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A local UAE company is an enterprise in the UAE Mainland that is registered in partnership with a UAE national (e.g. a “Local partner”). A local partner owns 51% of the company shares. For most limited liability companies, partnership with UAE nationals is mandatory, although there can be some exceptions. Learn more about setting up a company in the UAE mainland by reading our guide below.
As stated above, most new businesses in the UAE mainland require a local partner who is often referred to as a local sponsor. A local partner owns 51% of the company by law. However, the UAE law also allows foreign investors to opt for a “silent partner option”. In this scenario, a Local partner is paid an annual fee in return for giving up management control of the company to a foreign investor. Yet, in case of any disputes between shareholders in the future, all side agreements are deemed null and void as in conflict with governing UAE laws.
Before setting up a company in the UAE mainland, it is important to prepare a proper company structuring scheme and work only with trusted local partners.
There are some cases when a local partner is not required for setting up a UAE mainland company. For any trading activities, unless a new company is a branch of a foreign entity, a local partner is mandatory. In case of opening a branch of a foreign entity (trading activities) or if a business provides professional services, a local company may be fully owned by a foreign investor, yet a local agent is required.
A Local agent (or Local Service Agent) is a UAE national or a UAE company which is appointed to carry out administrative functions only and assist with license renewals, visa applications and alike.
Any UAE citizen can become a Local agent, except for situations where a specific qualification is required. Any business that has 100% ownership by a UAE citizen can also be a Local agent. Unlike a Local partner, a Local service agent is not a shareholder of a foreign investor’s business and cannot be held liable for the company's activities.
A Local service agent does not take part in business management and decision making and is generally appointed by means of execution and attestation of the relevant agreement in notary public. The terms of cooperation are discussed with each agent individually. The agreement term is usually one year long and a company is entitled to appoint a new Local Agent if required. Consult Business Boutique for appointment of a Local service agent.
A business in the UAE mainland can be registered as a branch of a foreign company. Although such enterprise is fully owned by a mother company in home jurisdiction, it still shall abide by UAE laws and appoint a Local Service Agent.
Another important requirement for a branch company is that business activities of a mother company and its UAE local branch must fully coincide. In other words, a mother company engaged in legal services cannot establish a local branch in the UAE for trading.
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