Can Foreigners Open a Company in Dubai Without a Local Sponsor?

Foreign Ownership · Company Setup · Dubai 2026

Until 2021, most foreigners setting up a mainland company in Dubai needed a UAE national to own 51% of the business. That rule no longer exists. But the full picture of foreign ownership in Dubai in 2026 is more nuanced than a simple yes or no.

The local sponsor requirement was one of the most significant barriers to foreign investment in the UAE for decades. Under the old Commercial Companies Law, foreigners could own a maximum of 49% of a mainland LLC — the remaining 51% had to be held by a UAE national sponsor who, in practice, often had no operational role in the business but received annual fees for their nominal ownership.

That system was dismantled by the UAE Ministry of Economy through Federal Decree-Law No. 32 of 2021, which came into force on June 2, 2021. The amended Commercial Companies Law removed the mandatory 51% Emirati ownership requirement for most business activities, allowing foreigners to own 100% of their mainland UAE companies for the first time. Here is exactly what changed, what exceptions remain, and what this means practically for foreign investors in 2026.

1. The 2021 Law Change — What Actually Changed

Federal Decree-Law No. 32 of 2021 on Commercial Companies removed the blanket 51% UAE national ownership requirement for mainland LLCs. Under the new law, foreigners can own 100% of a mainland LLC for the vast majority of commercial and professional activities licensed through the Dubai Department of Economy and Tourism (DET) — without requiring any UAE national partner, sponsor, or silent shareholder.

2. The Exceptions — Activities That Still Require Emirati Involvement

The 2021 law change applies to the vast majority of business activities — but not all. The UAE Ministry of Economy maintains a list of "Strategic Activities" that remain subject to UAE national ownership requirements for national security, strategic, or public interest reasons. These activities require a minimum of 51% UAE national ownership and are not accessible to 100% foreign-owned mainland companies.

For the overwhelming majority of foreign investors — those in consulting, trading, technology, retail, professional services, real estate brokerage, marketing, logistics, hospitality, and manufacturing — 100% foreign ownership on the mainland is fully available and straightforward to obtain.

3. Free Zones — 100% Foreign Ownership Has Always Applied

It is worth noting that the 2021 law change was relevant primarily for mainland companies. Free zone companies in the UAE have always allowed 100% foreign ownership — this was one of the defining features of the free zone model from its inception. If you set up in DMCC, IFZA, DIFC, Dubai South, or any of Dubai's 30+ free zones, you have always been able to own 100% of your company without any UAE national involvement.

The practical significance of the 2021 law change is therefore specifically for businesses that need a mainland license — either because their activity requires mainland presence, they want to work directly with UAE government clients, or they want to operate physical locations across the UAE without free zone restrictions. For a detailed comparison of the two structures, see our guide on the Dubai Mainland vs Free Zone comparison.

4. Local Agent vs Local Sponsor — An Important Distinction

Even after the 2021 law change, some foreign investors in Dubai encounter references to needing a "local agent" — and confuse this with the old "local sponsor" requirement. These are two very different things.

A local sponsor under the old law held equity — 51% ownership of your company. They were a legal shareholder with corresponding rights, and their involvement created real legal and business risks for the foreign investor. This requirement has been abolished for most activities.

A local agent, by contrast, holds no equity and has no ownership rights in your company whatsoever. For certain professional license categories — particularly sole establishments (individual professional licenses) operated by foreigners — a UAE national local agent is still required to act as the registered agent for the license. The agent receives an annual fee (typically AED 5,000–15,000) but cannot interfere in your business operations, cannot sign on behalf of your company, and has no claim to your profits or assets. The foreign professional retains 100% ownership and full operational control.

5. Practical Steps to Set Up as a 100% Foreign Owner on the Mainland

6. Do You Still Need a "Service Agent" for Any Activity?

There is one remaining scenario where a UAE national agent is still technically involved — the sole establishment (individual professional license). If a foreign individual wants to operate a professional business under their own name (rather than as a corporate LLC), the licensing process for some professional categories still requires a UAE national service agent. This is not an ownership arrangement — the agent has no equity — but it does involve a recurring fee.

For most foreign investors, incorporating as an LLC (even a single-member LLC with 100% foreign ownership) is cleaner, offers stronger liability protection, and avoids the service agent requirement entirely. An LLC structure is available to any foreigner for most commercial activities through DET with full 100% ownership and no UAE national involvement of any kind.

For the complete guide to setting up your company in Dubai as a foreigner — from choosing your structure to banking and tax registration — see our step-by-step company setup guide. For cost details, see our breakdowns of mainland company costs and free zone company costs.

© 2026 Dubai Capital Advisors · dubaicapitaladvisors.com · Informational content only — not legal advice.