Ministry of Housing Keeps up its Campaign Against Housing Cooperatives

The Ministry of Public Works and Housing continues to interfere in housing cooperative societies, from dissolving them to restructuring their administrative councils, prosecuting violators and merging different cooperatives. These actions followed the dismantling of the General Union of Housing Cooperatives, which represented and defended such societies, in 2019.

Though a host of issues plague the housing cooperative sector, around 2,500 societies have nevertheless managed to construct roughly 220,000 housing units in recent decades–compared with just 77,000 units built by government social housing programmes overseen by the Ministry of Housing. 

Dissolving cooperatives

After Law No. 37 of 2019 was issued, dissolving the General Union of Housing Cooperatives, the Ministry of Housing started a campaign to dissolve hundreds of cooperatives in various governorates. 

Under Decree No. 99 of 2011, which regulated the housing cooperatives sector, (and Law No. 37), the Ministry of Housing may dissolve cooperatives for any of four different reasons: 

1. If the cooperative has stopped operations;
2. If any obstacles are preventing the cooperative from continuing its work or meeting its obligations;
3. If membership numbers dip below the foundational number of 100 members;
4. If the cooperative hasn’t implemented any projects three years after receiving its licence. 

A decision by the Ministry of Housing to dissolve a cooperative includes forming a “dissolution committee” headed by an auditor. Such decisions also determine the tasks of the committee and its work period. Decree No. 99 (and Law No. 37) state that the dissolution procedures begin when a decision to dissolve a cooperative is published in the Official Gazette. The ministry may keep a cooperative’s assets and other items via public prosecution. Meanwhile, the previously formed Building Committee has the right to take on the tasks of the former cooperative’s administrative council in all matters related to completing the remaining work, including subdividing and registering the properties. The building committee is composed of elected occupants of the cooperative-built housing block. 

Any balance sheets resulting from the dissolution process go to the Ministry of Housing. Members will only receive the shares and other payments they’ve already paid. The ministry carries out any payment of funds during dissolution in cases where the dissolved cooperative’s assets are insufficient. Finally, the ministry is not obliged to pay off any debts owed by the cooperative except within the scope of the dissolution process. 

After publishing the account information for dissolution, any party may appeal these accounts within two months before the Civil Court of Appeals, which then issues a final judgment. The right of members to file personal liability lawsuits against any administrative council members or other actors carrying out the dissolution is cancelled one year after the announcement of the final dissolution results. 

Violations and punishments

In early October, the Minister of Public Works and Housing issued several statements saying that the Central Commission for Monitoring and Inspection is currently viewing thousands of violations that had allegedly been carried out by cooperatives, with a particular focus on corruption and cronyism. 

Decree No. 99 of 2011 stipulates one to six months imprisonment and a fine of up to SYP 30,000 for all founders and members of cooperatives’ administrative councils or committees, auditors, dissolution officials and cooperative employees for several violations. Those violations include forging tables, giving preference to certain housing applicants, illegally changing construction plans, selling construction materials belonging to the cooperative, disposing of any construction materials outside the scope of the cooperative’s projects, falsifying record ledgers, issuing false documents and more. 

Restructuring administrative councils

According to statements by the Minister of Housing, the ministry has since 2020 worked to re-elect housing cooperative administrative councils and appoint temporary administrative councils. Such councils consist of at least five members elected by a general commission composed solely of founding members of the housing cooperative. Administrative councils serve four-year terms, which can be renewed once. A representative from the Ministry of Housing attends council meetings and elections. 

The Minister of Housing may appoint a temporary administrative council of a housing cooperative composed of the cooperative’s members and a ministry representative in cases where:

• The council’s term has ended;
• Most membership slots are vacant;
• Its interests are under threat;
• Its funds are at risk of being lost;
• It has not yet implemented ministerial decisions.

Members of the dissolved council and cooperative employees must hand over all the cooperative’s assets, records, books and documents to the temporary council. 

Once formed, the temporary council must invite the general authority to convene within three months to discuss their plan and elect a new administrative council. If no quorum is reached two consecutive times, or if a new council is not selected, the housing cooperative is dissolved or merged with another cooperative by decree of the Minister of Housing. 

The temporary council’s term may be extended by one year via decree from the Minister of Housing. During this time, the council may continue exercising the authorities granted to it by the decree that appointed the body, except for accepting any new members or dismissing current ones. This measure contradicts the statements made by the Minister of Housing, in which he said the ministry was working to introduce qualified and specialised staff to the administrative councils. 

Mergers

Finally, the Ministry of Housing has also ordered many cooperatives to merge with others. Under Decree No. 99 of 2011, merging cooperatives is up to the General Commission of a giving cooperative or the minister, per their powers of public interest. The latter occurs in any of the following cases: 

• A cooperative’s membership count is less than the number of its founders;
• One year has passed since the decree to license the cooperative was published without securing a headquarters;
• There are no candidates for membership in the administrative council or the monitoring committee. 

The new housing cooperative acquires legal identity and financial independence. It takes the place of the previous cooperatives concerning its rights and obligations without compromising the rights of existing applicants, beneficiaries and those who have been allocated housing.