LSA or local partner

If you are not an Emirati national and you are considering the UAE to set up your business as a mainland company then you will probably need an Emirati partner.

The Emirates and more particularly the city of Dubai are a destination of choice for entrepreneurs in search of tax optimization. The UAE is a sunny place to live all year round, and tax system that makes you dream and taxes close to 0.

Setting up a company in Dubai can be very complicated when you have no experience and no knowledge of the local rules, whatever your sector of activity. Contact a firm like ours is to save time and money. We are a leader in business set up in the Emirates since 2009, we also have an office in Hong Kong since 1998 and another office in Orlando in Florida, USA.

We are specialists in the creation of all types of companies in the Emirates: Mainland, Free Zone, Freelance, Offshore and Foundation.

We support you from A to Z

It is very important to note that depending on the type of structure you choose, you will probably be required to have an Emirati partner.

Be careful not to confuse the Local Service Agent with the Local Partner.

Until June 2021, the Emirati partner was mandatory for commercial companies registered in the mainland. For professional companies such as service and consultancy companies, it is no longer required to have a local partner since two years. However, it is mandatory to have a local service agent for this type of structure.

But who is this Local Service Agent?

One of the questions that comes up most often when setting up a company, do I need an Emirati partner to start a business in the UAE?

A Local Service Agent for professional activities in mainland

For all professional licenses registered in mainland, the law requires that a Local Service Agent be appointed to represent your company to the authorities. This agent does not intervene in the capital nor in the decision making of your company, he is simply the Emirati voice of your structure.

The Local Service Agent simply offers his or her services in exchange of a fixed annual fee.

In this case, the foreign investor owns 100% of the company’s shares. The Local Service Agent has no power over the company.

In summary:

  • The Local Service Agent does not intervene in the company’s operations
  • His role is to facilitate the administrative procedures with the authorities
  • His remuneration is still very accessible and honest

For commercial licenses, it is not required to have a Local Service Agent or even a local partner.

Note: a free zone company will not need a local partner since by definition, a free zone company can be 100% owned by a foreigner.

And who is the Local Partner?

The Local Partner must be a UAE national and hold at least 51% of the company’s shares (valid in mainland only).

An Emirati who owns 51% of the company’s shares

In most cases, the local partner signs an agreement with the foreign investor in order to define its scope of intervention and its annual remuneration. Generally, the local partner gives full powers to the 49% shareholder.

But, the revolution of this year concerns the local partner. Indeed, as explained in the introduction, since the June 2021 reforms, it is no longer necessary to have an Emirati partner for commercial companies in the mainland.

Full ownership in mainland and free zone in Dubai

This means that in both the mainland and the free zone it is now possible for a foreigner to have full ownership of his company.

Commercial license in mainland: Local Service Agent or Local Partner?

In recent months, more than 1000 businesses in Dubai, Ajman, Sharjah etc. offer full foreign ownership.

Click here to discover all the business type activities that no longer need a local sponsor holding 51% of the shares of your company.

This list is freely available on the DED website.

Need a Local Service Agent?

At the moment, the only structure that requires you to have a Local Service Agent is the professional company in mainland.

If you decide to choose Merritt as your partner in setting up your company, we will provide you with a Local Service Agent.

Our firm is competent for company set up, license renewal, and all the administrative steps related to your company in Dubai or in any other emirate. We also assist you in opening your personal and professional bank account.

Small summary of your needs in terms of Emirati partner:

MAINLAND

  • Commercial activity
  • Professional activity
  • No need for an Emirati sponsor – full foreign ownership
  • Need a Local Service Agent

FREE ZONE

  • Free Zone Company
  • No need for an Emirati sponsor – full foreign ownership

OFFSHORE

  • Offshore Company
  • You need an agent, our cabinet can act as your agent