Commenting on the Cabinet decision allowing the listing and trading of cooperatives’ shares on financial markets

H.E. Bin Touq: Cooperative sector an important contributor to the diversity & competitiveness of the national economy; new decision to enhance transparency & flexibility in the UAE’s cooperative sector

Development of the cooperative sector a major axis within UAE’s new economic model, in line with goals of 50

Abu Dhabi, 18 February 2022:  Commenting on the UAE Cabinet’s decision to allow cooperatives in the country to list and trade their shares on local financial markets via specialized platforms, H.E. Abdulla bin Touq Al Marri, Minister of Economy, said that the cooperative sector is an important contributor to the national economy’s diversity and competitiveness.

H.E. added that the sector plays a vital role in the achievement of the sustainable economic and social development goals of the UAE, thanks to the vision and directives of the wise leadership and its focus on promoting this sector as a major driver of economic development, prosperity and well-being of the society. He further pointed out that the development of the cooperative sector’s operations is one of the main development paths in the UAE’s new economic model in line with the objectives of the 50 and the principles of proactivity, flexibility and the development of future sectors.

Furthermore, the Minister of Economy explained that the Cabinet Resolution No. 2 of 2022 forms part of the efforts made by the government to develop the UAE’s cooperative sector to achieve leadership and competitiveness at the global level. He noted that the resolution is a major step forward in regulating the procedures of the cooperative sector and that the UAE is the first country to adopt this step in the region. The resolution will allow cooperatives to benefit from the advanced services provided by the UAE’s financial markets in terms of transparency, flexibility and speed of procedures, and will also enhance the economic return on cooperative activities.  In addition, the resolution offers plenty of benefits to shareholders in terms of preservation of rights, enabling sound practices in trading operations, and ensuring their ease and reliability.

H.E. Bin Touq emphasized that the move enhances the confidence of shareholders and develops the regulatory and supervisory processes for stock trading. It creates new opportunities for improvement and development regarding trading in cooperative shares on the financial markets, in a manner that achieves the interests of cooperatives and shareholders alike.

As per the resolution, the financial markets, when listing and trading cooperative shares, play the role of the registrar, as they undertake the task of maintaining the register that shows the membership of the cooperative shareholders, the number of shares and any relevant details such as profits and any other notes related to the registration and trading.  After obtaining the approval of the Ministry of Economy and the Securities and Commodities Authority, the financial markets will issue decisions regarding the terms, conditions and controls related to the operations of registering and trading cooperative shares. These will determine all procedures, standards, requirements, forms and mechanisms related to the registration and trading of cooperative societies’ shares, the transfer of their ownership and the settlement of rights arising from them.

This procedure will contribute to creating a mechanism between the concerned partners in the UAE to enhance the performance of cooperatives, provide new possibilities to preserve the rights of shareholders, develop mechanisms for trading or assigning shares. It will also enable transferring of their ownership easily and transparently without being subjected to any exploitation, and reduce fake trading through intermediaries by providing direct trading among shareholders themselves.

Meanwhile, H.E. Dr. Maryam Butti Al Suwaidi, CEO of the Securities and Commodities Authority, underlined the importance of the resolution and the benefits of its implementation to all concerned parties. She noted that the issuance of the resolution is the first decision in 2022 that deals with emerging topics in the financial market, pointing out that the resolution is a reflection of the UAE’s aspiration to lead on all fronts. The UAE is the first country in the region to allow the listing and trading of cooperative shares on the financial markets. The move is an advanced and unprecedented one locally and regionally, in terms of organizing the procedures of the cooperative sector in a way that allows the activation and deepening of its role in supporting the economic sectors and shareholders in the country.

Dr. Maryam Al Suwaidi said that the listing of cooperatives’ shares on a specific platform on the country’s financial markets will allow the cooperatives’ contributors to conduct supervised and regulated exchanges of shares. She noted that the true value of shares will be transparently determined as per the supply and demand factors, and without any non-regulated trading; hence promoting the confidence of the contributors.

Samah Al Hajri, Director of the Department of Cooperatives and Strategic Inventory at the Ministry of Economy, stated that through this resolution, any cooperative in the UAE is allowed to enlist and trade its shares on the financial markets through simple procedures stipulated in the resolution. The procedures start with the cooperative’s Board of Directors applying to a specific financial market, with which is attached a copy of the Ordinary General Assembly’s resolution and any other instruments requested by the specified market. Copies of the application and resolution are then to be sent to the Ministry of Economy and Securities and Commodities Authority. The financial market would then consider the application in accordance with the legal rules in force and inform the cooperative of its decision within a period of 30 days commencing from the date of the application’s submission.

Samah Al Hajri further explained: “As per the resolution, the cooperative that wishes to list and trade its share on the financial markets through a specific platform should receive the consent of the majority attendees of the Ordinary meetings held by the General Assembly. This procedure does not impact the rights of the contributors and has been regulated by the UAE’s Cabinet per the provisions of the cooperatives law. The cooperative’s statute does not have to be amended regarding the listing and exchanging process, even if the statute states so. As for amending any other conditions but the listing and trading processes, such as members forfeiting their shares to others, then this calls for the alignment with the statute and amendment in accordance with established procedures”.

The resolution is a proactive step by the UAE under the Integrated Federal resolution. The Ministry of Economy and its partners are developing this Act regarding the regulation of the cooperative sector in the country within a new and flexible framework, in line with the ‘Principles of the 50’ and the ambitions of the wise leadership. Additionally, the move falls in line with the directives of the Federal National Council. The newly anticipated law is set to be an effective measure to promote the cooperatives’ growth and offer them more space for operations, expansion, and diversification of their activities and targeted sectors. The law additionally offers ultimate protection of the contributors’ rights and ensures the cooperative conducts the best commercial practices while also maintaining the concept of cooperative work. It is also seen as a vital incentive to promote economic growth and social prosperity.

By the end of 2020, the number of working cooperatives in the UAE reached 42, 20 of which are Consumer Cooperatives, 13 fishermen cooperatives, seven cooperatives of other specialties, and two federal cooperatives. The total capital of these cooperatives exceeded AED 3.1 billion, with a net profit of AED 1 billion, and with almost 200 subsidiaries of them working in the UAE.