Monday 27 June 2022 - 8:43:19 am

Cooperatives' sector driving force behind competitive economy: Minister of Economy


ABU DHABI, 18th February, 2022 (WAM) -- Abdulla bin Touq Al Marri, Minister of Economy, said that the cooperatives sector is a key contributor to the national economy’s diversity and competitiveness.

The minister made the remarks while commenting on the UAE Cabinet’s recent decision to allow trading of shares of cooperatives on the financial markets, stressing that the sector plays a significant role in the achievement of the UAE's sustainable economic and social development goals for the next 50, thanks to the vision and directives of the wise leadership.

He highlighted in this regard the UAE leadership's directives to promoting this sector as a major driver of economic development, prosperity and well-being of the UAE society.

The minister explained that the Cabinet Resolution No. 2 of 2022 falls within the efforts made by the government to develop the UAE’s cooperatives sector to ensure competitiveness at the global level.

He noted that the resolution is a major step forward in regulating the procedures of the cooperatives sector, adding that the UAE is the first country in the region to adopt this step.

"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."

He emphasised 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 stockholders 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, 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’ stockholders 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, away from any non-regulated trading; hence promoting shareholder confidence.

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 get listed 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 for listing on 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 forms 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 effective 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 of attendees of the ordinary meetings held by the General Assembly. This procedure does not impact the shareholder rights and has been regulated by the UAE’s Cabinet as 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 requires alignment with the statute and amendment in accordance with the established procedures".

By the end of 2020, there have been 42 cooperatives with 200 branches operating in the UAE with a total capital of over AED3.1 billion, and net profit of AED1 billion.

WAM/Esraa Ismail/Lina ibrahim/Hatem Mohamed