Ley 88 del 2008

(No. 88)

(Approved June 12, 2008)

AN ACT

To add a new Section 36.2-A to Act No. 239 of September 1, 2004, known as the "General Cooperative Associations Act of 2004," in order to establish the parameters under which the Inspector of Cooperatives shall annually examine youth cooperatives; and for other related purposes.

STATEMENT OF MOTIVES

Act No. 220 of August 29, 2002, as amended, known as the "Special Act for Youth Cooperatives," was promulgated with the purpose of authorizing and promoting the creation of youth cooperatives in Puerto Rico. They have the objective to: 1) promote youth participation in the cooperative experience to obtain an integrated development in the educational, social and economic aspects; 2) establish a cooperative practice laboratory through the collective work of their members and the community; 3) offer services to the members and non-members according to the community's common needs; 4) promote the establishment of workshops to develop creative, artistic and sporting skills; 5) provide a workshop for the development of leadership skills.

Basically and in accordance with the provisions of Act No. 220, supra, a youth cooperative is an organization composed of youths under 29 years of age in a public and private school facility, community or university institution. Among the objectives and purposes of the school youth cooperatives, the participation of youth in the cooperative experience to

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achieve an integrated development in the educational, social and economic aspect, must be emphasized.

Among the activities carried out by youth cooperatives are to established different cooperative projects of administration and operation, alone or jointly with other cooperatives. To become a member of a youth cooperative, it is required that the person be under 29 years of age, be a student in a public or private school or a resident of the community in which the youth cooperative is organized, and that the admission requirements established in its incorporation clauses and by-laws are complied with.

According to data furnished by the Escuela Nacional de Cooperativismo (ENCOOP, Spanish acronym), there are approximately 129 organized youth school cooperatives and other groups in process that are divided in diverse types, to wit: 1) consumption cooperatives; 2) fine arts; 3) book stores; 4) agricultural school materials; 5) savings; 6) recreation and others. These cooperatives are authorized to carry out various activities, among which are: 1) buy and sell snacks and school supplies to members and non-members in the school facility; 2) promote and sponsor cultural and sports activities that are showcased in schools, community, and by the cooperative movement; 3) collaborate with the school and the community in areas of need that affect the safety or health of students; 4) carry out activities aimed at raising awareness and education in cooperative principles and values in the school community and other youth sectors; and 5) establish different cooperative projects of administration and operation, alone or jointly with other cooperatives, or develop projects that enable broadening entrepreneurial skills in youth cooperatives.

Due to the stated above, it can be concluded that youth cooperatives are vested with compelling public interest to the extent that in the Statement

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of Motives of Act No. 220, id., it was established that it is imperative to "...safeguard, extend and improve..." youth cooperatives and further classified them as "...youth formation laboratories." It also provided that "[Y]outh Cooperatives are the tool that makes viable the practice and learning of all the necessary values for the formation of responsible leaders committed to their country."

However, at present, youth cooperatives are lacking a managerial support structure that allows for the strengthening and development thereof to the maximum of their potential.

In view of the abovesaid, the present Legislature of Puerto Rico deems it reasonable for the Inspector of Cooperatives to annually examine the same so that the elements of a sound administration are present. Furthermore, it is intended that the Office of the Inspector shall prepare an audit report directed to establishing the operational strong and weak points of the cooperative and a plan for the continuous development of said cooperatives.

BE IT ENACTED BY THE LEGISLATURE OF PUERTO RICO:

Section 1.- A new Section 36.2-A is hereby added to Act No. 239 of September 1, 2004, to read as follows: "Section 36.2-A.- Annual examination of the operations of youth cooperatives.

The Inspector shall examine the operations of all youth cooperatives incorporated and operating in Puerto Rico at least once a year. Said examination shall have a non-punitive, educational and informational purpose through which the auditor together with the workshop students shall channel all the elements of a sound administration and shall prepare an audit report directed to the establishment of the operational strong and weak points of the cooperative and of a plan for the continuous development of

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said cooperatives. Said examination, as well as any other consultation, shall be free of charge for all youth cooperatives, it being considered a public service for all purposes of law.

The examination to be prepared by the Inspector of Cooperatives together with the youth cooperatives shall be made solely under the parameters established in this Section and on the basis of Act No. 220 of August 29, 2002, as amended, known as the "Special Act for Youth Cooperatives."

Furthermore, the Office of the Inspector of Cooperatives shall annually prepare a Financial Statement of the youth cooperatives operating in Puerto Rico, which shall contain the following information:

(a) operational statement of youth cooperatives;

(b) significant achievements;

(c) factors that limit development;

(d) details regarding government, cooperative, community and private support provided to the youth cooperative.

It is provided that said Financial Statement shall be submitted by September 30, of each year to the Committees of the Legislature of Puerto Rico with jurisdiction over cooperatives, to the Office of the Governor, to the Cooperative Development Administration, to the Youth Affairs Office, to the Department of Education, to the Cooperative Investment and Development Fund, to the Cooperativism Institute of the University of Puerto Rico and to the Puerto Rico League of Cooperatives.

The Department of Education and the Cooperative Development Administration shall have the responsibility of

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facilitating and collaborating with the examination process of youth cooperatives."

Section 2.- To comply with the purposes of this Act, the Inspector of Cooperatives shall annually consign the sums needed for the implementation thereof in the budget of operating expenses. However, it shall be the obligation of the Office of Management and Budget to identify the source of financing to cover the initial item of the funds needed to comply with this Act.

Section 3.- To ensure the effective consecution of the herein provided, the Inspector of Cooperatives shall draft, approve, amend, and repeal those rules and regulations that he/she deems pertinent. Said process shall be conducted pursuant to the provisions of Section 36.11 of Act No. 239 of September 1, 2004, known as the "General Cooperative Associations Act of 2004."

Section 4.- This Act shall take effect as of Fiscal Year 2008-2009.

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CERTIFICATION

I hereby certify to the Secretary of State that the following Act No. 88 (H.B. 3941) of the $7^{ ext {th }}$ Session of the $15^{ ext {th }}$ Legislature of Puerto Rico:

AN ACT to add a new Section 36.2-A to Act No. 239 of September 1, 2004, known as the "General Cooperative Associations Act of 2004," in order to establish the parameters under which the Inspector of Cooperatives shall annually examine youth cooperatives; and for other related purposes, has been translated from Spanish to English and that the English version is correct.

In San Juan, Puerto Rico, today $15^{ ext {th }}$ of November of 2008.

Francisco J. Domenech Director