Esta ley enmienda el Código de Seguros de Puerto Rico para permitir que los directores de cooperativas de seguros sean reelegidos por un máximo de tres (3) términos consecutivos de tres (3) años cada uno, alineando así las cooperativas de seguros con otras cooperativas en cuanto a la duración de los mandatos de sus directores.
(Approved April 17, 2003)
To amend subsection (2) of Section 34.120 of Act No. 77 of June 19, 1957, as amended, known as the "Puerto Rico Insurance Code," for the purpose of extending to the number of terms during which directors of insurance cooperatives can hold their posts to three (3) and to reduce each term to three (3) years.
The Puerto Rico Cooperative Movement is an important social and economic force which, since the forties, has been contributing to the improvement of the quality of life of the Puerto Rican family. This has been possible through the growth of the Cooperative movement supported by a favorable public policy, in the most diverse areas of the economy and social life of the country, among them, financial services, housing, transportation, consumption, agriculture, production, diverse services and insurance. Regardless of the different forms of organization and the activities undertaken by cooperatives, depending on the sector in which they operate, they all share the same nature and are a part of an integrated and coordinated system based on organized cooperation.
The success that cooperativism has achieved in Puerto Rico is due to the fact that through the years it has been able to incorporate volunteer community leaders who have served on the boards of directors, guiding
them towards a sustained growth and committed to social welfare. It has been acknowledged however, that in the present national and world economy, better management training and experience is required from the directing bodies of cooperatives to be able to manage them effectively and ensure their optimal development.
As a contributing measure for this greater managerial capacity of the directing bodies of cooperatives, and to guarantee the continuity of a more efficient managerial tenure, the Legislature increased the terms some years ago for which cooperative directors in the country can be elected from two (2) terms to three (3). This provision was first approved for savings and loan cooperatives, and then, through the approval of Act No. 50 of August 4, 1994, as amended, known as "Cooperative Savings and Credit Union Act," it was extended to the cooperatives of other sectors governed by this Act. Subsequently, the Puerto Rico Cooperative Bank Act was amended in 1999 so that the directors of this institution could also be elected for a maximum of three (3) terms.
The present legislation has the purpose of amending the Insurance Code so that the Insurance Cooperatives of the country may also elect their directors for a maximum of three (3) terms. In this way, the insurance cooperatives which are the only ones in the country that can elect their directors for a maximum of two (2) terms, may retain their directors for an additional term.
To comply with the purpose of completely aligning insurance cooperatives with the other cooperatives of the country, the bill reduces the maximum extension of each term from four (4) to three (3) years. This maximum extent of four (4) years has never been used by the insurance cooperatives, which have always established a maximum of three (3) years
in each term, which has also been established for the other cooperative sectors.
The elimination of this limitation imposed by law also has the effect of granting the insurance cooperatives by law, the same freedom that the rest of the cooperatives enjoy without affecting the democratic process for the selection of directors by the Assembly.
Section 1.- Subsection (2) of Section 34.120 of Act No. 77 of June 19, 1957, as amended, is hereby amended to read as follows: "Section 34.120.- Election of Directors (1) $\quad$. (2) Each director shall be elected for a minimum term of one (1) year and a maximum of three (3) years, and until his successor is elected and qualifies. The directors shall have the right to be re-elected to serve for three (3) terms of three (3) consecutive years. A minimum period of twenty-four (24) months must elapse from the end of the term, before a person who has been elected for three (3) consecutive terms can again aspire to be a director of the insurance cooperative."
Section 2.- This Act shall take effect immediately after its approval. The insurance cooperatives shall take the necessary measures to harmonize their regulations and procedures to comply with this Act.
I hereby certify to the Secretary of State that the following Act No. 113 ($.B. 1999) of the $\underline{5}^{ ext {th }}$ Session of the $\underline{14}^{ ext {th }}$ Legislature of Puerto Rico:
AN ACT to amend subsection (2) of Section 34.120 of Act No. 77 of June 19, 1957, as amended, known as the "Puerto Rico Insurance Code," for the purpose of extending to the number of terms during which directors of insurance cooperatives can hold their posts to three (3) and to reduce each term to three (3) years, has been translated from Spanish to English and that the English version is correct.
In San Juan, Puerto Rico, today $28^{ ext {th }}$ of June of 2004.
Elba Rosa Rodríguez-Fuentes Director