New cooperative system details
The new cooperative system in Saudi Arabia, which has been officially announced and will be implemented following approval by the Council of Ministers and Royal Decree, introduces comprehensive reforms to the regulation of cooperative work. The goal is to reshape the sector after nearly 17 years of the previous system. The amendments define a cooperative as an independent association aimed at meeting the economic, social, and cultural needs of its members through joint ownership, with the Ministry of Human Resources and Social Development overseeing its organization. The system stipulates that the minimum number of founders to establish a cooperative is 12, with a 60-day period to decide on the application. Any approval is subject to management councils consisting of five members, with one vote per member regardless of the number of shares. It also emphasizes profit distribution in a manner that balances reserve requirements, members' rights, and capacity-building support by allocating a percentage of profits for training and social services. Additionally, the system allows for the unification of cooperatives through mergers and divisions, as well as the establishment of central cooperatives and a cooperative management council, under strict oversight by the ministry. The ministry retains the right to dissolve cooperatives in cases of violations. The system sets a 12-month period for rectifying existing situations and mandates the issuance of an executive regulation within 90 days of system adoption. It will go into effect 90 days after publication, with the aim of organizing the sector more transparently and flexibly.
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