Article 2 of the Saudi Cooperative Societies Law
المادة 2 من نظام الجمعيات التعاونية · الباب الأول: أحكام عامة
The article defines a cooperative society as one formed by individuals to improve its members' economic and social condition by following cooperative principles, and requires its name to indicate its cooperative character and the type of its work.
Official text (Arabic)
This article has not been amended since the law was issued.
تعد جمعية تعاونية كُل جمعية يكوِّنها أفراد طِبقاً لأحكام هذا النِظام، بهدف تحسين الحالة الاقتصادية والاجتماعية لأعضائها ،سواء في نواحي الإنتاج، أم الاستِهلاك ،أم التسويق أم الخدمات ، باشتِراك جهود الأعضاء مُتبِعة في ذلك المبادئ التعاونية. ويجب أن يشتمل اسم الجمعية على ما يدل على صفتها التعاونية ،ونوع عملها .
This is the official Arabic wording, the only legally binding version. We do not translate the law itself; the explanation below is ours. Official source: Bureau of Experts at the Council of Ministers
Article 2 explained in plain English
This article defines the nature of the cooperative society and what distinguishes it, then sets a condition relating to its name.
First: the elements of a cooperative society
- Who forms it: individuals, in accordance with the provisions of the Law.
- Its aim: improving the economic and social condition of its members, so the main beneficiaries are the members themselves.
- Its fields of work: production, consumption, marketing or services.
- Its means: the joint efforts of the members.
- Its approach: following cooperative principles.
Second: the society's name
The society's name must include what indicates two things:
- Its cooperative character.
- The type of its work.
A general name that does not show it is cooperative or does not reveal its field of activity is therefore not enough.
This article builds on the definitions in Article 1, which makes the «society» any cooperative society registered under the provisions of the Law, and the «member» the founding member or one who joins after establishment.
Article 3 follows to set the society's composition: its individuals may not number fewer than twelve persons, and what one member owns may not exceed 10% of the capital, with establishment permitted by at least five members in exceptional cases assessed by the Minister, with an ownership limit of 20%.
Anyone considering establishing a cooperative society can consult a lawyer who specializes in commercial and corporate cases.
Practical example
A number of date farmers in Qassim agreed to set up an entity to pool their production and market it jointly to improve their income. Under this article, that entity can be a cooperative society, because its aim is to improve its members' economic condition in marketing through their joint efforts, and its name must indicate its cooperative character and the type of its work, for example by including wording showing it is a cooperative society for marketing dates.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
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Frequently asked questions about Article 2 of the Saudi Cooperative Societies Law
What is a cooperative society under Saudi law?
A society formed by individuals under the provisions of the Law to improve its members' economic and social condition in production, consumption, marketing or services, through the members' joint efforts and following cooperative principles.
What are the conditions for a cooperative society's name?
Its name must include what indicates its cooperative character and the type of its work.
What fields do cooperative societies work in?
Production, consumption, marketing or services.
More articles on Definition of the Cooperative Society and General Provisions
- Article 1
The article defines the key terms in the Cooperative Societies Law, including the Ministry, the society, the general assembly, the board of directors, the member and the Regulations.
يقصد بالألفاظ والعبارات الآتية – أينما وردت في هذا النظام – المعاني المبينة أمام كل منها ما لم يقتض السياق خلاف ذلك. الوزارة : وزارة الشئون الاجتماعية. الوزير:
- Article 41
The article provides that the relevant ministries exercise technical supervision over cooperative societies as to their activities.
تتولى الوزارات ذات العلاقة الإشراف الفني على الجمعيات، وذلك فيما يخص نشاطاتها.
- Article 42
The article authorizes the Minister to issue the Implementing Regulations and the decisions needed to implement the Cooperative Societies Law, with the Regulations to be issued within 90 days of the Law's issuance and to apply from the date the Law takes effect.
يصدر الوزير اللائحة والقرارات اللازمة لتنفيذ أحكام هذا النظام، على أن تصدر اللائحة في مدة أقصاها (تسعون) يومًا من تاريخ صدوره، ويعمل بها من تاريخ العمل بالنظام.
- Article 43
The article provides that this Law replaces the Cooperative Societies Law issued by Decree No. 26 of 1382 AH and the Regulation on Subsidies to Cooperative Societies issued by Council of Ministers Resolution No. 419 of 1398 AH.
يحل هذا النظام محل نظام الجمعيات التعاونية، الصادر بالمرسوم ذي الرقم 26 والتاريخ 25 / 6 / 1382 هـ، وكذا لائحة إعانة الجمعيات التعاونية، الصادرة بقرار مجلس الوزر
- Article 44
The article provides that the Cooperative Societies Law is published in the Official Gazette and takes effect 90 days after its publication.
ينشر هذا النظام في الجريدة الرسمية، ويعمل به بعد (تسعين) يومًا من تاريخ نشره.
The texts are reproduced from the official website of the Bureau of Experts at the Council of Ministers for reference; where they differ, the officially published Arabic text prevails. This content is not legal advice.