Al-Watani discussed it today.. 9 parliamentary comments on the "Cooperatives Bill"

The report of the Financial, Economic and Industrial Affairs Committee of the Federal National Council, on the "Federal Draft Law on Cooperatives", which was discussed by the Council this morning, during its closing session of the third ordinary session of the seventeenth legislative term, made 9 main observations on its articles and clauses, the first of which is that The draft law is free of the restriction that the founders and shareholders of the “consumer cooperative” should be citizens of the state. Therefore, the committee decided to add a new provision to the draft law that stipulates “that the founders and shareholders of the typical consumer cooperative are citizens of the state,” given the economic and strategic importance of this type of cooperative, While defining its terms and conditions was left to the executive regulations of the draft law. 

The list included the nine notes, as well.Organizing the draft law for a new provision that includes dividing the cooperative shares into preference shares and ordinary shares, with the draft law granting preference shares a privilege over ordinary shares, in terms of priority in obtaining profits and collecting their value in the event of liquidation or dissolution of the cooperative, which is what the committee considered that it may lead to failure The development of cooperatives and their playing the role expected of them in supporting and developing the national economy, as it will lead to inequality between cooperative shareholders who own common shares and have invested in them for a long time, during which they bore the risks of beginnings, in return for granting preference shares holders advantages over them, which will lead to a practical result of selling the owners Ordinary shares of their shares and their transformation into owners of preferential shares, so the committee decided to cancel the idea of ​​preference shares from the draft law and replace it with financial instruments as sources of financing for cooperatives, leaving determining the nature and types of these tools to the executive regulations, in addition to granting cooperatives full authority.Using financial instruments or financing shares in accordance with their basic solidarity and after the approval of the General Assembly by a special resolution. 

According to the report, the observations also included, that dividing cooperatives into small-sized and large-sized cooperatives, will entail practical difficulties due to the great disparity between cooperatives in the different emirates, and that a cooperative that is large in one emirate may be small in another emirate, and based on The committee created another criterion for dividing cooperatives, which is converting them into basic and non-essential cooperatives according to the nature of the activity they practice, their capital, the number of their shareholders and other determinants to be determined by the executive regulations. 

In the notes as well, the provision that came in Article 10 of the draft law, which decided that the percentage of members representing major shareholders in the board of directors, was deleted not to exceed 3 members, due to the practical difficulties that may result from implementing this provision on the ground, in addition to that this is a restriction. It has no justification for the right of major shareholders to participate in the management of cooperatives, through the member of the board of directors elected by the general assembly. 3 seats only. 

In the observations, the committee considered the introduction of a new clause in the special provisions for voting in basic cooperatives, to the effect that local authorities have the right to determine a voting mechanism for the licensed cooperatives, in order to give the draft law flexibility and validity for application in all emirates of the country according to their economic activities, and also considered a commitment to the principle of transparency, a necessity. That the financial statements, the final budget, the auditor’s report and the report of the board of directors be with the members of the general assembly, the competent authority and the ministry in sufficient time for the convening of the general assembly, so I introduced a new provision in the draft law that the financial statements and other data mentioned previously on the website of the cooperative, in addition to To provide Tawuniya shareholders with a copy of it, and it also specified the time periods during which this data is sent to Tawuniya shareholders.

Among the observations monitored by the committee, the draft law omitted some important provisions related to liquidation and dissolution and referred the whole matter to the executive regulations, as the committee considered that this approach needs to be reconsidered, because liquidation and dissolution relate to parties other than the cooperative as a legal person, such as cooperative creditors, suppliers and employees and its shareholders in non-service cooperatives, etc., and accordingly, the committee’s approach was based on the differentiation between the procedures for dissolving and liquidating the cooperative and the objective provisions for dissolving and liquidating the cooperative and the decision to protect the rights of the related parties, and then the committee ended to amend the provisions of the draft law by referring to the executive regulations to determine the procedures As for the remaining substantive provisions that guarantee the protection of the rights of the creditors and shareholders of the cooperative, it referred them to the controls specified in the legislation in force in the country, such as the decree-law on bankruptcy and the decree-law on commercial companies, and others.Other laws in force in the country. 

On another note, the committee stressed the great importance of cooperatives’ commitment to the principles of governance because it is one of the main controls that ensure the protection of shareholders’ rights. That the draft law includes a set of principles that constitute the main foundations of the principles of governance, and accordingly the committee decided the necessity of separating the authority of management and the authority of oversight, so it amended the second item of Article 13 by granting the competence to appoint the auditor to the competent authority instead of the committee, according to which the auditor will audit the expenses The Committee, it is not permissible for it to appoint a person who will audit its accounts. 

In the last note, the committee clarified that the draft law frequently referred to many essential and basic provisions to the executive regulations. It also noted that the draft law is not of a text that guarantees the compatibility of local authorities with the provisions that the minister will propose in the executive regulations or cooperative policy and submit them to the Council of Ministers. Accordingly, the committee created in Article 30 of the draft law includes a provision to ensure the achievement of this consensus, by stipulating the approval of the local authorities on the minister’s proposal regarding the executive regulations or cooperative policy, which he will submit to the Council of Ministers. 

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