There has been a perplexity regarding the provisions used in connection with the Local Partner (Emirati), a compulsory limitation when establishing a business outside the free zones in the United Arab Emirates (Main Land). Generally, common people mix two terminologies into one “sponsor” as commonly known, creating the impression that there is always an Emirati in full control of the business.
The word “Local Partner” is neither a title or position nor a job description of the involved Emirati. However, it can be considered a status that a Local Partner or Local Service Agent gains after establishing a company or after being appointed as a Service Agent for a certain entity. The confirmation of a Local Partner or a service agent depends on the activity partially and majority on the company’s structure.
In Dubai, trading and industrial activities require a Local Partner (who has to hold 51% of the company shares) and are usually structured as a Limited Liability Company (LLC). However, a professional license can be a Sole establishment, civil company or LLC company too.
Professional companies may be 100% foreign-owned. However, it is not necessary to appoint a local Emirati Service Agent from the same Emirate. According to Dubai rules any licensing professional in order to establish a business which practices services or professional activities, the business will be formed as a “Sole Establishment or Civil Company”. Most of the services related to professional activities require a professional license.
The Local Service Agent will deal with the government officials and Ministries on behalf of the company and facilitate the renewal process.
Local service agents and local partners from the UAE are reliable and honest. They can be bound by side agreement and separate POA can be taken from them. With a Local Partner, it is common to arrange side agreements that redefine the conditions between the parties in favour of the actual owners/managers of the company.