who will not interfere in your business. But what happens if the Sponsor were to pass-away suddenly? His shares will pass onto his legal heirs as per Islamic Sharia Law. You will suddenly be faced with the prospect of dealing with one or more of your Sponsor's legal heirs who may not be as accomodating to you or as trustworthy as your previous sponsor.
  • Your Sponsor may be faced with bankruptcy. The shares that your Sponsor holds in your company may come up as settlement for your Sponsor's debt.
  • If your company is very successful, you may find that the Sponsor may become interested in forcing you out of the company - after all he does own the majority of the shares.
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