P.R. Laws tit. 26, § 3604
(a) The organization of a society shall be governed as follows:
(1) Seven or more persons, the majority of which shall be citizens of the United States and residents of Puerto Rico, who desire to form a fraternal benefit society, may make, sign and acknowledge before some officer competent to take acknowledgments.
(2) Articles of incorporation, in which shall be stated:
(A) The proposed corporate name of the society, which shall not so closely resemble the name of any society or insurance company as to be misleading or confusing;
(B) the purposes for which it is being formed and the mode in which its corporate powers are to be exercised. Such purposes shall not include more liberal powers than are granted by this chapter, provided that any lawful, social, intellectual, educational, charitable, benevolent, moral, fraternal or religious advantages may be set forth among the purposes of the society, and
(C) the names and residences of the incorporators and the names, residences and official titles of all the officers, trustees, directors, or other persons who are to have and exercise the general control of the management of the affairs and funds of the society for the first year or until the ensuing election at which all such officers shall be elected by the supreme legislative or governing body, which election shall be held not later than one year from the date of the issuance of the permanent certificate of authority.
(b) Such articles of incorporation, duly certified copies of the constitution, laws and rules, copies of all proposed forms of certificates, applications therefor, and circulars to be issued by the society, and a bond conditioned upon the return to applicants of the advanced payments if the organization is not completed within one year, shall be filed with the Commissioner of Insurance, who may require such further information as he deems necessary. The bond with sureties approved by the Commissioner of Insurance shall be in such amount, not less than five thousand dollars ($5,000) nor more than twenty-five thousand dollars ($25,000), as required by the Commissioner of Insurance. All documents filed are to be in either the English or Spanish language. If the purposes of the society conform to the requirements of this chapter and all provisions of the law have been complied with, the Commissioner of Insurance shall so certify, retain and file the articles of incorporation and furnish the incorporators a preliminary certificate authorizing the society to solicit members as hereinafter provided.
(c) No preliminary certificate granted under the provisions of this section shall be valid after one year from its date or after such further period, not exceeding one year, as may be authorized by the Commissioner of Insurance upon cause shown, unless the five hundred applicants hereinafter required have been secured and the organization has been completed as herein provided. The articles of incorporation and all other proceedings thereunder shall become null and void in one year from the date of the preliminary certificate, or at the expiration of the extended period, unless the society shall have completed its organization and received a certificate of authority to do business as hereinafter provided.
(d) Upon receipt of a preliminary certificate from the Commissioner of Insurance, the society may solicit members for the purpose of completing its organization, shall collect from each applicant the amount of not less than one regular monthly premium in accordance with its table of rates as provided by its constitution and laws, and shall issue to each such applicant a receipt for the amount so collected. No society shall incur any liability other than for the return of such advance premium, nor issue any certificate, nor pay, allow, or offer or promise to pay or allow, any death or disability benefit to any person until:
(1) Actual bona fide applications for death benefits have been secured aggregating at least five hundred thousand dollars on not less than five hundred lives, none of which shall be insured for more than one thousand dollars, for the purposes of complying with the requirement of five hundred thousand dollars herein established; Provided, That for the purpose of complying with the requirement of insurance on five hundred lives, the applications of members from various subordinate lodges or branches of such society may be counted;
(2) all such applicants for death benefits shall have furnished evidence of insurability satisfactory to the society;
(3) certificates of examinations or acceptable declarations of insurability have been duly filed and approved by the chief medical examiner of the society;
(4) there has been submitted to the Commissioner of Insurance, under oath of the president or secretary, or corresponding officer of the society, a list of such applicants, giving their names, addresses, date each was admitted, name and number of the subordinate branch of which each applicant is a member, amount of benefits to be granted and premiums therefor, and
(5) it shall have been shown to the Commissioner of Insurance, by sworn statement of the treasurer, or corresponding officer of such society, that at least five hundred applicants have each paid in cash at least one regular monthly premium as herein provided, which premiums in the aggregate shall amount to at least twenty-five hundred dollars, all of which shall be credited to the fund or funds from which benefits are to be paid and no part of which may be used for expenses. Said advance premiums shall be held in trust during the period of organization and if the society has not qualified for a certificate of authority within one year, such premiums shall be returned to said applicants.
(e) The Commissioner of Insurance may make such examination and require such further information as he deems advisable. Upon presentation of satisfactory evidence that the society has complied with all the provisions of law, he shall issue to the society a certificate to that effect and that the society is authorized to transact business pursuant to the provisions of this chapter. The certificate shall be prima facie evidence of the existence of the society at the date of such certificate. The Commissioner of Insurance shall cause a record of such certificate to be made. A certified copy of such record may be given in evidence with like effect as the original certificate.
(f) Every society shall have the power to adopt a constitution and laws for the government of the society, the admission of its members, the management of its affairs and the fixing and readjusting of the rates of its members from time to time. It shall have the power to change, alter, or amend such constitution and laws and shall have such other powers as are necessary and incidental to carrying into effect the objects and purposes of the society.
History —Ins. Code, added as § 36.040 on June 13, 1964, No. 55, p. 122.