P.R. Laws tit. 26, § 3408
(a) Admission.—
(1) The Board of an insurance cooperative shall have the power to admit members according to the admission rules established by the articles of incorporation or the bylaws, or by resolution of the board, which rules shall be in harmony with the ends and purposes of the insurance cooperative, its faculties, and the provisions of this Code that allow admission as a member only to natural persons, only to cooperatives, or both. Provided, That if an application for admission is denied by the Board, the candidate shall have the right to appeal said decision before the next assembly that may be held, within fifteen (15) workdays [following] the notice of the decision of the Board. The candidate shall have the right to appeal the determination in reconsideration before the next regular assembly of members, as long as he/she notifies to the Board his/her decision to appeal, duly grounded, within fifteen (15) workdays [following] the notice thereof. In case the said assembly revokes by a majority vote, prior to the corresponding hearing, the decision of the Board, as long as said action is consistent with the Insurance Code, the articles of incorporation, or the bylaws of the insurance cooperative nor with the rules governing the eligibility of members established in the bylaws, the applicant shall be considered as a member of the cooperative from the date of the resolution revoking said decision.
(2) The Cooperative Bank of Puerto Rico may become a member of the insurance cooperatives.
(A) Does not comply with his/her duties and obligations as a member, as established in this Code or any other provided by the bylaws.
(b) Resignation and separation.—
(1) Resignation.— When a member wishes to terminate his/her relations with an insurance cooperative, he/she shall tender his/her resignation in writing to the Board, which shall act according to the provisions of this Code, the articles of incorporation and the bylaws or rules applicable to the case.
(2) Causes for the separation of a member.— The Board of Directors of the insurance cooperative may separate or expel a member when it deems that he/she:
(B) Has acted against the interests or ends and purposes of the insurance cooperative.
(C) Has violated the provisions of this chapter applicable to the members or has incurred any of the violations established in the bylaws as cause for separation.
(3) Procedure for involuntary separation.— When the Board considers that a member is acting against the interests of the insurance cooperative or of the obligations contracted with the cooperative, said Board may separate the member and deprive him/her of his/her rights and benefits in the insurance cooperative, counting from the date of his/her removal, after written notice of charges is served on the member affected, who shall be given a reasonable opportunity to defend himself/herself at a hearing before the Board. The member so separated may, within the fifteen (15) workdays following the date on which notice of his/her separation was served on him/her, appeal from the decision of the Board.
The member shall have the right to appeal the decision in reconsideration before the next regular assembly of members, provided he/she notifies the Board of his/her decision to appeal, duly grounded, within fifteen (15) workdays [following] the date of the notice of the decision in reconsideration.
The assembly may, by a majority of the members present, after the proper hearing, provided it is acting in accordance with the Insurance Code, the articles of incorporation or the bylaws of the insurance cooperative, ratify the decision of the Board or order the reinstatement of the member, including restoration of his/her rights and privileges.
(4) In the case that the insurance cooperative has natural persons among its members, upon the death of a member, his/her heirs or successors in interest may select the person who will be entitled to be part of the insurance cooperative, if such person meets the requirements established by the cooperative association for the admission of new members, and the fund contribution certificates and other assets the deceased may have had in the cooperative shall be registered to the name of said person. In case of opting for the liquidation of assets, the interests of the member in the property of the insurance cooperative shall be delivered to the person or persons entitled thereto.
(c) Fund contribution certificate.—
(1) Every member shall be under [the] obligation to pay the admission quota provided in the bylaws of the insurance cooperative, which shall never be less than a fund contribution certificate.
(2) The fund contribution certificates of an insurance cooperative may be transferred only with the consent of the Board and to persons eligible as members according to the articles of incorporation and the bylaws of the insurance cooperative. This restriction shall be printed on every fund contribution certificate.
(d) Voting right.— Every member shall have the right to cast only one vote in the regular and special assemblies of the insurance cooperative, notwithstanding the fund contribution certificates he/she owns. Provided, That this right is personal and unassignable, and may only be exercised at the assemblies of the insurance cooperative, in person if he/she is a natural person and by proxy if it is a cooperative or the Cooperative Bank.
(e) Duties and obligations of the member.— Every member shall comply with the obligations established by this chapter, with the articles of incorporation and with the bylaws, and with:
(1) Any social or financial obligation toward the insurance cooperative.
(2) The agreements of the assembly and of the Board of Directors.
(3) Shall be liable for the debts and obligations of the insurance cooperative only up to the unpaid amount, if any, on the fund contribution certificates underwritten by him/her.
(4) Sponsoring and watching over the interests of the insurance cooperative, which includes, among other things, periodic contributions to its social capital to contribute toward its strengthening and solidity and place with the insurance cooperative not less than 50% of the total premiums paid for the same kinds or lines of insurance marketed by the insurance cooperative.
(f) Liquidation of obligations.— When a member ceases to be so, the Board shall pay to the member or to his/her authorized representatives, or the persons entitled therefor, within one year as of the date of his/her resignation, separation or liquidation, the sum of money indicated in the documents that accredit his/her participation in the assets of the insurance cooperative. When, in the judgment of the Board, the total payment of said participation is damaging to the operations or financial stability of the insurance cooperative, and provided that the decision of the Board is based on objective criteria, the Board may pay in the following manner:
(1) Within one (1) year of the death, resignation, separation or liquidation of the member, he/she or his/her authorized representatives or the person or persons entitled therefor shall be paid all interest initially contributed directly by the member in the form of capital.
(2) The remaining interest of the member shall be paid annually in proportion and according to the date in which he/she accrued said assets throughout the years. The assets so accrued shall be paid starting not later than one year after the death, resignation, separation or liquidation of the member and they shall be paid within not more than five (5) years. They shall continue to be paid in the manner described above during a period in addition to the one previously expressed, with the prior approval of the Insurance Commissioner of Puerto Rico. On any date of the aforementioned periods the Board may order the payment of the balance owed up to that date. If the total assets of the member cannot be paid in a revolving manner within the aforementioned period, the Board shall be bound to liquidate the excess of said accrual in a prorated manner or in a lump sum on any date within the indicated period. Certificates with a redemption date held by members who are retiring shall be liquidated on or before said date.
History —Ins. Code, added as § 34.080 on June 26, 1959, No. 84, p. 220, § 1; June 25, 1965, No. 86, p. 200, § 4; Dec. 13, 1990, No. 36, p. 1545, § 2; Nov. 12, 2007, No. 174, § 9, eff. 30 days after Nov. 12, 2007.