Cooperatives Law

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  • By the grace of Almighty God

  • We, Salman bin Abdulaziz Al Saud

  • King of the Kingdom of Saudi Arabia

  • Pursuant to Article (Seventy) of the Basic Law of Governance, issued by Royal Order No. (A/90) dated 27/8/1412 AH.

  • Pursuant to Article (Twenty) of the Council of Ministers Law, issued by Royal Order No. (A/13) dated 3/3/1414 AH.

  • Pursuant to Article (Eighteen) of the Shura Council Law, issued by Royal Order No. (A/91) dated 27/8/1412 AH.

  • Having reviewed the Shura Council Decisions No. (118/11) dated 1/6/1446 AH and No. (415/35) dated 24/12/1447 AH.

  • Having reviewed Council of Ministers Decision No. (278) dated 19/3/1448 AH.

  • We hereby decree as follows:

    • First: Approval of the Cooperatives Law, in the accompanying form.
    • Second: Repeal of Clause (Second) of Royal Decree No. (M/94) dated 22/10/1442 AH.
    • Third: Replacing the term “Cooperative” with the phrase “Cooperative Society” wherever it appears in laws, orders, decisions, and instructions.
    • Fourth: Cooperatives existing at the time the Law enters into force -referred to in Clause (First) of this Decree- shall amend their status and basic bylaws within (twelve) months from the date on which the Law enters into force, so as to comply therewith and with its Implementing Regulations.
    • Fifth: The President of the Council of Ministers, ministers, and heads of the relevant independent authorities -each within his respective jurisdiction- shall implement this Decree.

  • Salman bin Abdulaziz Al Saud

    • The Council of Ministers

      • Having reviewed the transaction received from the Royal Court under No. 922 dated 3/1/1448 AH, enclosing the telegram of His Excellency the Minister of Human Resources and Social Development No. 169130 dated 5/9/1443 AH, concerning the draft Cooperatives Law.

      • Having reviewed the aforementioned draft Law.

      • Having reviewed the Cooperative Societies Law, issued by Royal Decree No. (M/14) dated 10/3/1429 AH.

      • Having reviewed Royal Decree No. (M/94) dated 22/10/1442 AH.

      • Having reviewed Council of Ministers Decision No. (618) dated 20/10/1442 AH.

      • Having reviewed the Statute of the National Center for Non-Profit Sector, issued by Council of Ministers Decision No. (618) dated 20/10/1442 AH.

      • Having reviewed Minutes No. (356) dated 18/12/1444 AH and No. (157) dated 5/9/1446 AH, and Memoranda No. (3896) dated 13/11/1445 AH, No. (112) dated 5/1/1446 AH, No. (2395) dated 6/7/1446 AH, No. (4138) dated 24/12/1446 AH, No. (1509) dated 21/4/1447 AH, No. (2046) dated 29/5/1447 AH, No. (3328) dated 27/9/1447 AH, and No. (464) dated 13/2/1448 AH, prepared by the Bureau of Experts at the Council of Ministers.

      • Having reviewed the recommendation of the Council of Economic and Development Affairs No. (2-1/46/T) dated 26/1/1446 AH.

      • Having reviewed the telegram of the Secretariat of the Council of Political and Security Affairs No. 11705 dated 29/7/1447 AH.

      • Having reviewed the recommendation prepared by the Council of Economic and Development Affairs No. (14-33/47/D) dated 17/8/1447 AH.

      • Having considered the Shura Council Decisions No. (118/11) dated 1/6/1446 AH and No. (415/35) dated 24/12/1447 AH.

      • Having reviewed the recommendation of the General Committee of the Council of Ministers No. (2475) dated 5/3/1448 AH.

      • Hereby decides as follows:

        • First: Approval of the Cooperatives Law, in the accompanying form.
        • Second: Repeal of Clause (Second) of Royal Decree No. (M/94) dated 22/10/1442 AH.
        • Third: Replacing the term “Cooperative” with the phrase “Cooperative Society” wherever it appears in laws, orders, decisions, and instructions.
        • Fourth: Cooperatives existing at the time the Law enters into force -referred to in Clause (First) of this Decision- shall amend their status and basic bylaws within (twelve) months from the date on which the Law enters into force, so as to comply therewith and with its Implementing Regulations.

      • A draft Royal Decree to that effect has been prepared, the form of which is attached hereto.

        • Fifth: The Ministry of Human Resources and Social Development shall coordinate with government entities to provide facilities and advantages that support cooperatives in carrying out their activities, without prejudice to laws, orders, and instructions. The Ministry may -after agreement with the Ministry of Finance and the Ministerial Committee for the Social Support and Subsidies System- provide any other subsidies to cooperatives for the purpose of establishing and launching their activities and overcoming the difficulties they face.

        • Sixth: The Ministry of Human Resources and Social Development shall -in agreement with the Ministry of Finance and the Ministerial Committee for the Social Support and Subsidies System- establish a specific mechanism for providing the support and subsidies -referred to in Clause (Fifth) of this Decision- including their types, the regulations governing their grant, and the method of distributing them.

        • Seventh: The Ministry of Human Resources and Social Development shall review matters relating to support for the cooperatives sector in accordance with the provisions referred to in Clauses (Fifth) and (Sixth) of this Decision, and submit a report thereon after (five) years from the date on which the Law enters into force -referred to in Clause (First) of this Decision- including its views regarding the extent to which continued support is required in light of the results of implementation.

        • Eighth: Article (Fifth) of the Statute of the National Center for Non-Profit Sector, issued by Council of Ministers Decision No. (618) dated 20/10/1442 AH, shall be amended as follows:

          • 1- Paragraph (8) of Clause (First) thereof shall be deleted, and the paragraphs shall be renumbered accordingly.
          • 2- Clause (Third) thereof shall be amended to read as follows: “The members referred to in Paragraphs (6), (7), (8), and (9) shall be appointed by a decision of the Council of Ministers for a term of three years, renewable once.”

        • Ninth: Clause (Twelfth) of Council of Ministers Decision No. (618) dated 20/10/1442 AH shall be deleted.

      • President of the Council of Ministers

Chapter 1: Definitions

Article 1

  • The following words and phrases, wherever they appear in this Law, shall have the meanings set forth opposite each of them, unless the context otherwise requires:

  • Ministry: Ministry of Human Resources and Social Development.

  • Minister: Minister of Human Resources and Social Development.

  • Cooperative: An independent association consisting of members who voluntarily join it to meet their common economic, social, and cultural needs and aspirations through joint ownership, and which is managed in accordance with the cooperative principles specified by the Regulation.

  • General Assembly: The members contributing to the capital of the Cooperative.

  • Board of Directors: The Board of Directors of the Cooperative.

  • Member: Any natural or legal person who acquires membership in the Cooperative in accordance with the provisions of the Law.

Article 2

The relevant government entities -each within its jurisdiction- shall undertake technical supervision of cooperative activities, and the Ministry shall coordinate with those entities to establish the mechanisms necessary for that purpose.

Chapter 2: Cooperative Members

Article: 3

The number of founding members of the cooperative shall not be fewer than (twelve) members. In exceptional cases specified by the Regulation, the Minister may approve its establishment with no fewer than (five) members. The ownership of shares by the founding member shall be in accordance with the Regulations specified by the Regulation.

Article 4

Membership in the cooperative is available to those who meet the membership requirements stipulated in the Regulation and the cooperative’s Bylaws.

Article 5

The Cooperative primarily provides its services to its members, and may provide its services to others, provided that this does not prejudice the interests of the members in accordance with the cooperative principles specified by the Regulation and any other principles specified by the Cooperative’s bylaws, provided that they do not contravene the Law and the Regulation.

Article 6

The value of the share in the cooperative is fixed and may not be altered or divided except in the cases specified by the Regulation.

Article 7

1- A member may withdraw from the cooperative and assign his shares to other members or to non-members, subject to the approval of the Board of Directors. If the assignment is not possible and the Board of Directors approves the withdrawal, the withdrawing member shall be entitled to recover the value of his shares after adding the profits realized on his shares or deducting the losses incurred thereby.

2- If a member loses his membership in the cooperative due to the loss of any of the membership requirements or by expulsion, he shall be entitled to recover the value of his shares after adding the profits realized thereon or deducting the losses incurred thereby.

3- If a member dies, the heirs may agree that one, some, or all of them—provided that they meet the membership requirements—shall replace their deceased predecessor, or they may recover the value of their predecessor’s shares after adding the profits realized thereon or deducting the losses incurred thereby.

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