Mainland Company Formation in Dubai Without a Local Sponsor?

Prodigy Corporate Services
Jul 19, 2023
4 min read

Are you looking to start a business in Dubai and wondering if you can do it without a local sponsor? In this article, we will explore the possibility of mainland company formation in Dubai without the need for a local sponsor. Whether you are an entrepreneur or an investor, understanding this process can be crucial to your business aspirations in the dynamic city of Dubai.

1 Introduction

2 What is Mainland Company Formation?

3 The Role of a Local Sponsor in Dubai Company Formation

4 Is a Local Sponsor Always Necessary?

5 The Alternative: Corporate Sponsorship

6 Advantages of Mainland Company Formation Without a Sponsor

7 Steps to Establish a Mainland Company Without a Sponsor

8 Legal Structures for Mainland Company Formation

9 Key Points to Consider During the Process

10 Compliance and Regulations

11 Costs Involved

12 Pros and Cons of No Local Sponsor Company Setup

13 Real-Life Success Stories

14 Conclusion

2. What is Mainland Company Formation?

Before delving into the specifics, let's understand what mainland company formation entails. In Dubai, businesses can be set up in different zones, with the mainland being one of them. Mainland companies allow you to conduct business across the UAE without any geographical restrictions, making them highly desirable.

3. The Role of a Local Sponsor in Dubai Company Formation

Traditionally, establishing a mainland company in Dubai required the involvement of a local sponsor, who would hold a 51% share in the company while the foreign investor retained the remaining 49%. The local sponsor's role was to assist with administrative tasks and provide support for obtaining licenses and permits.

4. Is a Local Sponsor Always Necessary?

The good news is that in recent years, the rules have evolved to attract more foreign investment. While a local sponsor is still mandatory in certain sectors, there are exceptions where you can wholly own your company without the need for a local sponsor.

5. The Alternative: Corporate Sponsorship

One way to bypass the requirement of a local sponsor is through corporate sponsorship. In this arrangement, a company, rather than an individual sponsor, holds the 51% share. This offers more control and security to foreign investors, as the terms and responsibilities can be clearly outlined in legal agreements.

6. Advantages of Mainland Company Formation Without a Sponsor

Opting for mainland company formation without a local sponsor comes with several advantages. Firstly, you have complete ownership and control of your business, allowing you to make independent decisions without any external influence. Additionally, it opens up a broader range of business activities and opportunities.

7. Steps to Establish a Mainland Company Without a Sponsor

To establish a mainland company without a sponsor, you need to follow a set of steps. These typically include:

Market Research: Identify the right business activity and potential market.
Choose the Legal Structure: Decide on the legal structure that best suits your business needs.
Trade Name Registration: Reserve a unique trade name for your company.
Office Space and Tenancy Contract: Arrange for a physical office space and tenancy contract.
Initial Approval and Licensing: Obtain initial approval and necessary licenses from government authorities.
Share Capital: Deposit the minimum share capital required for your chosen legal structure.
Memorandum of Association (MOA): Draft the MOA outlining the company's constitution and internal rules.
Local Service Agent: Appoint a local service agent if required by law.
Final Submission: Submit all necessary documents to relevant authorities for final approval.

8. Legal Structures for Mainland Company Formation

When setting up a mainland company, you can choose from various legal structures, including:

Limited Liability Company (LLC): Suitable for small to medium-sized businesses with few shareholders.
Public Joint Stock Company (PJSC): Ideal for large-scale businesses planning to go public.
Private Joint Stock Company (PrJSC): Similar to PJSC but with restrictions on share transferability.
Sole Proprietorship: Suitable for individual entrepreneurs with full ownership.

9. Key Points to Consider During the Process

During the mainland company formation process, there are essential factors to consider, such as:

Business Plan: Create a comprehensive business plan outlining your objectives and strategies.
Local Regulations: Familiarize yourself with local laws and regulations to ensure compliance.
Bank Account: Open a local bank account for business transactions.
Visas and Labor Contracts: Arrange visas for employees and create labor contracts.
Taxation: Understand the tax implications and obligations for your business.

10. Compliance and Regulations

As with any business setup, compliance with local regulations is vital. Engage with a legal consultant who can guide you through the legal aspects, ensuring you meet all requirements.

11. Costs Involved

Setting up a mainland company without a local sponsor involves various costs, including government fees, licensing costs, office rent, and visa expenses. These costs vary based on the legal structure and business activities.

12. Pros and Cons of No Local Sponsor Company Setup

To help you make an informed decision, let's examine the pros and cons of opting for mainland company formation without a local sponsor:

Pros:

Complete ownership and control of your business.
Access to a broader range of business activities.
More privacy and flexibility in decision-making.

Cons:

Potential higher setup costs compared to some free zones.
Limited access to certain sectors restricted by the government.
Dependence on local agents for specific legal requirements.

13. Real-Life Success Stories

Numerous success stories highlight how foreign investors have flourished by setting up mainland companies without local sponsors. These inspiring examples demonstrate the opportunities and potential for growth in Dubai's thriving business landscape.

Conclusion

In conclusion, mainland company formation in Dubai without a local sponsor is indeed possible, thanks to the evolving business environment. By choosing the right legal structure and complying with local regulations, you can have full ownership and control of your business, exploring a diverse range of opportunities across the UAE.