# Finding a reliable local sponsor for business setup?



## VonDutch (Nov 4, 2009)

Hello everybody,

Just new at the forum, first of all I wanna say Hi to you all! It's nice to see so many people helping each other out.

I am 29 years old, male and thinking about leaving The Netherlands and starting a (internet)company in the UAE. Problem in setting up a business in the UAE is finding a local sponsor which will have 51 percent of the shares on paper. My question is how or where can I find a reliable local sponsor to help me setting up the business? I did some inquiry with the Dutch embassy but it didn't help me much and found some companies in local papers which advertise they can help finding a local sponsor, but all they ask for is money before helping me out/and give some global information.

Another question about local sponsorship I have is, does anyone know more about changing the rules about sponsorship/ownership to attract more foreign investors? I've read in Gulf News and Arabian Business that the Government wants to change the rules in favor of the foreign investor and change the shares of the local sponsor from 51 percent to 20 percent. So the new rule (propably before the end of 2009) would be that the foreign investor will have 80 percent of the shares. Does anybody know more about this? 

I hope you can help me. Right now I am in Dubai for more information, but as it seems right now I'm getting more attracted in setting up a business in a free zone, because this is more transparant (and relatively more safe, 100 percent ownership but less possibilities in doing business within the UAE).

Again, nice to meet you all and I hope you can help me.

Greetings, VonDutch


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## boyinblue (Nov 8, 2009)

apparently its not a good way an investor should advertise him/herself.. The reason is you'll receive lots of offers and stuff and I bet, there are more scammers in dubai than in Nigeria 



> starting a (internet)company in the UAE


What kinda company would that be? I mean you are looking to establish an internet cafe or something like a web development, software firm? It all depends on this one question.

1) Internet Cafe.. (You need to hit main Dubai market place, and you need a sponsor definitely)

2) Software/webdevelopment company (forget about everything and invest in freezone and be 100% owner their)

I know what you going through cause i am into IT industry and was in the same situation few months back.. I call it "investor's influenza".. lol. But I found myself too weak on finances to open a company. Anyways if you need some more free info or discuss about internet industry in middle east, you can befriend by visiting my profile so that you can get intouch.


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## dizzyizzy (Mar 30, 2008)

If you set up your company in one of the free zones (Media City or Jebel Ali for example) you can have 100% ownership and therefore will not need a local investor. This is more expensive to set up but I think would be the best option for you in the long run as you will not have anyone interfering in your business, raising their demands every time you need them to sign a document for you, or taking away your profits earned by your hard work.


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## Mr Rossi (May 16, 2009)

Definately look at setting up something in Internet City. Not only will you retain ownership of your company and avoid a meddling sponsor you will save endless costs and hassles with regards to hiring staff, exporting/importing, opening a bank account, getting an isp and other inefficiencies that'll drive you insane on a daily basis. 

It may seem an expensive outlay now but you can't go to toilet here these days without a letter from your sponsor and company stamp.


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## Sumair (Aug 16, 2008)

Dear Von,

Your post has many queries , I will try to provide brief answers one by one:

1) Q: starting an internet company
Suggested reply:You can not establish internet company in UAE. ( assumption is person who can establish internet company will not ask these question)

2) Q: Finding a local sponsor
Suggested reply: You can find it only through links , the local sponsor also will not become your sponsor only because of money he is also liable for some extent. This is mutual agreement. It involve cost the more you pay the more benefit you receive.

3) change of rule, everything is in paper , but you can check RAK they already changed the rules and for some businesses you do not need sponsor


Best of Luck!






VonDutch said:


> Hello everybody,
> 
> Just new at the forum, first of all I wanna say Hi to you all! It's nice to see so many people helping each other out.
> 
> ...


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## Acacia32 (Nov 10, 2009)

I highly recommend looking into setting up an offshore company in this case. There are only certain business types that would benefit from having a local sponser and in your case I dont think their is one. Like someone else said the cash outlay is higher and you also have to rent office space so you can get a liscence. The process is actually more stringent than opening a regular company with a local sponser. But the benefits outway the price and hassle. check it out DubaiInternetcity.ae


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## boyinblue (Nov 8, 2009)

well as I said.. the term is very vague.. "*Internet Company*" What that would be doing? if you thinking of providing internet to public, forget about it.. its not allowed as sumair said !


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## Xpat (Nov 12, 2008)

von i have been researching on how to get reliable sponsor for past few days and I am in process of verifying it. I have a non-freezone licence and my sponsor is one god damn busy man who took two months to sign an important paper. I am kinda not happy with him so I researched ways to overcome that. will update you over time.


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## Sumair (Aug 16, 2008)

Dear XPAT , in my opinion you are blessed by God for having such a sponsor, think in opposite way the sponsor who come everyday to your office and satrt nose pocking or who has so much time to read and redraft hundred times the papers/letters/contracts you send him for signature?

dear here expats are in search of those sponsors who doesnt have time ....





Xpat said:


> von i have been researching on how to get reliable sponsor for past few days and I am in process of verifying it. I have a non-freezone licence and my sponsor is one god damn busy man who took two months to sign an important paper. I am kinda not happy with him so I researched ways to overcome that. will update you over time.


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## boyinblue (Nov 8, 2009)

Sumair said:


> Dear XPAT , in my opinion you are blessed by God for having such a sponsor, think in opposite way the sponsor who come everyday to your office and satrt nose pocking or who has so much time to read and redraft hundred times the papers/letters/contracts you send him for signature?
> 
> dear here expats are in search of those sponsors who doesnt have time ....


well at least they show you a face unlike the ones who aren't available when you need


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## VonDutch (Nov 4, 2009)

Hi everybody,

Thank you all for replying and sorry for my late reply. But I'm back in The Netherlands right now and a lot has become clear to me after a trip to Dubai.

First, I will explain a little bit more about my vague 'Internet company' description, sorry about the confusion. What I meant was that the company I want to set up will be operating through the internet mainly and that I won't need a showroom, storage space, warehouses, etc. for import/export of goods for example.
In the beginning I'm thinking of working from my home and if the company grows office space is a possibility. My product is a service (an internet application/program) which my clients can use online. 

Second, the idea of starting a Limited Liability Company (LLC) and finding a reliable sponsor is not the best option for me (thank you all for your advise) and I'm focussing now on starting in a Freezone.
Main reason is the fact that I'm not comfortable with the idea that sombody else has 51% (majority) of the shares of your company and that you are totally reliable on this sponsor. Maybe if the sponsor has 20% and you have 80% of the shares this would be an option. I've read about this future change (before the end of 2009?) on the website of ArabianBusiness and GulfNews, but haven't heard anything new about this..

So, the best option for me seems to be starting in a freezone as you have 100% ownership and the process of establishing a company in a Freezone seems hasslefree. A freezone gives a lot of support and in a short amount of time you can focus on your business.

The only doubt I have is starting in the Dubai Internet City Freezone or the Ras Al Khaimah Free Trade Zone (RAK FTZ). I still have some research to do, but the favour is for the RAK FTZ. I also visited the European Promotion Center of the RAK FTZ in Cologne in Germany and I have a good feeling about this. The information they provide regarding procedures and prices about visa's, office space, start-up costs are very transparant.

So till sofar my progression. Again, thank you all for your advise and if you have new/more advise I would really appreciate it!

VonDutch


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## Elphaba (Jan 24, 2008)

I'd go for RAK as cheaper and less hoops to jump through. (We have a RAKFZ company  )

I can also put you in touch wih people who can help with the set up and save you travelling to RAK 6+ times. They charge a little more to cover their costs, but give you guidance and save you time.

-


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## Xpat (Nov 12, 2008)

von, 51% and 49% are just in paper, you can make SEPERAte agreement which says YOU invested the money in business NOT your sponsor.

Yes FZ has less hassles than stupid LLC as I am facing HUGE problems hiring ppl and one lady I tried ot hire was rejected on gorunds that first visa cant be granted to a lady! Can u belive this crapo?


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## Elphaba (Jan 24, 2008)

Xpat said:


> von, 51% and 49% are just in paper, you can make SEPERAte agreement which says YOU invested the money in business NOT your sponsor.
> 
> Yes FZ has less hassles than stupid LLC as I am facing HUGE problems hiring ppl and one lady I tried ot hire was rejected on gorunds that first visa cant be granted to a lady! Can u belive this crapo?



No such thing as just on paper like that. Fact is that the local sponsor legally owns half so it is not ever solely your business.

-


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## VonDutch (Nov 4, 2009)

Dear Elphaba,

Sorry for the late reply, but in my rush I totally forgot about your offer. But could you give me the contact details of your people who can help me setting up a business in the RAK FTZ. As I made up my mind and am now planning to start my business in the RAK FTZ (probably) throught their promotion center in Cologne, Germany. Unless the option you can provide me has more advantages.

Thank you very much.

Kind regards, VonDutch


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## Elphaba (Jan 24, 2008)

VonDutch said:


> Dear Elphaba,
> 
> Sorry for the late reply, but in my rush I totally forgot about your offer. But could you give me the contact details of your people who can help me setting up a business in the RAK FTZ. As I made up my mind and am now planning to start my business in the RAK FTZ (probably) throught their promotion center in Cologne, Germany. Unless the option you can provide me has more advantages.
> 
> ...


You need 5 posts to activate the PM facility.


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## VonDutch (Nov 4, 2009)

Elphaba said:


> You need 5 posts to activate the PM facility.


Ahh, that's the reason why I couldn't find the option to send a PM! 

I'm looking forward for your info Elphaba. Thank you!


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## Xpat (Nov 12, 2008)

Elphaba said:


> No such thing as just on paper like that. Fact is that the local sponsor legally owns half so it is not ever solely your business.
> 
> -


Nah in ur memorandum u can implicitly state and make that sponsor binded..... if ever there is a conflict between u and ur sponsor they check memorandum and bank statement details to confirm


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## dolphingirl (Nov 29, 2009)

*Sponsorship*

Hi VonDutch,
Sorry but I just got your email this evening.
Ok so my friend has used this company called Quality House and from what she said it is very good. They have a local sponsor who is I think an American/British lady and she is now local. From what I know only locals can work from home and in free zones you are limited to business, like you can't do business in dubai directly, I think. Also a proper local sponsor only has shares within the company but if they are not a partner then they have no claims to property or money. Here is one case I know for sure, there was a local man working for the government and he was a sponsor for a company, so the business owner died and he went in to try to take over the company (he has 51% right) well he was a real ass and was trying to literally take the company from the poor guys wife and kids, so it went to court and of course he lost and he got fired from his job in the government for basically being an unethical ass. Many people are affraid of this 51% but it really isn't a big deal otherwise there would not be so much foreign business here. It is basically just on paper and decent sponsors just take the annual fees and you never hear from them except on renewal of the licence.

I have also looked at their webpage and they seem to be pretty good, they do business with alot of European companies who seem to be happy with them. Anyway you can have a look for yourself and see what you think.

qualityhouse.ae

Good luck









VonDutch said:


> Hi everybody,
> 
> Thank you all for replying and sorry for my late reply. But I'm back in The Netherlands right now and a lot has become clear to me after a trip to Dubai.
> 
> ...


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## Madam Mim (Jul 1, 2008)

My two cents worth - go freezone. Have a friend who had local sponsor - all was great she was treated like a family member - included in all family events etc., etc., - come credit crunch - different story. So called family now trying to take over all the business and squeeze her out - even locked her out of her business - anyway my advice go freezone - good luck!


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## Xpat (Nov 12, 2008)

basically dont spend more than 40,000 dhs (including virtual office) if it's more they are ripping u off.... in this time of the yeat DONT be shy to ask for a deal.... call em ask their last price... pause... pause some more....the party who opens the mouth is the first person to give concessions most prob.... tell them u will call em back ... most will call u back with new lower price. I know another one Dubai business advisors they are bit pricey but they have great service.


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## Elphaba (Jan 24, 2008)

Most FZ companies I know of (via my contact) have cost less than AED 30k to set up...

-


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## Anna returning (Aug 17, 2009)

Madam Mim said:


> My two cents worth - go freezone. Have a friend who had local sponsor - all was great she was treated like a family member - included in all family events etc., etc., - come credit crunch - different story. So called family now trying to take over all the business and squeeze her out - even locked her out of her business - anyway my advice go freezone - good luck!


Hi VonDutch,
Theoretically, in Dubai you are not allowed to work from home. I set up as a FZ LLC through Knowledge Village, which, like Internet City is part of TECOM, and you have to have an office. Whenever I've popped into mine, which is an open office of about 30 cubicles, there have never been more than 2 others in there working!!  With laptops, wifi and mobile phones, where's the need? You have to pay the rent for an office though!
It's cheaper if you set up as a Freelancer, but then you are only allowed to operate under your own name. If you want to have a business name, you have to be a FZ LLC. The size of the office you hire determines how many employee visas you can have. (And a warning: One of your employee visas is used for you to employ yourself! :confused2: So if you have 2 employee visas, you can employ one other person!!)
I don't know much about the FZs in other Emirates, like RAK, but my understanding is that they are much more flexible (and cheaper!)
My question a year down the line will be 'can I/and how can I,move my FZ business to another Emirate?' 

StageAbility


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## Elphaba (Jan 24, 2008)

You may work frm home provided you have registered business address/premises.

The poster asing about compnay formation has not yet contacted me, so I cannot assist...


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## Anna returning (Aug 17, 2009)

Elphaba said:


> You may work frm home provided you have registered business address/premises.
> 
> The poster asing about compnay formation has not yet contacted me, so I cannot assist...


Oh good! So I'm not going to get into big trouble then 

StageAbility


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## TallyHo (Aug 21, 2011)

Before you bump up a thread in a desperate attempt to find business, you should take notice of the dates on the thread. Von Dutch posted his message two years ago and the thread hasn't been active in 18 months.


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