What is meant by a sponsor?

The term "sponsor" has various meanings which depend on the legal form and location of the company you wish to incorporate. If you are setting up a company with limited liability (LLC) in the territory of the United Arab Emirates, the sponsor generally has to be the majority shareholder of the LLC. By contrast, the sponsor merely serves as a so-called national service agent when establishing a dependent subsidiary of a foreign mother company (so-called branch) in the territory of the United Arab Emirates and has no authorities to exert influence at partner or management level. In any case, the sponsor either has to be an Emirati national or a company with 100% of its shares held by Emirati nationals. An amendment to the UAE Commercial Companies Law, which will come into force in April 2021, will make the sponsor requirement obsolete in most cases. However, it remains to be seen how and when the amendment will actually be implemented in practice.

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