When starting a business in Dubai, foreign investors are often required to find a local sponsor. This is a mandatory requirement for acquiring a mainland license in Dubai, although rare exceptions to this rule exist.
A local sponsor is typically an Emirati individual, or a corporate entity that has been founded by UAE nationals. This local sponsor is entrusted with at least 51% of the new company’s shares. However, the sponsor’s involvement in running the business is minimal. For an annual fee, most sponsors sign away their power of attorney to the foreign investor.
Still, circumstances can arise that warrant a change in local sponsor for a company. Below is a breakdown of how a change in local sponsor may be initiated.
Speak with your current local sponsor
It may seem simple, but too many forget that this is a vital first step towards changing your local sponsor for your mainland business license in Dubai. If they agree to the change, the whole process will be a lot smoother, which means everyone will be happier, and you will be able to get back to your business much more quickly.
If a conflict has developed between you and your current sponsor, try to resolve the matter first, and then change your sponsor (hopefully with your current sponsor’s cooperation). Mediation, and even informal discussions, can help all the parties work through their matters and come to an agreement. If your current sponsor refuses to agree to a change in sponsorship, then you may need legal assistance to pursue the matter through the courts.
Gather the necessary documents
In order for a smooth change of local sponsors, it is essential for foreign investors to present certain documents to the court. These documents include, but are not limited to a Memorandum of Association (MOA) between the foreign investor and local sponsor, the power of attorney and receipts of annual sponsorship payments.
Present the documents at the court with your current sponsor
Once you have your documents and your current sponsor agrees to the change, you will meet at the court where an official will review your documents and confirm your current sponsor’s approval. Then, new documents, including a revised MOA and trade license, will be issued for your company to show your new sponsor.