# LLC Sponsor Disagreement



## hadiesper (Sep 8, 2010)

Hi everyone, I would appreciate any help from someone experienced in company formation in UAE.

I am in the market looking to set up an LLC with a local sponsor with a side contract to give me full control of the company in exchange for a certain fee.

My question are:

- If after a year, say the sponsor suddenly decides he wants to bump his fee from 20,000AED to 200,000AED. or any other small increase. What can I do about it? What happens when you disagree on such an issue?

-Also, can he decide on his own to go and cancel the company license without my consent and without the involvement of a legal court-case? or put a ban/hold on all visa applications? Can he block the name of the company indefinitely (say if I decided to re-form the company with another sponsor)?

What I am trying to get at, is that if I my future with the sponsor is not very predictable, how can I protect myself or ensure the continuity of my business?

I would appreciate any help on this (also, please don't recommend a FZ company, there is a very specific reason why it needs to be an LLC).

Thanks


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## Bbay2Oz (May 10, 2010)

The local would be 51% - majority shareholder. You could probably include some clause in the contract and restrict future fees to a fixed amount. To be honest there is not much you can do if he gets greedy. He could cancel your POA for operating the company account if he wants to get nasty or trump up some charges against you. Make sure your local sponsor is well reputed/has been recommended to you. 

Anyway the best advice I can offer you is to get yourself a lawyer in Dubai. Don't base such important decisions on free advice received on internet forums.


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## ash_ak (Jan 22, 2011)

Your questions are very valid. For this exact reason, your local sponsor should be a well respected person, someone who has good references from the past 10-20 years doing this type of deals. 

Friend of mine has a factory in Sharjah industrial area and their local sponsor is also the sponsor for 10-15 other similar medium sized companies and he has a history of more than 20 years in this line of work and his reputation is impeccable. You would probably pay a bit more every year, but you can also have the peace of mind that he has never screwed anybody over in the past 20 years. 

For the contractual part, go with a lawyer who has experience in this sort of matters.


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## dr0nehack (Jan 22, 2014)

hadiesper said:


> What I am trying to get at, is that if I my future with the sponsor is not very predictable, how can I protect myself or ensure the continuity of my business?



As other have suggested, you can make an agreement to reduce the total percentage of the shares with the sponsor, just ask the typing center or agency you are going through make your license, and if your doing it yourself, take the help of an agency , 

Unfortunately, its upto the sponsor if he is willing to sign this document, if he is not willing to do it , then you must proceed with caution , you can always change the sponsor , but if your sponsor wants a lump sump payment of the kaffal prior to making the license, you would have to consider it a loss. 

The issue with the sponsor is a huge problem here in the uae , most of it is to do with luck , there isnt some sort of a registry here for good sponsors, nor are their enough laws here that would keep a sponsor in check. 

The court route is the most unpredictable and expensive option


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## Desert_Fever (Apr 13, 2013)

I heard that there are "sponsor brokerages" in Dubai meaning they handle all the background check, reputation issues and all you do is cut the check. I am not sure who does the contract negotiations..anyone hear of these?


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## plckid (Jul 25, 2013)

Try Shurra Business Setup service


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## RandomDude (Mar 7, 2014)

Try one of the business setup offices.

They would have a sponsor person, who has got 50 companies under him, so he would not cause you any problems, only collect his fees. Try to stay anonymous and out of his eyesight or do not involve him much in the company.
Anyways, the side contract should help you out in case any disagreements.

I hope you have done your homework, but the FZ is not as bad as you think. Anyways, there are many business incubators, with LLC

You can try business centers offering LLC, search buisness center in yellow page.

Look, if you are having doubts, it means you are not confident, don't do it. Look for the silent partner, the one whose background will check and he's got 50 others buisness and all he wants is collecting the 10 or 15k AED at the end of the year


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