P.R. Laws tit. 3, § 9009
The Assembly of Delegates shall administer, through its Executive Committee, the assets of the Association and invest the reserves in excess of its operational needs. Any investment made in accordance with the provisions of this section shall be made with the care, skill, and judgment that a reasonably prudent and experienced person would employ in handling his/her personal matters, for investment and non-speculative purposes, taking into account the balance that should exist between expectations of return and risk. For the purposes of making the investments authorized in this chapter, the Association shall hire specialized professional services as are necessary, including consultants and fund managers. As prescribed by regulations, it may invest in the following:
(a) Fixed income securities.—
(1) Bonds, notes, and obligations of the Government of the United States of America, its agencies and instrumentalities.
(2) Money market instruments, of one (1) year or less, which may be recognized and have the highest rating category for this type of short-term instruments according to any of the credit rating agencies.
(3) Bonds, notes, or debentures, whether tax-exempt or taxable, that constitute direct obligations or that are guaranteed by the full faith and credit of the government entities created under the laws of the Government of the United States of America, any state thereof, or the Commonwealth of Puerto Rico, its instrumentalities, ventures, or public corporations and any other government entity, whether such securities are tax-exempt or taxable.
(4) Corporate bonds, notes, and obligations.
(5) Financial instruments constituted directly or indirectly over financial obligations, such as mortgage loans secured by such loans, as well as auto loans and leasing contracts, among others.
(6) Investments authorized under clauses (3), (4), and (5) shall be rated by at least one (1) of the credit rating agencies under any of its top-four credit rating categories.
(b) Investment rules.—
(1) In order to make the investments authorized in this subsection, the specialized professional services shall be hired as are necessary, including consultants, and fund managers of the Association. The Assembly of Delegates shall adopt regulations for the management of the investments authorized in this subsection, including, but not limited to, the following:
(A) The criteria, requirements, and conditions for the selection, hiring, and evaluation of the performance of fund managers and custodian banks that shall be contracted to make the investments authorized under this subsection.
(B) The Association may borrow money or invest in bonds, notes, obligations, debentures, or investment instruments of the agencies of the Commonwealth of Puerto Rico, its municipalities, public corporations, or instrumentalities, provided that two (2) recognized credit rating agencies rate them in the top-four credit rating categories (investment grade) and whose guarantees are not less than those generally accepted for investment bonds.
(2) The following miscellaneous restrictions and authorizations shall be observed when investing assets:
(A) Investments in foreign countries shall not exceed ten percent (10%) of the total liquid assets available for investment. Said investments, whether fixed income or shares, may be denominated in U.S. or foreign currency.
(B) No investment shall be made in securities of a government or business located in countries where the Government of the Commonwealth of Puerto Rico or the United States of America does not do business.
(3) The Association is hereby authorized to purchase, sell, or trade common or preferred stocks of any corporation created under state or federal laws of the United States of America, Puerto Rico, or foreign countries, subject to the following criteria:
(A) The stocks to be acquired shall be openly traded in one or more stock markets or national or international stock exchange electronic trading system.
(B) Privately held securities shall not be acquired.
(C) The Association shall not invest more than forty percent (40%) of its total liquid assets available for investment in this class of securities.
(D) No investment shall be made in a company whose market value is less than one hundred million U.S. dollars ($100,000,000).
(E) The Association shall not hold more than five percent (5%) of a company’s issued and outstanding shares. It shall neither hold shares of a company in which the members of the Assembly of Delegates, the Executive Committee, the Executive Director or the Top Management have a substantial interest.
(F) The Association shall not invest more than fifteen percent (15%) of its liquid assets available for investment in a single economic sector.
(4) Real estate.— The Association may invest up to a maximum of ten percent (10%) of its liquid assets available for investment, directly or indirectly, in income- producing real estate or real estate investment trusts. This limit shall not apply to real estate used by the Association to provide services to its members and locate its offices. The return expectations for such investment shall be equal to or higher than other types of investment. Provided that no investment shall be made in undeveloped lands, unless such lands are to be used in a development project to be carried out in accordance with these provisions with proven feasibility and duly approved by the pertinent government agencies.
(5) Other investments.— The Association may invest in venture capital funds, in young companies, growing companies, high-growth or high-risk companies and the equivalent thereof, without being subject to the provisions of clause (3).
In both cases, the Association may not control more than five percent (5%) of the value of the shares issued by the companies or funds, provided that the sums devoted to this type of investment do not exceed seven percent (7%) of the total liquid assets available for investment. The return expectations for such investment shall be equal to or higher than other types of investment. The Association shall give priority to investments in Puerto Rico.
(6) Financial instruments.— The Assembly of Delegates may authorize the Executive Committee through regulations to employ financial instruments such as: mutual fund shares, options contracts, futures, security futures, and currency hedging. Provided, however, That the amount of assets available for these risk-reduction transactions shall not exceed five percent (5%) of its total liquid assets available for investment. If the extent of risk of a transaction requires exceeding said limit to responsibly reduce the risk of said transaction, the Association shall not authorize such transaction.
History —Apr. 25, 2013, No. 9, § 10.