When establishing a company on the UAE mainland, particularly for professional services like consulting or IT, understanding the distinction between a Local Service Agent (LSA) and a local sponsor is critical. Following recent legal reforms allowing 100% foreign ownership for most commercial and industrial activities, the traditional 51% Emirati sponsor model is becoming less common. However, for professional licenses (sole establishments or civil companies), an LSA is still mandatory. An LSA is a UAE national or a UAE-owned company whose role is purely administrative; they assist with licensing, visas, and government paperwork for a fixed annual fee, holding no shares and having no claim on profits or management.
In contrast, a traditional local sponsor was required to hold 51% of the shares in a Limited Liability Company (LLC), giving them significant legal control, though day-to-day management was often delegated via a side agreement. Choosing an LSA model for a professional license provides entrepreneurs with 100% ownership and complete financial and operational control over their business. This structure is ideal for service-oriented professionals who want to maintain full autonomy while fulfilling all legal requirements for operating on the mainland. Making the right choice between these structures is fundamental to your company's long-term success and governance.