Puerto Rico

Puerto Rico

Legal framework

 

It aims to evaluate whether the national legislation in place supports or hampers the development of cooperatives, and is therefore “cooperative friendly” or not, and the degree to which it may be considered so, also in comparison to the legislation in force in other countries of the ICA region, or at the supranational level.

In addition, the research aims to provide recommendations for eventual renewal of the legal frameworks in place in order to understand what changes in the current legislation would be necessary to improve its degree of “cooperative friendliness”, which is to say, to make the legislation more favourable to cooperatives, also in consideration of their specific identity. This webpage presents a snapshot of the legal framework analysis results for Puerto Rico.

 

 

In the Constitution of Puerto Rico, there is no reference to cooperativism, nor to the principles of social justice and economic democracy that we associate with the recognition of a sector of the social and solidarity economy. Therefore, the rules on the regulation of cooperativism in PR are of legislative and administrative origin. It is divided into three main areas. First, we have a General Law of Cooperative Corporations (LGC for its acronym in Spanish), Law 239 of September 1, 2004, which gathers the doctrinal foundations of cooperativism, establishes its basic operational structure and also harbors some special provisions.

 

Cooperative Friendliness

Public policy in PR seeks to promote cooperativism. However, due to the automatic and other tax benefits mentioned in the legal analysis, the processes of incorporating these are not so simple. To balance both interests, a whole range of institutional supports have been created for the establishment and promotion  of cooperatives.

 

Key recommendations for improvement

  • Facilitate the incorporation processes, providing so that the initial qualification of a cooperative, can be channeled through more agile entities in its actions (such as the League of Cooperatives or FIDECOOP (for its acronym in Spanish); rather than limiting that aspect to CDCOOP.
  • Improve the definition of key concepts such as the "Cooperative Act", the "Cooperative Law", the "Limited Interest to Capital", among others mentioned.
  • Define with more specificity the regulations applicable to cooperatives of superior grade.
  • Review the absolute prohibition on for-profit legal entities being able to be members of cooperative ventures, in areas where individual partner ventures are generally structured by this route.

 

Conclusions

Puerto Rico has extensive legislation that allows the organization of different types of cooperative ventures, and contains the necessary support instruments for the promotion and strengthening of the sector; which, not withstanding, is not exempt to being able to be improved according to the recommendations made in the study.

 

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