One of the challenges to start and operate a business in the United Arab Emirates ‘mainland’ is the element of the local sponsor owning 51 per cent of the business.

Historically, the legislation in Gulf states has only allowed partial ownership to expat businessmen. It is now changing and a number of GCC states are passing new legislations and establishing free trade zones allowing 100 per cent foreign ownership.

However, in the mainland, it is still a 51 per cent (local) and 49 per cent (expat) shareholding structure.

Hence, it is very important for foreign investors to understand the role and functions of local sponsorship. Here we will tell you everything about local sponsorship in UAE.

WHAT

Local sponsorship is a compulsory condition for a person of foreign origin who wants to establish a business in the UAE mainland. This condition doesn’t apply to freezones. There are three types of local sponsorship and the selection is based on your business activity.

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