Saudi Arabia has adopted a new Cooperative Law aimed at updating the regulatory framework for the sector and strengthening its contribution to the country’s economic and social development. The law was approved by the Council of Ministers on 1 September 2026 and formalised through Royal Decree No. M/96, dated 7 September, published in the official gazette Umm Al-Qura on 18 September 2026.
According to official documentation, the reform replaces the previous Law on Cooperative Societies and establishes a specific regulatory framework for the establishment, administration, supervision and dissolution of these entities.
The law defines a cooperative as an independent entity voluntarily formed by members who share economic, social and cultural needs and objectives. It is collectively owned, and its management must comply with cooperative principles.
As a general rule, establishing a cooperative requires a minimum of 12 founding members. However, the competent minister may exceptionally authorise its establishment with at least five members, in accordance with the applicable regulatory conditions.
Stronger governance and supervisory requirements
The Board of Directors must have at least five members, elected by the general assembly, subject to the exceptions provided for the first board.
The legislation also regulates members’ rights, the transfer of shares, members’ withdrawal, resource management and the distribution of profits. In addition, it allows two or more cooperatives to merge, subject to approval by their respective general assemblies and the competent ministry.
Supervision falls under the responsibility of the Ministry of Human Resources and Social Development, in coordination with the public bodies responsible for the various areas of activity.
Transition period for existing entities
The Royal Decree stipulates that cooperatives already established when the new law enters into force will have a period of 12 months, starting from that date, to bring their status and bylaws into compliance with the new provisions and their implementing regulations.
In accordance with its final provision, the law will enter into force 90 days after its publication in the official gazette, that is, on 18 December 2026.
Objective: strengthening the cooperative sector
In a statement published following the adoption of the new law, the Ministry of Human Resources and Social Development stated that the new law represents a qualitative shift towards a more flexible legislative framework focused on growth, empowerment and sustainability, and that it strengthens the independence of cooperatives and the principles of governance, transparency, accountability and member participation.
Furthermore, it empowers central cooperatives, expands the scope of shared services and regulates mergers in a way that improves resource utilisation and increases competitiveness, while supporting the diversification of activities and investments and the achievement of financial sustainability.
The law is the result of institutional work that has benefited from international experience and best practices, with the participation of the authorities, the cooperative sector and other stakeholders.
