Credit union member: your rights, and when they are suspended

This is the law governing Puerto Rico’s savings and credit cooperatives and the relationship between the cooperative and its members. A member is not just a customer: they are an owner, they vote at the assembly and may be elected to the governing bodies. That is why the law gives them information rights a bank does not give a depositor, and why it also imposes obligations on them. The law calls "the Corporation" the Public Corporation for the Supervision and Insurance of Savings and Credit Cooperatives, COSSEC, which adjudicates certain disputes between a member and their cooperative.

Members may be, besides its incorporators, every person who is not a for-profit juridical person and who meets the requirements of the articles of incorporation and the general bylaws. Minors may be members subject to the limitations of Puerto Rico law and the bylaws, except those who have already turned eighteen (18), who shall be considered persons with legal capacity to request and use financial services and to hold governing positions. It is an essential condition to make the periodic contributions to the share account as the general bylaws provide. The law prohibits denying or preventing admission on grounds of race, sex, religious or political beliefs, or social or economic condition, while eligibility may be defined by affinity groups in exercise of the constitutional right of free association.

• To exercise your rights: being current in paying your obligations and debts to the cooperative, including loans on which you are a joint debtor and the share accumulation the general bylaws require.Verified against the official source
• To examine the books: a sworn request in which you state your purpose, which must relate to your interest as a member.Verified against the official source

• The sworn request stating your purpose, if you will ask to examine the member registry or the other books.
• The copy of the cooperative’s bylaws they must give you upon joining, along with the documents and operating rules.
• If you were notified of a separation action: the certified mail notice, which must specify the causes and inform you of your right to an administrative hearing.

1. 1

   Step 1: Know the seven rights

   Article 4.02 lists them: to participate with voice and vote in general assemblies on a basis of equality, mutual respect and decorum; to elect and be elected to positions in the governing bodies; to use the cooperative’s services; to be informed of its financial condition and of its operations and activities through the corresponding reports; to know the status of your accounts, holdings and transactions; to participate equitably in the distribution of surpluses, when there are any, per the rules the general assembly approves; and to receive, upon joining as a member, a copy of the cooperative’s bylaws, of the documents it delivers and of its operating rules.

2. 2

   Step 2: To see the books, the request goes sworn

   It is the most concrete right and the one most people do not know. Through a sworn request stating your purpose, you have the right to examine, for purposes related to your interest as a member and during regular office hours, the member registry and the cooperative’s other books, and to make copies or extracts of them. The law sets a limit: no member shall have the right to access information that by law or applicable regulation is confidential or privileged, including information constituting business secrets or strategies. And it names a referee: in case of dispute over the legitimacy of your purpose or over the confidentiality or privilege covering the requested information, the dispute shall be adjudicated by the Corporation.

3. 3

   Step 3: Know what switches your rights off

   The law says it at the end of the same article and it is the part that surprises: a member’s rights and prerogatives, as well as those the cooperative’s general bylaws recognize, shall be suspended in every case where the member is not current in paying their obligations and debts to the cooperative, including payment of loans on which they are a joint debtor and the accumulation of shares required by the general bylaws. Note "joint debtor": having guaranteed someone else’s loan that fell behind can leave you without a vote at the assembly.

4. 4

   Step 4: If they want to separate you, there is a dated procedure

   Article 4.06 lists eight causes for separation and then fixes the process. When the Board determines separation is warranted, it shall notify you by certified mail specifying the causes, and in that notice inform you of your right to an administrative hearing, which must be held no later than thirty (30) days after the date you receive the notice. At the hearing you may appear on your own or accompanied by counsel, and you have the right to examine the evidence presented against you, to cross-examine witnesses and to offer evidence in your favor. The Board shall evaluate the evidence, issue its decision within fifteen (15) days after the hearing concludes, and notify it to you by certified mail within the five (5) days following the date it issues it. The decision is effective from the date of notice to you.

5. 5

   Step 5: If you withdraw, do it in writing and in advance

   Every member may withdraw voluntarily at any time, in which case they must notify the Board in writing, with the advance notice the general bylaws require. That notice shall be considered by the Board or by the officers, executive officials or employees it delegates to. And a warning the law states expressly: members who withdraw voluntarily shall be responsible for all debts and obligations pending with the cooperative as of the date of their resignation. If you hold a position on the Board, on a committee, or are an executive official, withdrawing your holdings is subject to the additional rules of Article 6.06.

6. 6

   Step 6: Count the thirty days for them to pay you

   Article 6.05 is concrete. When a member withdraws voluntarily or is expelled, they shall be paid — after deducting any debt they owe the cooperative, including debts contracted as joint debtor, surety or guarantor, whether or not they obtained personal benefit from the loan — the money they paid for shares and deposits, plus dividends, patronage and interest duly earned and credited up to the date of their withdrawal or expulsion. That payment shall be made within the thirty (30) days following the withdrawal or separation. The cooperative may require that notice of deposit withdrawal be given thirty (30) days in advance and notice of share withdrawal ninety (90) days in advance.

7. 7

   Step 7: Know that expulsion is not forever

   Persons separated from a cooperative for the causes in Article 4.06 may join that or another cooperative again when there is reliable evidence, to the Board’s satisfaction, that they have overcome or cured the circumstances that grounded their expulsion. The law adds a specific rule: every member who files under the Bankruptcy Act must meet the requirements established in that law before they can regain their capacity to take on debts with the cooperative. And in any case, someone separated remains responsible for any debt or obligation pending as of the date of their separation.

The rights are exercised before your own cooperative: the request to examine books is presented to it, and separation is decided by its Board. The Corporation — COSSEC — enters at two concrete points the law names: it adjudicates the dispute when there is disagreement over the legitimacy of your purpose in requesting the books or over the confidentiality or privilege of the requested information; and it authorizes share transfers the cooperative makes in loan portfolio sales or asset-sale and liability-assumption transactions. An appeal from a separation decision goes to an arbitration panel under the law, with the citation caveat we explain below.

• Asking to see the books verbally: the law requires a sworn request stating your purpose.
• Not knowing that being a joint debtor on a delinquent loan suspends all your rights as a member.
• Letting the thirty days for the administrative hearing lapse after receiving the separation notice.
• Going to the hearing without counsel believing you cannot: the law allows appearing on your own or with an attorney.
• Resigning without notifying the Board in writing and with the advance notice the general bylaws require.
• Believing resigning erases your debts: you remain answerable for everything pending as of the resignation date.
• Forgetting the cooperative may require 30 days’ notice to withdraw deposits and 90 to withdraw shares.
• Using the OGP compilation marked as the version without the amendments of Act 99-2024 and later.

These are the government pages this guide is based on.

• Corporación Pública para la Supervisión y Seguro de Cooperativas de Ahorro y Crédito (COSSEC)

  COSSEC

  bvirtualogp.pr.gov

• COSSEC

  COSSEC

  www.cossec.pr.gov