Dubai is a global business hub, attracting entrepreneurs and investors worldwide. Whether considering a business setup in Dubai or looking for the right business trade license, recent legal reforms have made the process more accessible. While the traditional business setup model in the UAE required a local sponsor to hold 51% ownership in mainland companies, recent reforms have made it possible for foreign investors to establish 100% ownership in specific business activities.

This blog explores the step-by-step process of registering a company in Dubai without a local sponsor, the benefits of such an approach, and key considerations for setting up your business successfully.

Key Legal Reforms: How Dubai Supports Foreign Investors

Dubai has implemented several legal reforms to create a more investor-friendly environment, making it easier for foreign entrepreneurs to establish and operate businesses in the UAE. These changes have significantly benefited those seeking company formation services in Dubai, ensuring a smooth registration process. These changes provide greater ownership rights, simplified processes, and long-term business incentives.

Some of the most significant legal reforms include:

1. 100% Foreign Ownership – Under Federal Decree-Law No. 26 of 2020, foreign investors can now own 100% of their business shares in several mainland sectors, eliminating the need for a local Emirati sponsor.

2. Streamlined Business Licensing – The Dubai Department of Economy and Tourism (DET) has simplified company registration, offering faster approvals and digital registration options, reducing bureaucratic delays.

3. Flexible Visa Options – Investors can benefit from long-term Golden Visas, freelancer permits, and investor visas, which allow business owners to manage their companies more flexibly.

4. Lower Business Setup Costs – Dubai has reduced various licensing and registration fees, making business establishment more affordable for entrepreneurs.

5. Enhanced Legal Protections – Strengthened intellectual property and investor protection laws ensure businesses operate in a legally secure environment, safeguarding assets and investments.

These reforms position Dubai as a premier business hub, offering full ownership, financial independence, and long-term growth opportunities for global investors.

Why Consider a Business Setup in Dubai Without a Local Sponsor?

Opting for a business setup in Dubai without a local sponsor offers several strategic advantages, especially for investors looking for free zone company formation in Dubai or 100% ownership opportunities.. It is an attractive option for foreign investors looking to establish and grow their businesses in the UAE. Traditionally, companies in Dubai’s mainland required a local Emirati sponsor who would own 51% of the company’s shares. However, recent regulatory changes and the rise of free zones have enabled foreign investors to operate without a local sponsor, granting them full ownership and control.

Here’s why opting for a business setup in Dubai without a local sponsor is a smart decision:

1. Full Business Ownership

One of the most significant advantages of setting up a business without a local sponsor is 100% ownership of the company. Unlike mainland companies that required an Emirati sponsor holding a majority share, free zones and select mainland business activities now allow foreign investors to establish and fully own their companies. This means you can structure your business without any external influence or the need to share ownership.

2. Complete Profit Retention

When you own 100% of your company, you retain all the profits the business generates. In traditional mainland setups with a local sponsor, a percentage of the profits was often allocated to the Emirati partner, even if they had no operational role in the company. Setting up a business without a sponsor ensures that every dirham earned stays within your company, maximising financial returns and reinvestment opportunities.

3. Greater Decision-Making Power

Full control over your business allows you to make strategic decisions without external interference. You can define business policies, operational strategies, and expansion plans without requiring approval from a local sponsor. This autonomy is particularly beneficial for businesses looking to operate dynamically, innovate, or expand rapidly without bureaucratic delays.

4. No Sponsor Dependence

When you partner with a local sponsor, certain business operations—such as changing the company structure, transferring shares, or exiting the business—may require the sponsor’s approval. This dependence can sometimes lead to operational restrictions or delays. Setting up a business without a sponsor eliminates this dependency, giving you greater flexibility in managing and modifying business operations as needed.

Legal Framework for 100% Foreign-Owned Companies in Dubai

The UAE government has implemented various reforms under Federal Decree-Law No. 26 of 2020, allowing full foreign ownership in several business sectors. The primary areas where 100% foreign ownership is permitted include:

• Free Zone Companies

• Professional Service Firms

• Specific Mainland Business Activities (as per UAE regulations)

1. Free Zone Companies (100% Foreign Ownership)

Dubai is home to over 30 free zones, each catering to different industries such as technology, media, healthcare, logistics, and finance. Setting up a business in a free zone allows 100% foreign ownership without requiring a local sponsor. Some popular free zones include:

a) Dubai Multi Commodities Centre (DMCC)

b) Jebel Ali Free Zone (JAFZA)

c) Dubai Internet City (DIC)

d) Dubai Media City (DMC)

e) Dubai Healthcare City (DHC)

Advantages of Free Zone Companies:

• 100% foreign ownership

• Tax exemptions (0% corporate and personal income tax)

• Full repatriation of profits and capital

• No customs duties on imports and exports

• Simplified setup and licensing procedures

2. Professional Service Firms (Sole Establishment or Civil Company)

Register as a Sole Establishment or Civil Company to establish a professional services business in Dubai, such as consultancy, marketing, IT, or legal services.

• You retain 100% ownership, but a Local Service Agent (LSA) is required. Unlike a local sponsor, an LSA has no shareholding in the company; they only facilitate administrative and legal procedures.

3. Mainland Companies with 100% Ownership

In June 2021, the UAE government announced that foreign investors can own 100% of their businesses in certain mainland activities.

Industries Eligible for 100% Foreign Ownership in Mainland Dubai:

• Manufacturing and Industrial Businesses

• Technology and Software Development

• Hospitality and Tourism

• Retail and Trading (subject to specific approvals)

Step-by-Step Guide to Registering a Company in Dubai Without a Local Sponsor

Step 1: Choose Your Business Activity

Identify your business activity and determine whether it falls under:

a) Free zone jurisdiction

b) Professional services (mainland)

c) Eligible mainland industries for 100% ownership

Each business type has different licensing requirements and regulatory processes.

Step 2: Select a Suitable Jurisdiction

Your business structure will determine the jurisdiction in which you register:

• Free Zones: Ideal for international businesses, logistics, and tech companies.

• Mainland (100% Foreign-Owned Sectors): Best for retail, manufacturing, and trading businesses.

• Professional Services (Sole Establishment): Suitable for consulting and professional firms.

Step 3: Register Your Business Name

Choose a unique and compliant trade name and register it with Dubai’s Department of Economic Development (DED) or the relevant free zone authority.

Step 4: Obtain Initial Approvals

Depending on your business type, approvals from the following authorities may be required:

• Department of Economic Development (DED)

• Free Zone Authorities

• Dubai Chamber of Commerce

• Ministry of Economy (for industrial businesses)

• Dubai Municipality

Step 5: Prepare and Submit Documentation

Typical documents required for company registration include:

• Passport copies of shareholders and directors

• Business plan (for specific industries)

• No Objection Certificate (NOC) if applicable

• Lease agreement for office space (Ejari)

• Memorandum of Association (MOA) for partnerships

Step 6: Apply for a Business License

Based on your business activity, apply for the appropriate license:

• Trade License (Commercial & Trading)

• Professional License (Consultancy & Services)

• Industrial License (Manufacturing & Production)

Step 7: Lease Office Space (if required)

Most businesses require a registered office address. Free zones provide flexi-desk or virtual offices to meet legal requirements.

Step 8: Obtain Your Establishment Card and Visas

To operate legally, you’ll need:

• Establishment card (for employment and residency visas)

• Investor visa (for company owners)

• Employee visas for staff

Step 9: Open a Corporate Bank Account

Choose a UAE bank to set up your business account. Popular banks include:

1. Emirates NBD

2. Mashreq Bank

3. ADCB

4. RAKBANK

Cost of Registering a Company Without a Local Sponsor in Dubai

The cost varies based on:

1. Business type and industry

2. Free zone or mainland setup

3. Number of visas required

4. Office space rental (if applicable)

On average, costs range from AED 12,000 to AED 50,000, depending on the business structure.

Final Thoughts

Thanks to recent regulatory changes, setting up a company in Dubai without a local sponsor is now easier than ever. Whether you opt for a free zone, a professional services firm, or a 100% foreign-owned mainland company, careful planning and compliance with legal requirements are key to success.

With the right strategy and professional guidance from Bizex LLC, you can successfully establish and grow your business in Dubai’s thriving economy.

Contact Us to receive a customised business setup solution and take your first step toward launching a successful company in Dubai!