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Common Questions About a Local Service Agent in Dubai
For a successful company formation in the United Arab Emirates (UAE), foreign companies have to engage a Local Service Agent Dubai (LSA).
An LSA is an Emirati national who is responsible for ensuring that the branch can continue its business in Dubai. However, it’s important to note that an LSA does not have any legal interest in the administration, company, profits, or assets of the local office.
So, what exactly is the role of an LSA and how can it benefit foreign companies? Well, in this article, we will explore the role of an LSA and how it can be a useful tool for foreign companies looking to do business in the UAE.
With that said. Here are common questions to help you understand everything you need to know about an Local Service Agent (LSA).
Common Questions About a Local Service Agent in Dubai
What is a local service agent?
An LSA is a UAE citizen who is accountable for making sure that the branch is able to keep conducting its operations in Dubai. It is necessary to remember, though, that an LSA does not possess any legal stake in the operations, corporation, gains, or resources of the local office.
When establishing a company in Dubai Mainland, it is common practice to appoint a Local Sponsor or Local Service Agent (LSA). An LSA is mandatory for businesses engaging in professional activities in the Mainland, unless the business falls under the list of approved activities that are allowed 100% foreign ownership.
In these cases, the requirement for an LSA does not apply.
However, it is important to note that the requirement for a Local Sponsor or LSA may still apply for businesses engaged in other types of activities.
What is the difference between a local service agent and a local sponsor in Dubai?
The key distinction between a Local Service Agent (LSA) and a Local Sponsor in Dubai is the type of support they offer.
The main responsibility of LSA is to make sure that the branch in Dubai can continue its business operations, but LSA will not have any legal stake in the management, company, profits, or assets of the local office.
On the other hand, a Local Sponsor is a person or firm based in Dubai that is willing to sponsor a foreign business or individual. The Local Sponsor is typically in charge of providing assistance and support to the sponsored party and may be necessary for certain types of visas or business activities in Dubai. A Local Sponsor is basically a 51% shareholder of a limited liability company.
However, a Local Sponsor is now obsolete since the law was changed in 2021 Local Service Agent is the new and correct term for Local Sponsors now
Who can be a local service agent?
As noted, Local Service Agent, is a person or business based in the United Arab Emirates (also known as Emirati) that is responsible for helping foreign companies successfully manage their branch or office in the country.
Is it mandatory to have a local service agent in Dubai Mainland?
In Dubai Mainland, a Local Service Agent (LSA) is required for a foreign company to obtain a professional license under the Dubai mainland jurisdiction.
The LSA is a UAE national with their name on the paper/documents but will not have any legal interest or financial obligations to the company. The LSA must be named on the professional license, even though they are not part of the ownership of the license.
This means that the LSA is required to be listed as a contact on the license, but does not have any ownership stake in the company or the license. The shareholder(s) of the company will still own 100% of the license. This requirement for an LSA is mandatory for obtaining a professional license in
Do I need a local service agent when starting a business in a free zone?
When it comes to starting a business in a free zone in Dubai, it is generally not mandatory to use a Local Service Agent (LSA).
However, it is important to note that every free zone has its own set of rules, regulations, and requirements for business setup. In such cases, it can be beneficial to seek the help of an LSA since they are well-versed with the laws related to business setup in Dubai, and can provide useful guidance and support.
What are the business activities that require a local service agent?
A professional license in Dubai covers a wide range of activities, such as:
- Arts and painting
- Consulting services
- Medical services
- Legal advisory services
- Business process development and document clearing services
- Information technology services
- Design services
- Digital marketing,
- Entertainment artists
- Engineering design services
- Electrical equipment repair and maintenance
- Hairdressing and spa services
- Independent auditing and accounting services
- Repair services for appliances, Vehicles and other equipment (household or industrial).
- Cleaning services
- Educational training services
Note they aren’t limited to these activities only, contact us for more details.
Is a local service agent involved in the day-to-day running of a company?
It is generally not the role of a Local Service Agent (LSA) to be involved in the day-to-day running of a company in Dubai.
Once a company is up and running, it is the responsibility of the business owner or management team to manage the day-to-day operations.
Do they have any involvement in the operations or profit-sharing of the company?
Yes, it is possible for a company to engage the services of an LSA on an ongoing basis under specific terms determined by a company and LSA.
However, it’s a general rule that Local Service Agents (LSAs) do not have any involvement in the operations or profit-sharing of the companies they work with in Dubai.
How do I find a local service agent?
To find a local service agent (LSA) in the UAE, you can try visiting the Choose UAE website. Choose UAE is a platform that connects businesses and service providers in the UAE.
How much is the cost of a local service agent?
The overall cost of an LSA varies depending on the business setup company or the LSAs themselves.
How do I change my local service agent?
If you want to change your local service agent (LSA), there are a few steps you can follow:
- Determine why you want to change your LSA.
- Research and evaluate potential new LSAs.
- Communicate with the new LSA.
- Negotiate terms and sign a contract with the newly chosen LSA.
- Inform your current LSA of your decision.
Keep in mind that changing an LSA can be a time-consuming and potentially disruptive process, so it is important to weigh the costs and benefits carefully before making a decision.
In conclusion, the role of a local service agent in Dubai is essential in ensuring the success of businesses in the city. Keep in mind that an LSA is only needed in some license and promote 100% company ownership in Dubai.
Overall, I hope the following questions and answers have answered all you need to know about LSAs in Dubai.
How Can Choose UAE Help
Choose UAE is the most trusted and reliable source for local service agent services in Dubai. And so, as a corporate service provider we offer LSA service to you. Alternatively, we can as well find clients an LSA, for them to get their trade license
In addition, Choose UAE also provides a wealth of additional services such as company formation, accounting services, and more. With Choose UAE, businesses can be sure they are receiving reliable and high-quality services. Contact us for more details.