A new law will enable Puerto Rican co-operatives to benefit from financial help to cover development and expansion costs. Under the Law 101 of 2014, signed by Governor Alejandro García Padilla on 23 October, co-operatives will be able to receive financial assistance in order to grow their business.
When starting up, co-operatives can obtain financial support from FIDECOOP, a non-profit organisation that is attached to the Co-operative Development Commission of Puerto Rico and offers capital investment and other financial tools for new co-ops. FIDECOOP was created in 2002 with the passing of the Enabling Law for the Investment Fund and Co-operative Development. This law has now been amended to include co-operatives seeking to expand and further develop.
“From the very beginning the Fund has affirmed itself as the easiest alternative for gaining access to capital for those start-up co-operatives that did not have the required structures to obtain loans from the regular financial market,” explained William Ortiz Negrón, first vice-president of the League of Co-operatives of Puerto Rico.
The law was designed to provide a legislative framework for co-operatives and ensure participation of both the co-operative movement and the state in defining the policies of the Fund. It also aimed to provide mechanisms and structures that would diminish bureaucracy and administrative costs.
The Co-operative League was involved throughout this project, expressing its interest in promoting and supporting any government initiatives that would help create, strengthen and develop co-operatives.
“We are certain that, as self-managed enterprises, co-operatives from any sector represent a real option for the social, economic and cultural growth of this country. The amendment to the law that we agreed to has the objective to make the requirements of FIDECOOP more flexible, in such a way that they are more accessible to co-operatives starting up. In this way is proposes a less costly option, maximising their chances to gain access to the fund,” added Mr Ortiz Negrón.
With this law new minimum parameters of insolvency, security and internal controls in the administration, approval, disbursement and supervision of investment have also been introduced.
“The Co-operative Leagues thinks it is necessary to structure a policy that promotes a environment favourable to the development of new co-operatives which, in turn, requires the design of mechanisms that facilitate their access to obtaining venture capital through funding. This is why it appeared to favour the amendment proposed regarding the establishment of supervision and compliance measures for FIDECOOP officers to safeguard the co-operatives’ financial stability and the investment of co-operatives in this tool,” said Mr Ortiz Negrón.
On signing the law, governor Alejandro García Padilla highlighted the important contribution of co-operative enterprises to the country’s economy. “The development and expansion of Puerto Rican co-operatives has become an essential element for the country’s economic growth. In turn, the movement is a facilitator for achieving full employment, social development and prosperity for all citizens,” he said in a press release.
Text of the law: http://www.lexjuris.com/lexlex/Leyes2014/lexl2014175.htm
Picture: governor Alejandro García Padilla
