A local service agent is UAE national and he/she has to make sure that the company can continue its business in Dubai. A local service agent is not responsible to run the civil functions of a company. Although he/ she does not have any shares in the business or the assets of a company. Whenever a foreign investor wants to establish a company in UAE, he has to hire a local service agent.

Difference between the local sponsor and local service agent

Many people confuse the term local sponsor with the local service agent. Let’s dig into it to clear that confusion. When entrepreneurs or businessmen want to establish their company in UAE, they either need a local sponsor or local service agent for licensing purposes. A Mainland company is also known as an Onshore or DED (Department of Economic Development) license. Depending on your business activity, you will select either a local service agent or a local sponsor. Let’s get an insight into the responsibilities of them to get a clear picture.

Responsibilities of Local Sponsor

• When foreign investors want to start a Mainland company, they require a local sponsor, stakeholder, or shareholder.
• 51% of shares belong to a local sponsor in a Limited Liability Company, which is also known as an LLC.
• In Mainland UAE, a foreign investor can take 49% of shares whereas a local sponsor has the ownership of the remaining 51% of shares.
• According to the legal framework of LLC, the local partner or sponsor will be declared as a shareholder on the Trade License as well as in the Memorandum of Association (MOA).
• Memorandum of Association (MOA) is the constitutional document of LLC and you need to certify it from a public Notary.
• However, the foreign investor will be able to control the company when the local sponsor or partner will share their rights with him/ her. The foreign investor along with the local sponsor will also share the company’s profit. Moreover, both of them will pay annual expenses together.

Types of Mainland Licenses

Your business activity will determine whether you need a local sponsor or a local service agent. There are three types of licenses in Mainland Dubai.

1. Professional Activities Licenses
2. Commercial Activities Licenses
3. Industrial Activities Licenses

1. Professional Activities Licenses

A professional license includes the activities regarding services and the exchange of knowledge. These activities can be consultancy, salon, restaurant, and accounting. You need a local service agent for the establishment of professional license.

2. Commercial Activities Licenses

This license covers the activities related to the trade and exchange of products or goods. It includes activities such as general trading, rental, and car dealerships. You need a local sponsor to get commercial license.

3. Industrial Activities Licenses

Industrial processes and various construction activities fall under the domain of industrial activities license. It includes different activities such as food production, construction, industrial, and fabrication. You need a local sponsor to get industrial activities license.

Hiring a Local Service Agent

• When you have paid the annual fee of a local service agent, you will have access to the documents of the local service agent. These documents include the passport copy and Emirates ID copy.
• After the selection of a trading name, you need to register it. Then, you need to get the initial approval from DED (Department of Economic Development). Moreover, you can also get initial approval through any typing centres in Dubai such as Tas’heel, etc.
• Submit a Local Service Agreement of Professional, Representative License through any typing centre. Afterward, you need to certify it from the notary public. After certification, the local service agent and investor has to sign on Local Service Agent Agreement.
• When the agreement has finalized, now you can either purchase office or get it on rent and approved it from the higher authorities.