Foreign investors are often found to be unsure about the type of business they can set up in the UAE. Most of them explained the reason as the complex business setup process and the need for a local sponsor. So the question that really needs our attention is that do you really need a local sponsor/partner for setting up a company in UAE. The simple answer to this question is based on two major factors. Firstly, it depends upon the type of business that you are opting to establish, and secondly, whether your business will be based in any of the free zones or not. Understanding these two factors can help you determine the answer relative to your business need. Some corporations and business communities necessitate a local sponsor however, there are various other options available that do not have any such limitation. Ajman Free Zone is a great example of this. To guide you comprehensively, we have put together all the necessary information below.

• For setting up a business in UAE, there are only three ways available for the foreign entrepreneurs i.e. Acquiring Professional Service License, Setting up in Free Zones, and Forming an LLC.
• If you wish to set up a Professional Service Company with 100% exclusive foreign ownership and capital repatriation, then you will need a local service agent or partner. As suggested by the name the licenses will be issued to the professional service business and the service provider will charge a certain service fee from investors however they have no authority and liability to interfere in business operations, management, and profit.
• Another way to sustain 100% ownership and profit repatriation, is to set up your business in one of the free zones of UAE. However, you cannot deal with local UAE market without a local service agent or distributor. There are few free zones such as Ajman Free Zone which does not require a local partnership however some of the collaborative institutions such as banks etc. may ask for a local partner.
• If not settled in UAE fee zone and the nature of your business falls under the industrial or commercial license category, then you must register as a Limited Liability Company (LLC); and for setting up LLC you must meet the requirement of having a local sponsor who upholds the majority of shares.
• According to the Abu Dhabi Statistics Centre, collaborating with local partners is a safe and beneficial process for investors which is reflected by over 16,000 industrial and commercial LLC licenses that were issued in 2015. This testifies the security, significance, and simplicity of the process.
• Mostly, the local partners are required to pay the annual fee and sometimes they may also demand a pre-determined percentage of profit or sales.

Musharaka is a leading consultancy in the UAE which has a reputed profile of assisting various clients in setting up their business successfully in the UAE. We can help you with the process of business setup and license acquisition. Our team of experts is just a call away for service.

Please take out a minute to contact us directly at +971 507904183 or by sending us an email at afzal@musharaka.ae. You can also leave a message by using the message window at the bottom.