The Dubai local sponsor replacement service is a formal administrative procedure that allows a business to change its designated UAE national sponsor or service agent. This process involves the legal termination of the existing sponsorship agreement and the execution of a new one, followed by an official amendment of the commercial license with the Dubai Department of Economy and Tourism (DED). Governed by Federal Decree-Law No. 32 of 2021 on Commercial Companies, this service is a procedural necessity for businesses undergoing restructuring or seeking new partnership terms. Multicorp Dubai manages the entire administrative workflow for this process, ensuring all submissions to the DED are accurate and compliant with current regulations.
The Legal Basis for Local Sponsor Replacement in Dubai
The legal foundation for changing a local sponsor is rooted in the UAE’s Commercial Companies Law and the specific regulations of the Dubai DED. The process does not constitute a “transfer” of a sponsor but rather the termination of one legal agreement and the formation of another. The existing Memorandum of Association (MOA) for an LLC or the Local Service Agent (LSA) agreement for a professional license is legally cancelled. A new MOA or LSA is then drafted and notarized. This change in the company’s foundational legal documents is then officially registered with the DED, which issues an amended trade license reflecting the new sponsor’s details.
Scenarios Necessitating a Local Sponsor Change
Businesses may require a Dubai local sponsor replacement service for several operational or legal reasons. A common scenario is the expiration of a fixed-term sponsorship agreement. Other reasons include a business restructuring where the expatriate partner wishes to bring in a new UAE national partner, or the dissolution of the relationship with the current sponsor due to a breach of contract or mutual disagreement. A company might also seek a new sponsor to secure more favorable commercial terms or a partner who can provide added value to the business operations.
The Procedural Framework for Dubai Local Sponsor Replacement
The procedure for replacing a local sponsor is a structured, multi-step process that requires precise documentation and adherence to DED protocols. Each step must be completed in sequence to ensure the legal change is valid and officially recorded. Multicorp Dubai executes these steps on behalf of the business, handling all interactions with government authorities and notary publics to facilitate a smooth transition.
Step 1: Termination of the Existing Sponsor Agreement
The first procedural step is the legal termination of the current sponsorship arrangement. This is formalized through a notarized termination letter signed by both the business owner and the existing local sponsor. In cases of dispute, a court judgment may be required to enforce the termination. This legal document serves as proof that the previous contractual obligations have been concluded, which is a mandatory prerequisite for the DED to process any subsequent amendment to the company’s license.
Step 2: Securing a New Local Sponsor and Drafting Agreements
Concurrently, a new local sponsor must be engaged and a new legal agreement must be executed. For an LLC, this involves drafting a new Memorandum of Association (MOA) that outlines the new shareholding structure, with the UAE national holding the required 51% stake. For a professional license, a new Local Service Agent (LSA) agreement is drafted. Multicorp Dubai oversees the drafting of these documents to ensure they are legally compliant and accurately reflect the terms of the new partnership before they are signed and notarized.
Step 3: Submission of Documents to the DED
With the old agreement terminated and the new one notarized, the application for license amendment is prepared and submitted to the DED. Multicorp Dubai compiles the complete application file, which includes the original trade license, the notarized termination letter, the new notarized MOA or LSA, and passport and Emirates ID copies of both the old and new sponsors. The application is filed through the DED’s e-service portal or at a service center, initiating the official review process.
Step 4: DED Approval and Issuance of Amended License
Upon submission, the DED reviews the application and all supporting documents for accuracy and compliance. If all requirements are met, the DED approves the amendment. The final step involves paying the requisite amendment fees and receiving a new, amended commercial license. This new license features the name and details of the new local sponsor, officially completing the Dubai local sponsor replacement service and updating the company’s legal standing in the government’s records.
Essential Documentation for the Sponsor Replacement Process
A complete and accurate set of documents is mandatory for the DED to process a sponsor change. Multicorp Dubai ensures all documentation is prepared and verified before submission to prevent rejections or delays. The required paperwork typically includes the original and a copy of the current trade license, the original MOA or LSA, a notarized termination letter from the previous sponsor, the new notarized MOA or LSA, and passport copies with Emirates IDs of both the former and the new local sponsor. A copy of the office tenancy contract may also be required.
Types of Companies Requiring Sponsor Replacement
The procedure for sponsor replacement varies slightly depending on the legal structure of the company. The two primary types of entities that require a UAE national sponsor are Civil Companies and Limited Liability Companies (LLCs). The distinction lies in the nature of the sponsorship: a service agent relationship versus a shareholding partnership. Multicorp Dubai is proficient in handling the specific procedural requirements for both company types.
Civil Company Sponsor Replacement
A Civil Company is a professional license for individuals in specific fields like medicine, engineering, or consulting. Here, the UAE national acts as a Local Service Agent (LSA), not a partner. The replacement process involves cancelling the existing LSA agreement and executing a new one. The amended license simply reflects the change in the service agent’s name, without any change in the professional ownership of the company.
LLC Sponsor Replacement
A Limited Liability Company (LLC) requires a UAE national to hold at least 51% of the company’s shares. Replacing a sponsor in an LLC is a more complex process. It legally involves the transfer of the 51% shares from the former sponsor to the new one. This requires the creation of a new Memorandum of Association (MOA), which is then notarized and submitted to the DED to amend the license and officially register the new shareholding structure.
The Procedural Role of Multicorp Dubai in Sponsor Replacement
Multicorp Dubai performs a defined procedural function in the sponsor replacement process. The firm’s role begins with an assessment of the existing sponsorship agreement and the facilitation of the termination process. Multicorp Dubai conducts due diligence on potential new sponsors and drafts the new MOA or LSA agreements. The firm manages the entire submission workflow with the DED, from initial application to final collection of the amended license. This administrative management ensures the procedure adheres to all legal requirements and is completed within the standard governmental timelines.
Timelines and Associated Government Fees
The standard timeline for a straightforward Dubai local sponsor replacement service is approximately 7 to 10 business days. This duration starts from the signing of the new agreement and assumes there are no disputes with the former sponsor. The financial components include the DED’s official amendment fee, which varies depending on the legal activity and license type, and notary public fees for legalizing the new and old agreements. Additional costs include professional service fees for the management of the entire procedural workflow.
Potential Legal and Administrative Hurdles
Several challenges can arise during the sponsor replacement process. A primary hurdle is a dispute with the existing sponsor, which can delay or complicate the termination of the current agreement. Outstanding liabilities, such as unpaid dues or unresolved fines tied to the old sponsor, must be cleared before the DED will approve any change. Administrative errors in the documentation, such as incorrect names or passport numbers, can lead to application rejections and cause significant delays in the process.
Frequently Asked Questions (FAQs)
Can I change my local sponsor without closing my Dubai company?
Yes, the Dubai local sponsor replacement service allows you to amend your existing license. The process involves terminating the old sponsor agreement and executing a new one, without the need to liquidate the company.
What is the main legal document needed for a sponsor change?
The most critical documents are the notarized termination letter from the old sponsor and the new, notarized Memorandum of Association (MOA) or Local Service Agent (LSA) agreement for the new sponsor.
How long does the sponsor replacement process take with the DED?
A straightforward sponsor change typically takes 7 to 10 business days. This timeline assumes all documents are correct and there are no disputes with the former sponsor.
Is it possible to change a sponsor if they are uncooperative?
If a sponsor is uncooperative, the process becomes more complex and may require legal action. A court judgment for termination of the sponsorship agreement would then be necessary to proceed with the change.
What is the difference between a local sponsor and a service agent?
A local sponsor is a 51% shareholder in an LLC. A local service agent is a UAE national who is appointed to represent a professional license (Civil Company) and does not hold shares in the company.