What is a sponsor and what significance does he have as part of a company formation in Dubai or elsewhere in the United Arab Emirates (UAE)?

With the liberalisation of the commercial companies law, a sponsor is now only mandatory in exceptional cases. In this regard, the term "sponsor" has various meanings which depend on the legal form of the company you are incorporating as well as its location. In case you are setting up a company with limited liability ("LLC") in the territory of the United Arab Emirates, the sponsor, if at all to be appointed, has to be a co-shareholder or the majority shareholder of the LLC, which depends on the activities to be conducted by the company. 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 possesses no opportunities to influence shareholders or managers. However, in most cases, such national service agent does not have to be appointed any longer. Should a sponsor be indeed still required, the sponsor either has to be an Emirati national or a company with 100% of its shares held by Emirati nationals.