Esta ley enmienda la Ley de la Asociación de Empleados del Gobierno de Puerto Rico (Ley Núm. 133 de 28 de junio de 1966) para actualizar sus disposiciones. Incluye nuevas definiciones, añade una categoría de membresía para miembros depositantes jubilados, establece normas adicionales para inversiones, autoriza nuevas formas de inversión, amplía y altera los poderes de la Junta de Directores, permite la deducción de deudas de las cuentas de los miembros, autoriza la creación de cuentas de retiro individual (IRA) y exime a la Asociación de ciertos requisitos de registro de valores.
(Approved September 7, 2004)
To add subsections
(i) ,
(j) ,
(k) ,
(l) ,
(m) ,
(n) ,
(o) , and
(p) of Section 2; clause (6) to the second paragraph of Section 4; to amend subsection
(a) of Section 5; subsections
(a) ,
(h) ,
(j) ,
(k) ,
(l) ,
(o) and
(q) and add subsections
(s) ,
(t) and
(u) to Section 7; amend the second paragraph of Section 23; Section 27; and add Sections 44 and to Act No. 133 of June 28, 1966, as amended, known as the "Commonwealth of Puerto Rico Employees Association Act," in order to add definitions, add a new category of membership, establish additional norms to make investments, authorize new forms of investment, broaden and alter the powers of the Board of Directors and for other purposes.
The organic acts of the different entities or institutions must be responsive to changes and to the new socioeconomic realities of our Island. In the measure that said acts adjust to the new social context, these entities or institutions will be able to discharge their functions in the most efficient manner. An example of this is Act No. 133 of June 28, 1966, as amended, known as the "Puerto Rico Commonwealth Employees Association Act." Said Act does not contain the mechanisms, attributes and criteria that the Association requires to serve the interests of its members responsibly. Therefore, it is urgent to amend said Act, in order to conform its provisions to the present conditions and thus enable first rate class services to the members that are owners of the Association.
In view of the above, it is imperative to recognize a new category of membership of the Association in the Act, in order to allow the depositing members who retire and have not availed themselves of the Insurance, to continue as members thereof.
Furthermore, the new economic order requires new and better mechanisms from the Association to invest its assets. To such ends, it is urgent to empower its Board of Directors to adopt new forms to invest its resources so that the diversification of investment mechanisms and the identification of sources of investment of the assets of the Association will be to the advantage of the interest of its members.
On the other hand, to give adequate protection to the resources of the Association, it should be empowered to deduct any amount owed for the different financial services from the member's account when the member fails to meet the terms and conditions of the service. In this way, the cases of delinquency that can gravely the harm stability of the Association can be handled.
The above, along with other changes incorporated in this Act, temper the provisions of said Act No. 133 to the demands of modern times, thus enabling a better functioning of the structures and the general operation of the Association. This is indispensable for the Association to fully and productively fulfill the institutional task it has been assigned for the protection of the best interests of the broad sector of public employees that deserve an Association that is constantly aware, of their needs and demands.
Section 1.- Subsection
(i) ,
(j) ,
(k) ,
(l) ,
(m) ,
(n) ,
(o) , and
(p) are hereby added to Section 2 of Act No. 133 of June 28, 1966, as amended, to read as follows:
Section 2.- Whenever used or mentioned in this Act, the following terms shall have the meaning indicated hereinbelow, unless another meaning clearly arises from the context:
(a) ...
(i) Credit Rating Agencies - shall mean those recognized entities extensively used in the United States, to the effect of establishing the quality of credit with regard to the securities to be used in the market.
(j) Highest Credit Range - shall mean the first four (4) categories in the classification of securities with regard to the quality of credit.
(k) Money Market Instrument - shall mean short-term debt securities, of a year or less, such as commercial paper, deposit certificates, term deposits and banker's acceptances, among others. (1) Futures - shall mean negotiable contracts in established markets that specify a future date of delivery or receipt of a fixed amount of a tangible or intangible product of a specific nature.
(m) Options - shall mean the rights to by or sell a fixed amount of a specific financial instrument at a specified price during a specified period.
(n) Other Investments - shall mean the investment of venture capital in new or developing high growth or risk enterprises, where there is a high potential for growth.
(o) Deliverable Securities - shall mean negotiable contracts in interbank or brokerage markets that specify the future date of delivery or receipt of a fixed amount of a tangible or intangible product of a specific nature.
(p) Liquid Assets Available for Investment - shall mean the difference between the amount of the items entitled: 'total participation of members' and 'Net loans and accounts payable,' as reported under the column entitled 'Total Savings and Loan Funds' of the Savings and Loan Fund Assets and Liabilities Statement of the Association, included in the Report of the Independent Accounts Association as of June 30 of the fiscal year preceding that in which an investment is made,"
Section 2.- A new clause (6) is hereby added to the second paragraph of Section 4 of Act No. 133 of June 28, 1966, as amended, to read as follows:
Section 4.- The members of the Association shall include all the employees and former employees, as they are defined hereinafter, of exiting Government agencies or those to be created subsequently, including the municipalities of Puerto Rico.
To the effects of the shares in the benefits of the Association, the members shall be divided into the following categories:
Section 3.- Subsection
(a) of Section 5 of Act No. 133 of June 28, 1966, as amended, is hereby amended to read as follows: "Section 5.-(a) Assembly of Delegates The Association shall be governed by an Assembly of Delegates. The Assembly of Delegates shall be elected as follows:
The employees of each government agency who are members of the Association shall hold elections every four (4) years during the month of April, beginning in April 2007. to elect delegates for terms of four (4) years each, in a proportion of one regular delegate and one alternate delegate for every thousand $(1,000)$ or fraction of a thousand $(1,000)$ employees contributing to the Savings and Loan Fund. No government agency may elect more than fifteen (15) regular delegates. The municipal governments shall jointly have one (1) delegate for each thousand $(1,000)$ or fraction of a thousand $(1,000)$ employees contributing to savings, up to a maximum of fifteen (15) delegates. In the case that the regular delegate cannot attend, ceases to be part of the agency he/she represented, or in the case of death, disability or resignation as delegate, the alternate delegate shall take over for the remainder of the term for which he/she was designated. As soon as the section is held in every government agency, the head thereof shall inform the names of the persons elected, to the Chairperson of the Assembly of Delegates, within a term of ten (10) days from the date of the election, and, as soon as the delegates of at least seventy-five (75) percent of all the government agencies in which there are employees who contribute to the Savings and Loan Fund have been elected, the Chairperson of the Assembly of Delegates shall call the new Assembly of Delegates to meet at the appropriate day, time and place.
The former employees who are members, shall be convoked by the Chairperson of the Board of Director of the Employee's Association, and shall elect delegates in the same manner and proportion as provided for employees in active service.
The employees of the municipal governments shall hold elections according to the following: (1) the mayor shall call an election to elect a candidate as delegate, for each one thousand $(1,000)$, or fraction of a thousand $(1,000)$ employees, from among the associates who contribute to the Savings and Loan Fund, who shall be the representative of said municipal government in the election of the delegates corresponding to the municipal governments. The mayor shall inform the Association in writing the candidate or candidates thus selected. (2) Once the election of seventy-five (75) percent of the candidates as delegates for the municipal government has been certified, they shall be convoked by the Chairperson of the Board of Directors of the Association and shall elect delegates as a single agency in the same manner and proportion as the other government agencies.
Not more than one (1) delegate may be elected for each municipality at the Assembly of the candidates to delegates to elect the representatives of the municipalities.
The heads of the government agencies shall be in charge of the organization of the elections established hereby. To such effect, an Organizing Committee shall be created no later than sixty (60) prior to the election, composed of one (1) representative of the Human Resources Office of the agency, a representative of each labor organization certified by law in the agency, and of the employees of the respective agencies that contribute
to the Savings and Loan Fund of the Association. The heads of the government agencies shall also appoint, as part of the Organizing Committee, a Voting and Canvassing Subcommittee, and a Challenge Subcommittee on which the following shall be represented, without it being understood as a limitation, one (1) representative of the Human Resources Office of the agency and one (1) representative of the labor organizations certified by law within the agencies that contribute to the Savings and Loan Fund of the Association. Said Committee shall resolve any complaint that is filed, in writing, within ten (10) working days regarding the candidacies and election procedure. The right of an employee to be a candidate or delegate precludes his/her designation as member of the Organizing Committee.
In every election, the necessary measures shall be taken to provide each member the opportunity to vote, in writing, secretly and freely, for the candidate or candidates of his/her choice. The fact that a government agency does not hold elections shall not affect the legal status of the Assembly of Delegates, if the majority of said entities hold it and elect candidates.
The employees of the government agencies that are part of another government body and have availed themselves of the provisions of this Act, shall not elect delegates as separate entities of said bodies; they shall do so as part of the body to which they are attached or are part of. In those bodies entitled to elect from four (4) to fifteen (15) delegates, if there were candidates from more than one (1) agency attached to or that is part of the body, the candidate of each attached agency who has obtained the most votes within his/her agency shall be certified as elected in the first instance. The remaining delegates of said body, if any, shall be certified as elected based on the total number of votes obtained in the entire body. In those cases that the application of this provision has the effect that the members of
the main government body do not have representation in the Assembly, a delegate shall be added in representation of the members of the principal government body. The delegate elected and certified by the head of the agency shall be convoked as one of the members of the Assembly of Delegates by the Chairperson of the Assembly, and shall exercise his/her vested rights and privileges. In the event of a challenge of the election process or of the elected candidate, the Chairperson of the Assembly of Delegates shall be bound to summon or convoke him/her to the first General Assembly of Delegates or subsequent assemblies during the quadrennial for which he/she was elected whether regular or special, and shall be recognized as a member thereof thus being allowed to exercise all vested rights, obligations and privileges until the challenge is addressed and a decision is issued that shall finally settle the controversy or issue. In the event the decision is adverse to the challenged delegate, he/she shall immediately cease his/her functions as member of the Assembly of Delegates and of any position held in the Board of Directors of the Association or in the subsidiary or nonprofit corporations created by it, and shall be substituted by the alternate delegate of the agency. No employee may be elected for more than two (2) consecutive terms as a member of the Assembly of Delegates. A term is the equivalent to more than fifty (50) percent or fraction thereof in excess of the time elapsed from the date of the election in the agency until next elections are held, regardless of the branch of government, municipality or sector for which he/she has, been elected. The part of a term served by an alternate delegate as a substitute of an official delegate, shall not be deemed as a term provided the substitution occurred after half of the term held by the official delegate has elapsed.
The expenses related to the election of delegates of every government agency shall be charged to the operating budget of each government agency, but once the election has taken place, the expenses related to the Assembly of Delegates shall be charged to the funds of the Association.
In its Inaugural Session, the Assembly of Delegates shall elect by secret vote a President, Vice-President, a Secretary and a Sergeant-at-Arms from among its members. It shall also elect the members of the Board of Directors of the Association. The members of the governing boards of the subsidiary corporations of the Association shall be elected in a special session of the Assembly of Delegates convoked to such effects. The date of the special session must be established in the inaugural session of the Assembly of Delegates and shall be held no later than ninety (90) days after said session. The Chairperson of the Board of Directors of the Association and the Chairperson of the Assembly of Delegates of the Association shall be members with voice and vote of the governing boards of the subsidiary corporations. The Chairperson of the Fiscal Policy Committee of the Association shall have a voice but shall not vote on the Board of Directors of subsidiary corporation. Every member of the Board of Directors of the subsidiary corporations shall be elected by the Assembly of Delegates from among its members. No member of the Board of Directors of the Association may be a member of the Board of Directors of the subsidiary corporations, with the exception of what is provided above. These directors shall be initially elected in the following manner:
The subsequent members of the Board of Directors of the subsidiary corporations shall be elected after two (2) years of the elections for a term of four (4) years, and if there is a vacancy, the person elected to fill the vacancy shall do so for the remainder of the term."
Section 4.- Subsections
(a) ,
(h) ,
(j) ,
(k) ,
(l) ,
(o) , and
(q) are hereby amended, and subsections
(s) ,
(t) , and
(u) are added to Section 7 of Act No. 133 of June 28, 1966, as amended, to read as follows:
Section 7.- The Board of Directors shall have all the powers that are necessary and convenient to achieve the purposes of the Association, including, without being construed as a limitation, the following:
(a) To grant personal loans to the employees and pensioned members at an interest rate approved by the Board of Directors, which shall not exceed seven (7) percent per annum, with such security and margin, and under such amortization terms as established by regulations. The Association is also empowered to grant mortgage loans pursuant to the norms and requirements of the secondary mortgage markets of the United States and Puerto Rico, and the applicable Federal and local laws, always seeking the best possible financing options for its members. The Association and the retirement systems sponsored by the Government of the Commonwealth of Puerto Rico are hereby empowered to deduct from the savings and contributions of those employees who have been permanently separated from service from any reason, all sums they may owe to the Association, as well as all public employees retirement systems to deduct from the pensions the monthly amortizations to be credited to the loans
granted. In those cases that the employee has a debt with the Association and any retirement system, the savings and contributions that the employee may have in the respective organization shall answer, in the first place, for outstanding obligations contracted with the respective body. Should the savings and contributions exceed the total amount of said obligations, the balance shall be used to amortize the obligations incurred by the employee with the Association or retirement system, as the case may be."
(b) ...
(h) To delegate on the Executive Director of the Association, a position created in this Section, such executive functions that it may deem pertinent for the proper functioning of the institution.
(i) ...
(j) To conduct transactions in behalf of the Association to acquire and hold property in any lawful manner, including, but without limitation to the following: by purchase, option to purchase, purchase by installments, public auction, lease, mandate, legacy, assignment, exchange and donation; to retain preserve, use and make use of, or utilize any real or personal property, including, without being understood as a limitation, securities and other personal goods or any interest therein, deemed by it as necessary or convenient to execute the purposes of the Association, when such transactions are fully justified and are in benefit of the Association.
(k) Invest and reinvest its liquid resources available for investment in excess of the cash that could be needed for its current operations, in the following securities. (1) Fixed yield securities, (A) ... (F) Investments authorized in paragraphs (C), (D) and (E) must be rated by the credit rating agencies in any of the four highest credit ratings. (2) Investment Norms (A) For the purpose of making the investments authorized in this subsection, the Board of Directors shall contract the necessary specialized professional services, including those of consultants and administrators of the Association's funds. (B) Any investments made under the provisions of this subsection shall be made with the foresight, care and under the criteria that prudent, reasonable, and experienced men exercise in the management of their own affairs for investment and non-speculative purposes, considering the balance that must exist between yield expectations and risks. (C) The Board of Directors shall adopt regulations for the administration of the investments authorized by this subsection that must be ratified by the Assembly of Delegates. The investment regulations shall include the following, without it being understood as a limitation:
(1) The criteria, requirements and conditions for the selection, contacting and evaluation of the performance of the administrators of funds and custodial banks that must be contracted to make the investments authorized by this subsection. (2) Investment policy of the Association's resources. The Association may borrow or invest in bonds, notes, obligations, evidence of indebtedness or investment instruments of agencies of the Commonwealth of Puerto Rico, its municipalities public corporations or instrumentalities, provided that they are included within the four (4) highest investment grades by two (2) of the recognized credit rating agencies, and that their securities are not less than those generally acceptable in investment bonds. (D) When investing the assets, the following restrictions and miscellaneous authorizations shall be observed: (1) Investment in foreign countries shall not exceed ten (10) percent of the total of the liquid assets available for investment. Said investments, whether of fixed yield or as stock may be denominated in United States or foreign currency. (2) No investment shall be made in securities of a government or enterprise located in countries with which the Government of the
Commonwealth of Puerto Rico or of the United States does not do business. (3) Stock. The Association is authorized to buy, sell or exchange common shares or preferred stock of any corporation created under the state or federal laws of the United States, the Commonwealth of Puerto Rico, or by foreign countries, subject to the following criteria:
(a) The stock to be acquired shall be quoted openly in one or more financial markets, or in national or international electronic quotation systems.
(b) Securities shall not be acquired through private placements.
(c) The Association shall not invest in this type of securities more than thirty (30) percent of the total of its liquid assets available for investment.
(d) No investment shall be made in enterprises whose market value is less than one hundred million $(1000,000,000)$ dollars in US currency.
(e) The Association shall not have more than five (5) percent of authorized and outstanding stock of an enterprise.
(f) The Association shall not have more than fifteen (15) percent of its liquid assets
available for investment in one single economic sector. (4) Real Properties. The Association may invest up to a maximum of fifteen (15) percent of its liquid assets available for investment in direct and indirect investments in real properties that generate income or in real estate investments trusts. Provided, that this limit shall not be applicable to real property used by the Association to render services to its associates and to establish its offices. In said investment, there must be a reasonable expectation of equal or greater yield to that of other types of investments, provided, that no investment shall be made in undeveloped land, unless it is land to be used for a development to be carried out pursuant to this provision, which has proven feasibility and is duly approved by the pertinent government agencies. (5) Other investments. The Association may invest in venture capital, in new, developing highgrowth or high risk enterprises that are not necessarily openly quoted in one or more national or international financial markets or electronic rating system.
In both cases, the Association shall control not more than five (5) percent of the authorized stock
of the companies or funds, provided that the amounts devoted to this type of investment do not exceed, as a whole, five (5) percent of the total liquid assets available for investment. (6) Financial Instruments. The Board of Directors may authorize the Association through regulations to such effect, to make use of financial instruments, such as participation in mutual funds, options, futures, securities for future delivery and transactions related to foreign currency exchange with the sole purpose of reducing risk. (1) Raise funds on its mortgage loans or equities or any other securities of the Association, or otherwise negotiate with them, including the power to sell or pledge them when convenient, in order to broaden, improve, and extend the services it provides to its associates, or the financial situation of the Association, being thus able to create nonprofit corporations under Act No. 144 of August 10, 1995, as amended, known as the 'General Corporations Act of 1995.' This shall be so, provided the service the Association intends to furnish cannot be integrated within its present structure or when it is convenient to segregate the service it intends to perform. Provided, that to create said corporations all the mechanisms provided in this Act shall be exercised for the purpose of securing the funds of the Association. The members of the Board of Directors of these corporations shall be members of the Assembly of Delegates of the Association. The interest
accrued by the loans or mortgage securities or any other present or future securities of the Association transferred to third parties to raise funds, as provided herein, shall be exempt from the payment of income taxes to the Commonwealth of Puerto Rico.
(m) ...
(n) ...
(o) To accept donations and/or contributions from individuals and institutions, and from Municipal and Commonwealth Governments and the Government of the United States, to use and/or match them with funds of the Association in the development of projects or facilities which benefit its members and the public in general.
(p) ...
(q) Develop special activities, programs and/or projects in benefit of its members which may be accessible to the general public, providing it is a complement to achieve financial stability.
(r) ...
(s) Invest the resources proceeding from the Insurance Funds of the Association, as authorized in the preceding subsection
(k) for the investment of the liquid assets available for investment that is not in conflict with the applicable provisions of the Insurance Code of Puerto Rico.
(t) Authorize the Association to borrow from any financial institution of the Government of Puerto Rico or the Federal Government of the United States of America, or through the direct placement of debts, securing said debts with the assets of the Association. The interest accrued by said obligations shall be
exempt from the payment of income taxes to the Commonwealth of Puerto Rico.
(u) Establish, operate and administer all types of trusts with broad powers and authority to offer the associates variable or "indexed" yields investment instruments with mutual funds and supplementary pension plans, among others.
Section 5.- The second paragraph of Section 23 of Act No. 133 of June 28, 1966, as amended, is hereby amended to read as follows:
Section 23.- The Association may create optional plans through which the members may acquire insurance at the lowest possible cost. The conditions for this insurance shall be determined by the Board of Directors on the basis of the result of the actuarial survey that shall be made to such effect.
The Association may establish Individual Retirement Accounts (IRA) of any type, subject to the requirements and provisions established in Act No. 223 of November 30, 1995, as amended, known as the 'Internal Revenue Code of 1994,' and in regulations adopted by virtue thereof.
Section 6.- Section 27 of Act No. 133 of June 28, 1966, as amended, is hereby amended to read as follows: "Section 27.- Amortization installment of the loans granted pursuant to the provisions of this Act, shall be deducted from the monthly salary of the employee or from the member's pension, upon prior notification of the Association to the officers in charge of certifying the payroll in the various government agencies and public employee retirement systems. Provided, that the Association may deduct any amount owed for any other financial services from the member's account, when the member fails to comply with
the terms and conditions of the service. The Board of Directors shall approve regulations that will guarantee the notice of indebtedness to the members and time to answer to answer and object to it."
Section 7.- Section 44 is hereby added to Act No. 133 of June 28, 1966, as amended, to read as follows: "Section 44.- Exemption The Association is hereby exempted from complying with the registration requirements imposed by Act No. 60 of June 1, 1963, as amended, known as the Uniform Securities Act."
Section 8.- Section 45 is hereby added to Act No. 133 of June 28, 1966, as amended, to read as follows: "Section 45.- Unclaimed Accounts The sums of money and other liquid assets in custody of the Association that have not been claimed during the previous seven years, shall be carried over to a capital stock reserve of the Association and/or to its Risk Capital item, at the option of the Association. The creation of such capital stock reserve, as well as its determination, separation and use of said fund shall be government by regulations approved by the Board of Directors. Said reserve shall not be subject to the provisions of Act No. 36 of July 28, 1989, known as the "Abandoned or Unclaimed Money and Other Liquid Assets Act."
Section 9.- This Act shall take effect immediately after its approval.
I hereby certify to the Secretary of State that the following Act No. 252 (H.B. 4803) of the $7^{ ext {th }}$ Session of the $14^{ ext {th }}$ Legislature of Puerto Rico:
AN ACT to add subsections
(i) ,
(j) ,
(k) ,
(l) ,
(m) ,
(n) ,
(o) , and
(p) of Section 2; clause (6) to the second paragraph of Section 4; to amend subsection
(a) of Section 5; subsections
(a) ,
(h) ,
(j) ,
(k) ,
(l) ,
(o) and
(q) and add subsections
(s) ,
(t) and
(u) to Section 7; amend the second paragraph of Section 23; Section 27; and add Sections 44 and to Act No. 133 of June 28, 1966, as amended, known as the "Commonwealth of Puerto Rico Employees Association Act," etc., has been translated from Spanish to English and that the English version is correct.
In San Juan, Puerto Rico, today 1st of February of 2005.
Luis Fusté-Lacourt Director