Law on Savings and Credit Cooperatives

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EXTRAORDINARY NUMBER
LIBERTY EQUALITY FRATERNITY
REPUBLIC OF HAITI
LEGISLATIVE BODY
LAW ON SAVINGS AND CREDIT COOPERATIVES

Having regard to Articles 1, 111-1, 144, 245, 246 of the Constitution, Having regard to the law of August 17, 1979 creating the Bank of the Republic of Haiti, Having regard to the decree of March 31, 1981 creating an autonomous body named the National Council of Cooperatives (CNC); Having regard to the decree of April 2, 1981 regulating the organization of cooperatives and the various forms of association, based on the cooperative society; Having regard to the decree of March 27, 1985 modifying Articles 9 and 17 of the law of August 17, 1979 creating the Bank of the Republic of Haiti, Having regard to the decree of May 17, 1995 on the liberalization of interest rates;

Considering that savings and credit cooperatives, commonly known as credit unions, participate in the economic and social development of the country, Considering that it is necessary to strengthen the control of the activities of savings and credit cooperatives to ensure the security of the interests of depositors in this sector, Considering that it is necessary to provide the BRH and the CNC with a legal instrument allowing them to frame, supervise, and control savings and credit cooperatives,

On the report of the Ministers of Planning and External Cooperation, of Economy and Finance, and after deliberation in the Council of Ministers, The Executive Power has proposed. And the Legislative Body has voted the following law:

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TITLE I
PRELIMINARY PROVISIONS
CHAPTER 1
OBJECT OF THE LAW

Article 1
This law concerns the constitution, organization, control, and supervision of Savings and Credit Cooperatives (CECs), commonly called Credit Unions, and federations of savings and credit cooperatives.

Article 2
A cooperative is an enterprise having objectives, structure, and administrative bodies that differentiate it from a corporation.
In addition to its fundamental purpose, the CEC must:
a) foster cooperation between members, between members and the CEC, and between the latter and other cooperative organizations. b) Promote economic, social, and cooperative education.

Article 3
A CEC is a financial cooperative whose purpose is financial intermediation. This financial intermediation consists in receiving funds from its members and granting them credit. Its legal existence comes from the National Council of Cooperatives (CNC) and the Bank of the Republic of Haiti (BRH). It may temporarily conduct operations under market conditions with users who must change their status during a period ranging from three (3) to six (6) months.

Article 4
Since the activities of a CEC are essentially cooperative, they are, subject to the exceptions provided by this law, reserved for its members. These activities are deemed not to constitute the operation of a business or a means of profit.

Article 5
As cooperatives, CECs are based on the following cooperative principles:

1. Voluntary and open membership,
2. Democratic member control: one member, one vote,
3. Member economic participation, Autonomy and Independence of the Cooperative,

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4) Education, Training, and Information for members and the general public,
5) Cooperation among cooperatives, Concern for community.

CHAPTER II
PARTICULAR, GENERAL DEFINITIONS AND ACRONYMS

Article 6
For the purposes of this law, the following terms are understood as:
A) PARTICULAR DEFINITIONS

1. Cooperative: Any autonomous association of persons voluntarily united to satisfy their common economic, social, and cultural aspirations and needs through a jointly owned enterprise, where ownership is collective and power is exercised democratically.
2. Members: Any founding or associated member of a savings and credit cooperative holding at least one share and a membership card which serves as a registered title.

B) GENERAL DEFINITIONS
Financial Intermediation: The role played by certain agents called cooperatives to achieve adaptation of financial services and products in a given market.
Users: Natural or legal persons who use the services of a financial cooperative under market conditions without having the status of members. At the end of a probationary period of three (3) to six (6) months, the user must decide whether or not to join. The cooperative may not continue to provide services to this person unless they meet the conditions to become full members. Funds: The following are considered funds: sums of money, funds received from members and users, funds collected by a cooperative notably in the form of savings deposits, term deposits, and investments, with the right to dispose of them for its own account, but under the obligation to repay them. However, the following are not considered funds of members and users. Own Funds: They consist of share capital and reserves. Credit Operation: Any act by which a financial cooperative acting for consideration makes or promises to make funds available to another institution or a member, or takes an engagement in their interest by signature, such as an aval, guarantee, or surety. Branches: Service points or counters of a cooperative without its own legal personality but endowed with a certain degree of management autonomy.

Reasonable Grounds to Believe: When there is sufficient information allowing one to presume the existence of mismanagement or an offense.

C) ACRONYMS
BRH: Bank of the Republic of Haiti
CNC: National Council of Cooperatives
CEC: Savings and Credit Cooperative
FCP: Federation of Credit Unions
DIGCP: General Inspection Directorate of Credit Unions

TITLE II
REGULATORY, SUPERVISION, AND CONTROL BODIES OF CECs
CHAPTER I
ROLE OF THE BRH, THE CNC, AND THE FCP

Article 7
The BRH is responsible, through the DIGCP, for controlling the compliance of CECs and CEC federations with the legislative and regulatory provisions applicable to them and for sanctioning observed breaches.

Article 8
The CNC is the supervisory authority for cooperatives. It is charged with formulating and promoting the government's policy on cooperatives.

Article 9
A federation is a grouping of CECs that has as its objects, in addition to those provided for a cooperative, to:
a) protect the interests of affiliated CECs, facilitate the achievement of their purpose, and promote their development, b) act, within the limits provided by this law, as a surveillance and control body for affiliated CECs, c) provide affiliated CECs with education, promotion, consultation, technical assistance, and other similar services according to an orientation plan prepared in agreement with the CNC and the BRH, each concerning its respective area,

d) represent CECs directly or through a body created before instances and forums with the aim of promoting their integration into the national financial system.

CHAPTER II
CONTROL AND SUPERVISION OF CECs
SECTION 1. GENERAL PROVISIONS

Article 10
A directorate named "General Inspection Directorate of Credit Unions" (DIGCP) is created within the Bank of the Republic of Haiti (BRH). This directorate is charged with supervising and controlling CECs and federations of savings and credit cooperatives regularly constituted under this law. It also ensures compliance with the standards and legislation concerning them.

Article 11
The DIGCP is placed under the authority of an official with the rank of Director. It may contain several services. The BRH makes financial, material, and human resources available to it for the exercise of its mission. The DIGCP examines operating conditions and ensures the quality of the financial situation of CECs.

Article 12
The BRH communicates to CECs and federations the regulatory provisions to which they are subject via instructions.

Article 13
The BRH has the power to verify, either itself or through an independent auditor mandated for this purpose, the accounts and activities of any entity whose operations or activities resemble those of a CEC.

Article 14
The BRH regulates the operations and activities of CECs, notably in matters of deposits, credit, and investment. It may determine:

1. The object and limits within which, as a percentage of own funds, credit may be granted or investments made,

2. The maximum deadline for maturities,

3. In the case of credit operations, the types and amounts of required securities,

4. Individual or collective ceilings for different categories of credit or investment operations as well as the currencies in circulation.

5. BRH regulations may differ from those issued for financial institutions directly regulated by the BRH. The BRH may, in particular, take into account the extent of their network, their location, the quality of their management, and their capitalization level to impose specific requirements on CECs.

Article 15
The BRH may require CECs to comply with management rules aimed at ensuring the security of deposits entrusted to them and promoting a credit policy consistent with the national interest. The BRH may notably establish liquidity rules to constrain CECs to keep a portion of their short-term resources in an immediately available or easily mobilizable form. It may subject them to risk division rules and credit concentration limits. The BRH may also issue rules to ensure that the amount of own resources of CECs is proportional to the volume of funds entrusted to them or the risks they assume.

CHAPTER II
AUTHORIZATION FOR OPERATION OF CECs

Article 16
All CECs are registered with the CNC as cooperatives. Any registration request must be accompanied by the following documents:

1. A letter of request for registration addressed to the General Director of the CNC
2. The original and two copies of the Deed of Incorporation
3. The original and two copies of the Internal Regulations
4. The original and two copies of the Opening Balance Sheet
5. The original and two copies of the Bylaws
6. The minutes of the Constitutive General Assembly
7. The original and two copies of the Provisional Operating Account
8. The copy of the identity card of the administrators

Article 17
Before exercising their activity, all CECs must be authorized to operate. This authorization is evidenced by an operating authorization notice issued by the CNC after opinion from the BRH.

Article 18
The operating authorization notice is granted within sixty (60) days from receipt of the request, unless additional documents or information are required. If so, the CNC communicates to the applicant the exhaustive list of missing documents or information. Any refusal of operating authorization is motivated and notified to the applicant.

Article 19
Any request for operating authorization submitted by a CEC must be accompanied by the following documents:

1. The CNC registration as a cooperative,
2. A certified copy of the Deed of Incorporation of the cooperative duly registered at the General Directorate of Taxes in the place where the cooperative is headquartered,
3. A copy of the bylaws duly signed by a minimum of 21 founding members,
4. A copy of the internal regulations
5. The opening balance sheet and/or the last balance sheet of the CEC
6. The business plan or provisional account if it is a CEC in formation,
7. Proof of the constitution of a minimum share capital of fifty thousand gourdes (G 50,000.00). At the time of its formation, the CEC must deposit (1/4) of the share capital, namely twelve thousand five hundred (12,500.00) with a local bank. This amount may be released upon obtaining the operating authorization, which must be published in a high-circulation newspaper at the expense and care of the CEC fifteen days after its receipt.
   If the request is supported by a federation, the proof of constitution of the minimum share capital shall be twenty-five thousand gourdes (G 25,000.00). At the time of its formation, the CEC must deposit 1/4 of the capital, namely six thousand two hundred fifty gourdes (6,250.00). In both cases, the release of the remainder of the capital occurs within a period of two (2) years, at a rate of half (50%) each year, starting from the publication in a high-circulation newspaper of the notice of operating authorization.
8. A certificate of mandatory acceptance of supervision and control from all CECs whose request is supported by a federation.
9. All other information and documents likely to clarify the decision of the BRH.
   The amounts indicated in paragraph 7 of this article may be modified by the BRH in concert with the CNC according to the evolution of the sector and general economic activity.

Article 20
The bylaws of the CEC, its registration reference, and its operating authorization are transmitted for publication in the Official Journal Le Moniteur at the diligence of the CNC. The CNC ensures that the BRH receives a copy of the letter of transmission to the National Press.

Article 21
The operating authorization, issued under this law, must be displayed in a visible place accessible to the public both at the CEC premises and at its service points or counters.

Article 22
The withdrawal of the operating authorization may be pronounced by the CNC either at the request of the BRH, at the request of the CEC, or ex officio when the CEC no longer meets the conditions to which the authorization is subject, when it has not used its operating authorization within a period of twelve (12) months, or when it no longer exercises its activity. The BRH and the CNC may request a re-evaluation of the file from a CEC that has not begun operations six (6) months after receiving its operating authorization. This re-evaluation may lead to the withdrawal of the authorization. Any CEC whose authorization has been revoked enters liquidation. During the liquidation period, the CEC remains subject to the exclusive control of the BRH; it may only perform operations strictly necessary to settle its situation. It may only claim its status as a CEC by specifying that it is in liquidation.

SECTION 1.- DENOMINATION

Article 23
No person other than a CEC may present itself under the denomination "CREDIT UNION", "SAVINGS AND CREDIT COOPERATIVE", or any similar appellations.
No person other than a CEC governed by this law may include one or other of these expressions or a combination of them in its name, nor use them for its activities.
A CEC may not, in the course of its operations, identify itself under a name other than that indicated in its bylaws. It may not use a name or acronym already used by other entities.

Article 24
It is prohibited for any person other than an authorized CEC to use a denomination, trade name, advertising, or generally expressions that make it appear that they are duly authorized to operate as a CEC, or to create confusion in this matter. It is prohibited for a CEC to engage directly, within the framework of this law, in commercial activities or the production of goods and services. However, it may participate in the share capital of any company up to 25%. This participation will be drawn from the chapter of overpayments and permanent shares.

SECTION 2.- DEED OF INCORPORATION

Article 25
The deed of incorporation of a CEC must include the following points:
a) the denomination, acronym, headquarters, and geographic area of intervention of the CEC, b) the operations to which the CEC intends to engage, c) the precise designation of the founders, d) the manner in which the share capital is constituted e) the duration of the CEC f) the names of the members of the Board of Directors and the supervisory committee, and those authorized to sign on behalf of the CEC g) the powers of the administrators and the duration of their mandate h) the rights and obligations of members.

Article 26
The creation of the CEC must be evidenced by an authentic deed drawn up by a notary in the place of the registered office of the CEC or by a private deed deposited with a notary in the same place. For the deposit of documents, the notary's fees cannot exceed 5/100 of the minimum share capital.

SECTION 3.- REGISTERED OFFICE

Article 27
The registered office of a CEC constitutes its domicile. It must be located in the department representing the geographic area of intervention indicated in its bylaws.

Article 28
A CEC may, within the limits of the department indicated in its bylaws, change the address of its registered office by decision of the Board of Directors, after prior opinion from the BRH and the CNC, at least fifteen (15) days before the execution of this decision. The publication of this notice is made within the same period in a high-circulation daily and by any other means (radio, television, etc.).

Article 29
The CEC may transfer its headquarters or develop branches in any other commune of said department after prior authorization from the CNC issued after opinion from the BRH. The request for change of address of its registered office must accompany any modification of the bylaws aiming to transfer it.

Article 30
Any CEC must seek authorization from the BRH and the CNC to establish branches. This authorization is given by the CNC after opinion from the BRH, which must base its decision on the financial performance of the CEC and the opportunity of the project. Any unfavorable response must be motivated.

SECTION 4.- OWN FUNDS

Article 31
The own funds of a CEC consist of share capital and reserves.

Article 32
The share capital of a CEC is variable. It is composed of qualification shares. It may also include permanent shares.

Article 33
Qualification shares are registered, indivisible, and non-transferable to third parties, and are subscribed by each member. The nominal value of these shares is fixed in the bylaws; it cannot exceed five hundred gourdes (G 500.00). Shares must be paid up at subscription for a minimum amount of 50%, and the balance within a period of six (6) months from subscription. The reimbursement of shares cannot in any case exceed their nominal value. Shares cannot receive dividends but only an interest fixed each year by the general assembly of members.

Article 34
When its bylaws authorize it, a CEC may issue permanent shares without voting rights.
The BRH may have a right of oversight on the issuance of these shares. The BRH determines, by regulatory means, the limits of permanent shares in the composition of share capital.

Article 35
The general assembly of members must provide, within the limits set by the BRH, the number of permanent shares that the CEC is authorized to issue, the amount of the issuance, the nominal value of each share, the privileges, rights, and restrictions of these shares, as well as the particular conditions for their reimbursement and transfer. Permanent shares are fully paid up, have a nominal maturity of ten (10) years, bear interest, and may be subject to a tax credit after two (2) years of holding.

SECTION 5.- QUALITY OF MEMBERS

Article 36
A CEC may be composed of two categories of members. These are:

1. Members, who constitute any natural person who:
   a) has their domicile, residence, establishment, or usual workplace in the geographic area of intervention of the CEC. b) makes a written request for admission c) subscribes and pays a share d) undertakes to respect the bylaws and internal regulations of the CEC e) is admitted by the Board of Directors.
2. Auxiliary members, who represent legal persons and minors situated within the area of their activities. The auxiliary member may only hold permanent shares provided for in Articles 34 and 35 of this law. They may attend assemblies; however, they have no vote and are not eligible for any position within the CEC.

Article 37
Unless the bylaws decide otherwise, members are financially responsible for the commitments of the CEC only up to the amount of their subscribed shares.
The reimbursement of shares to a member or heirs, in case of death, can never exceed the nominal value of these shares increased by the interest and rebates due to them.

Article 38
Unless in cases of force majeure duly justified and submitted to the appreciation of the Board of Directors, no member may withdraw from the CEC before the expiration of one (1) year starting from their registration as a member.

Article 39
The rights of each member are represented by a registered title bearing the denomination of the CEC, the first name, last name, qualities, and domicile of the holder, the date of their admission, the number of shares subscribed, all signed by those with management and social signature authority; the membership card serves as the registered title for a member of a CEC. The share confers the right of ownership, the right to attend assemblies, to vote, and to become an administrator.

The share bears interest, cannot have a value, and is not negotiable on markets. The share is redeemable only by members of the CEC and reimbursable at its nominal value.

SECTION 6.- GENERAL ASSEMBLY

Article 40
The general assembly is the supreme authority of the CEC. Its decisions bind all members provided they are in conformity with this law and the bylaws.

Article 41
The general assembly meets at least once a year, upon convocation by the President of the Board of Directors, within six (6) months following the closing of the fiscal year.
It may be convened extraordinarily, at any time, by the President of the Board of Directors, by two (2) members of the Board of Directors, by the supervisory committee, or upon motivated request of 25% of its members.

Article 42
To deliberate validly, the general assembly must gather two-thirds (2/3) of the members. When the quorum provided by law is not reached, The assembly will be convened again. If the quorum is not reached after this convocation made at eight days' notice, the assembly deliberates validly regardless of the number of members present. In ordinary general assemblies as well as in extraordinary general assemblies, decisions are taken by a majority of members present. The deliberations of ordinary or extraordinary general assemblies are recorded by minutes transcribed on a special register and signed by the President and the Secretary of the Board of Directors, and the

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