The new co-operative law that aims to boost the co-operatives sector in the UAE will come into effect next month, according to Ministry of Economy.
The new law will encourage members of the community to establish co-operatives in sectors including technology, finance, health, tourism, creative industries as well as consumer-related sectors and others.
The new law is “mainly for expansion of the co-operatives sector and how we can provide all the support and tools for the existing ones as well as encouraging [the establishment of] new ones … just to support the whole eco-system of the co-operatives in the UAE”, Samah AlHajeri, director of co-operatives and strategic reserve at the Ministry of Economy, told The National on Thursday.
The previous law basically supported the "traditional type of co-operative" but the new law “is very agile, very flexible and very advanced in accommodating new types of co-operatives, including production co-ops, consumer co-ops, sports co-ops, the technological co-operatives as well”, she said.
It also introduces “new improvement”, when it comes to the involvement of non-Emiratis in obtaining membership in co-operatives. At present, the membership is open only to Emiratis.
“Currently we have 100,000 members in the co-operative sector and we are expecting to have more than 500,000 in the coming years," Ms AlHajeri said.
At the end of 2020, the UAE had 42 co-operatives with 200 branches operating across the country, with a total capital of more than Dh3.1 billion ($840 million) and a net profit of Dh1bn, according to state news agency Wam.
The enactment of the new law comes as the UAE undertakes measures to boost its economy. Last year, it unveiled a new industrial strategy to boost the contribution of the industrial sector to Dh300bn in the next 10 years, from Dh133bn currently.
The country also overhauled its commercial companies' law in 2020 to attract more foreign capital and annulled the requirement for onshore companies to have Emirati shareholders.
New legal reforms were also introduced to help the country attract more foreign direct investment and support the growth of small and medium enterprises to strengthen its economy.
The new co-operative law is expected to increase the contribution of the co-operatives sector to the country’s non-oil gross domestic product (GDP) by more than 5 per cent by 2031, from less than 1 per cent currently.
They will also be encouraged to list their shares on local financial markets as well as raise money through the issuing of bonds or sukuk or other financial instruments.
In February, the UAE Cabinet approved a decision to let co-operative associations trade their shares on local financial markets. After the decision, in July Union Co-op became the first UAE retail co-operative to list its shares on the Dubai Financial Market.
“The law creates new prospects for all members of society to participate in the co-operative sector’s operations, in addition to building a new generation of leaders in the co-operatives sector,” said Abdullah Al Saleh, Undersecretary of the Ministry of Economy.
“It generates more employment opportunities in this vital sector, encouraging and spreading the innovative co-operative culture in society.”
Key highlights of the new co-operative law
♦ The law enables co-operative societies to open branches in the UAE, subject to the approval of the relevant authorities.
♦ It grants the co-operative society the right to transform into a company in the specified form, as per the conditions to be stipulated in the executive regulations of the law. Moreover, a co-operative society may merge with another one, subject to the approval of the relevant authority.
♦ During the incorporation phase, the founders shall elect, from among themselves, a committee comprising not less than three persons, including a president, a vice president, and a financial officer, to assume the tasks and mandate to be agreed upon to complete the procedures of incorporation, contracts, and disbursement and legally represent the co-operative society before official entities.
♦ Co-operatives must keep a co-operatives register, which includes all data about the members, their qualities and the number of shares they own.
♦ The law also specifies penalties and fines for offenders, including a fine of not less than Dh200,000 and not more than Dh1 million, for anyone who furnishes false or misleading data in the articles of incorporation, statutes, share prospectuses, or annual statements and reports.
