Dubai has long been recognized for its business-friendly policies and tax benefits, attracting numerous global companies. However, one of the most common questions when setting up a company is whether appointing a Local Agent is mandatory. Below is an overview of the concept, role, and necessity of a Local Agent.
Definition of a Local Agent
A Local Agent refers to a UAE national or a UAE-owned company holding 100% local ownership. In certain cases, foreign investors establishing a company in Dubai Mainland are legally required to appoint a Local Agent as their local representative. This system originated when foreign investors were restricted from holding full ownership and was designed to assist with administrative and legal procedures.
Main Roles of a Local Agent
- Administrative Representation: Handling official filings, business registration, license renewals, and visa applications under the capacity of a UAE national.
- Liaison with Government Authorities: Acting as a point of contact with the Department of Economy and Tourism (DED), General Directorate of Residency and Foreigners Affairs (GDRFA), Ministry of Human Resources and Emiratisation (MOHRE), and other government agencies.
- Compliance with Legal Requirements: Meeting the mandatory UAE national representative requirements for certain business activities or company structures.
- Past Ownership Requirement: Previously, UAE nationals were required to hold at least 51% ownership; however, recent reforms now allow 100% foreign ownership for many sectors.
When a Local Agent is Required
A Local Agent is not always mandatory, and the requirement depends on the business jurisdiction and activity.
- Free Zone: No Local Agent is required. 100% foreign ownership is permitted, and the Free Zone authority assists with administrative and legal procedures.
- Mainland:
- Commercial and Industrial Licenses: Recent legal reforms allow 100% foreign ownership for most activities, removing the need for a Local Agent in many cases. However, certain regulated sectors still require one.
- Professional License: Activities such as consulting, accounting, and legal advisory must appoint a Local Agent. This agent does not hold equity but represents the business in administrative and governmental matters.
In conclusion, whether a Local Agent is required depends on the business jurisdiction (Free Zone or Mainland) and the nature of the activity. Investors should verify the latest licensing requirements before proceeding.
When a Local Agent is Not Required
The UAE government now permits full foreign ownership in most Mainland commercial and industrial sectors. In such cases, a Local Agent is not necessary, and companies can be fully foreign-owned.
However, professional services (consulting, legal, accounting, etc.) still require the appointment of a Local Service Agent for administrative representation.
Conclusion
The necessity of a Local Agent when establishing a company in Dubai depends on the jurisdiction and business activity:
- Free Zone → Not required
- Mainland (Commercial/Industrial) → Mostly not required, some sectors still require it
- Mainland (Professional Services) → Required
Before incorporation, it is essential to review the licensing requirements and the latest laws. If appointing a Local Agent, clearly define their role and authority in the contract to prevent future disputes.
Premia TNC Can Help You
Through this article, we have outlined the necessity of a Local Agent when setting up a company in Dubai. Premia TNC’s team of experts has extensive experience and knowledge and can provide tailored, one-on-one consulting to help you launch your business successfully in Dubai. We offer comprehensive services, including company incorporation, operational consulting, accounting, taxation, and visa advisory. Should you require assistance, please contact us for professional support.