The new UAE law on cooperatives will come into effect in December, the Ministry of Economy said on Thursday.
The law will encourage members of the community to establish cooperatives in new sectors and diversify their operations to include areas such as 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.
The law also allows for listing and trading cooperative associations in the country’s financial markets.
“The UAE issued the Federal Decree-Law No. 6 of 2022 on cooperatives, aimed at developing and enhancing the cooperatives sector to take it to higher levels of prosperity. In light of the new law, the Ministry of Economy has set two new goals. The first one is to increase the contribution of cooperatives to the non-oil GDP by 5 per cent by the year 2031, as compared to the sector’s current contribution of less than 1 per cent. The second goal is to increase the number of members contributing to cooperative unions to nearly 500,000 from the current 100,435,” said Abdullah Bin Ahmed Al Saleh, Undersecretary of the Ministry of Economy.
As per the law, cooperative unions will have more room to diversify their activities and expand in the country’s markets while ensuring complete protection of the participants’ rights. The law also supports building leading Emirati cooperative associations in new sectors, most notably the new economy sectors, as well as in the fields of health, education, tourism, financial services, and other key sectors.
The law also supports the expansion of cooperatives’ activities and businesses in the country and the provision of technical, financial, operational, and marketing support to them by allowing them to add strategic partners for the benefit of the cooperative.
In addition, the law gives cooperative associations the right to establish all types of companies, as per the requirements and procedures specified by the relevant authorities. They also have the right to acquire shares in other companies and cooperative associations, as well as the option to acquire or participate in the establishment of commercial companies or cooperative associations, whether alone or with others.
The new law supports the national digital economy as well by allowing the establishment of new cooperative association in digital fields, and the expansion in advanced technological activities, thus keeping pace with global advancements in this regard, and supporting the UAE’s vision on investing in and expanding the new economy sectors.
In addition, the law also specifies penalties and fines for violators. A fine of no less than Dh200,000 and not more than Dh1 million shall be imposed for anyone who furnishes false or misleading data in the articles of incorporation, statutes, share prospectuses, or annual statements and reports, and a fine of no less than Dh100,000 and not more than Dh1 million for anyone who unlawfully uses a name or logo that disguises it as a cooperative.