According to a top official of the Ministry of Economy, UAE has introduced a new cooperative law that would encourage members of the community to found cooperatives in new industries and diversify their businesses in order to expand their contributions to the UAE’s non-oil gross domestic product (GDP) to 5% by 2031.
Abdullah bin Ahmed Al Saleh, Undersecretary of the Ministry of Economy, speaking on the new law opinionated that the Federal Decree-Law No. 6 of 2022 on cooperatives was published by the UAE in an effort to expand and improve the cooperatives sector and raise its degree of prosperity.
The Implementation Of A New UAE Cooperative Law
The undersecretary further remarked at the press conference that the Ministry of Economy has established two new objectives in light of the new law. If the first one is to enhance the sector’s current contribution of less than 1% to cooperatives’ share of the non-oil GDP to 5% by the year 2031, the second objective is to more than double the existing level of 100,435 members who contribute to cooperative unions to approximately 500,000.
The ministry pushed the cooperatives to expand their business activities to include consumption cooperatives, production cooperatives, employees’ and professionals’ cooperatives, community cooperatives, service cooperatives (financial and health), digital cooperatives, platform cooperatives, and other cooperatives approved by the Cabinet.
In line with their efforts to enhance sustainable economic and social development, the nation is eager to carry out policies that comprehensively boost the performance of this important industry, support the diversity, competitiveness, and sustainability of the national economy in line with the tenets of the 50 and the UAE Centennial 2071 goals, and strengthen the cooperative system and its contribution to the national GDP.
New Regulation On The Verge
The regulation that is due to take effect next month represents a significant turning point in the evolution of the sector’s governance.
Al Saleh stated that the Ministry of Economy has taken a proactive and flexible approach to the drafting of the law, taking into account future economic trends. These partners include municipal and federal government institutions, the cooperatives sector, and the private sector.
In addition, he claimed that the ministry depended on analyses that compare cooperative development in developed nations with that in developing nations.
The Undersecretary finished by revealing that the UAE Federal National Council had also examined the Law in order to ensure that it was current and integrated with international best practices and that it met the changing needs of the business environment in the UAE.
According to the law, cooperative unions in the UAE will have much more room to diversify their operations and increase their market share while providing total participant rights protection. The law also encourages the development of influential Emirati cooperative associations in emerging industries, particularly those related to the new economy, and even in the fields of health, education, tourism, financial services, and other crucial and important industries in the United Arab Emirates.
Additionally, the legislation grants cooperative societies the ability to form any sort of company in accordance with the conditions and guidelines established by the competent authorities.
They also have the power to invest in other firms and cooperative associations by purchasing shares, and they can separately or collectively invest in or participate in the establishment of new businesses or cooperative associations.
Key Highlights Of The Law In A Nutshell
- Enables the establishment of cooperative societies’ branches in the UAE.
- Gives the cooperative organization permission to become a business in the designated form. A cooperative society can join with another one under certain conditions.
- The founders must choose a committee during the incorporation stage from among themselves that comprises at least three members, including a president, a vice president, and a financial officer.
- Co-operatives are required to maintain a co-operatives register, which contains information on each member’s characteristics and the number of shares they currently own.
- Any person who provides false or misleading information in the articles of incorporation, laws, share prospectuses, or annual statements and reports is subject to penalties and fines (In between Dh200,000 and Dh1 million).