Capítulo II. Organizacion

The superior organs of the Institute are:

a)the board of directors;

b)the Management; and,

c)the Technical Council.

The board of directors is the supreme authority of the Institute and, consequently, the general direction of its activities corresponds to it.

The board of directors must be integrated by six full members and six alternate members, as follows:

a). One full member and one alternate appointed by the President of the Republic, by agreement issued through the Ministry of Economy and Labor;

b). One full member and one alternate appointed by the Monetary Board of the Bank of Guatemala, from any of its members, with the sole exception of those who are members ex officio.

If any of the designated persons ceases to have the status of member of the Monetary Board, the latter must make the new appointment that corresponds for the remainder needed to complete the respective legal term;

c). One full member and one alternate appointed by the Superior Council of the Autonomous University of San Carlos of Guatemala;

d). One full member and one alternate appointed by the Official College of Physicians and Surgeons;

e). One full member and one alternate appointed by the employers' associations or unions that are registered in accordance with the law; and,

f). One full member and one alternate appointed by the workers' unions that are registered in accordance with the law.

The full members to which the preceding article alludes are, in their order, the president, the first vice president, the second vice president and the three members of the board of directors.

All these members have equal rights and obligations, except the president, to whom it also corresponds to preside over the sessions, to decide with a double vote the matters in which there is a tie, to maintain frequent contact with the manager for the purpose of facilitating the work of the latter and that of the board of directors and, consequently, to receive each month the additional remuneration indicated by the general budget of expenditures of the Institute.

In case of temporary or accidental absence of the president, he must be substituted, in his functions as president, by one of the vice presidents in the order of their appointment. In said case the alternate appointed by the President of the Republic must enter the board of directors to act as a simple full member, without special category.

The full members must be substituted in their temporary or accidental absences by their respective alternates.

In case of definitive absence of a full member, his respective alternate must occupy his position for the entire remainder of the corresponding legal term and the persons or entities in charge of making the corresponding appointment must limit themselves to designating a new alternate also for the remainder of said term.

Both the full members and the alternate members must be appointed for terms of six years, except as provided in the second paragraph of the preceding article and in subsection b) of article 4, and may be re-elected at the expiration of their respective terms.

The members of the board of directors, full or alternate, must meet the following requirements:

a). Be Guatemalans by birth, over twenty-five years of age, under seventy years of age, of secular status and citizens in the exercise of their rights;

b). Possess recognized honorability and independence of judgment;

c). Be versed in economic-social matters;

d). Possess conditions of professional or practical capacity and experience widely recognized.

For this requirement to be understood as fulfilled in the case of members appointed by the workers' unions, the respective full member and alternate must currently practice their profession or trade or earn their living by the practice of one or the other;

e). In the case of subsections e) and f) of article 4, belong to their respective associations or unions at the moment of their appointment and, at least, during the year prior to their designation; and,

f). Especially, be identified with the principles that inspire this law.

The following may not be members of the board of directors, full or alternate:

a). Those who infringe or contribute to infringing the provisions of this law or of its regulations;

b). Those who are leaders of any political party as members of its general executive committee, of its advisory council or of its subsidiary directive committees, unless they choose to be appointed members of the board of directors of the Institute;

c). Those who are linked to another member of the board of directors by reasons of kinship, up to within the fourth degree of consanguinity or second of affinity, or linked by economic reasons, if they belong to the same general or limited partnership as the other member, or if they form with the latter part of the board of directors of a company by shares;

d). Those who have been convicted of a crime that implies lack of probity, such as theft, robbery, fraud, bribery, prevarication, forgery, misappropriation of public funds or illegal exactions;

e). Those declared in insolvency or culpable or fraudulent bankruptcy, even if they have been rehabilitated, and those declared in fortuitous insolvency or bankruptcy, as long as they have not obtained said rehabilitation;

f). Repealed.

g). Those who belong to the Management, to the Technical Council or to the personnel of the Institute.

In the cases to which the preceding subsections f) and g) refer, the person who previously resigns from the position or employment that causes the impediment may be appointed.

* Subsection f) is repealed by Article 2, of Decree Number 15-89 of 02-03-1989.

The members of the board of directors who are to replace those who end their term must be appointed within the thirty days prior to the expiration of the same, in accordance with the following rules:

a). if it is a matter of one of the groups of full and alternate members to which subsections a), b), c) and d) of article 4 allude, the manager must send, within the first three days of the thirty to which the preceding paragraph refers, a written reminder to the persons or entities in charge of making the respective appointments, stating the time limit that this law grants them for the purpose. Once that time limit has expired without the appointments having been made, the board of directors and the manager must elect without loss of time, by a majority represented by a minimum of five votes, the persons they deem convenient, provided they meet the legal requirements; and,

b). If it is a matter of one of the groups of full and alternate members to which subsections e) and f) of article 4 allude, the manager must publish in the Official Gazette during the first three working days of the thirty-day time limit to which the opening paragraph of this article refers, a notice in which the day and hour on which the election is to be held must be indicated and in which all the instructions necessary to facilitate its realization must be given.

At least twenty days must elapse between the day of the election and the day on which the third notice appears, with the purpose that within this latter term each employers' association or union or, as the case may be, each workers' union may present to the Management, after proof of its legal capacity, the names and surnames of its candidates, one for full member and another for alternate, together with the documents it is able to provide as proof that said candidates meet the requirements determined by this law.

Once the day and hour of the election have arrived, the manager must proceed in the presence of the board of directors and of all the interested parties who wish to attend the act. In the first place he must certify, together with the board of directors, which candidates meet said requirements and then must declare elected those who, among these, appear in the greatest number of nomination lists presented in accordance with the preceding paragraph. In case of a tie, the election must be decided by drawing lots.

If no candidates are presented or if none of them meets the legal conditions, the board of directors and the manager must elect without loss of time, by a majority represented by a minimum of five votes, the persons they deem convenient, provided they fulfill the requirements provided for by this law.

The members of the board of directors, full or alternate, must perform their functions with absolute independence from the interests of a political-party order and from any and all others foreign to the purpose of the Institute; the responsibility that corresponds to them for their management must fall upon them, and they are irremovable during the period of their mandate, unless they incur any of the following grounds:

a). One who is absent from the country for more than one month without authorization of the Board;

b). One who, without justified cause, in the judgment of the board, fails to attend the sessions that are held during a period of fifteen days, whether they are ordinary or extraordinary;

c). One who for any reason, justified or not, has been unable to perform his functions for six consecutive months;

d). One who becomes legally incapacitated in accordance with articles 4, subsection b), 8, subsection a) and 9; and,

e). One who expressly resigns his position before the same Board.

The board of directors must decide by a majority represented by a minimum of five votes, and after hearing the interested party beforehand, whether or not there is ground for the separation or, as the case may be, for the acceptance of the resignation. If the separation or the acceptance of the resignation is agreed, it must be understood that the loss or surrender of his position does not free the departing person from the responsibilities in which he may have incurred.

For any interested party to request the separation of a member of the board of directors, full or alternate, it is indispensable that he do so in writing and that he attach or clearly state the evidence on which his request is based.

Once the vacancy is declared in the cases to which the preceding article refers, as well as in the case of death of a member of the board of directors, the manager must immediately inform whoever corresponds, so that the respective appointment is made. For that purpose, the procedure established in article 10 must be followed, insofar as it is applicable by analogy.

The board of directors must meet in ordinary session once each week and, extraordinarily, to deal with urgent matters, each time it is convened by its president, by three of its full members or by the manager, who, in such case, must do so in writing, specifying the purpose of the session.

Four full members of the board of directors, or alternates in their case, form a quorum for any session, except those meetings in which the law requires that the decisions be adopted by a majority represented by five votes, in which circumstance it is necessary that no fewer than five members of the same attend.

The resolutions must always be taken by simple majority of votes, unless there is a legal provision to the contrary.

The full members and the alternates who substitute a full member have the right to the per-session allowance that the general budget of expenditures of the Institute determines, provided that the number of the meetings does not exceed two per week. The sessions that exceed this number must not be paid.

The alternate members, when they are not substituting the full members, may attend the sessions of the board of directors, with voice but without vote, nor right to the allowance, except, as regards this latter circumstance, when they have been expressly convened for the meeting in question.

The Management must be integrated by:

a). A manager, who is the holder of the same; and,

b). One or more deputy managers, who must always act under the orders of the former and are the ones called to substitute him in his temporary absences, according to the order indicated by the regulation.

The management is the executive organ of the Institute and, consequently, has in its charge the administration and government of the same, in accordance with the legal provisions, and must also put into practice the decisions that the board of directors adopts on the general direction of the Institute, in accordance with the instructions that it gives it.

The manager has in his charge the legal representation of the Institute and may delegate it, totally or partially, to one or more deputy managers.

The members of the Management are also subject to the following provisions:

a). They must be appointed by the Board of Directors, by a majority represented by a minimum of five votes and shall have the qualities expressed in subsections a), b), c), d) and f) of article 8;

b). Those who are within the provisions of article 9, subsections a) through e), inclusive, may not hold those positions; nor those who perform other work, positions or employments, public or private, that prevent them from dedicating themselves fully to the performance of their mandate, except in the case of teaching or advisory activities that are related to or that contribute directly to the realization of the purposes of the Institute;

c). Those who belong to the board of directors or the Technical Council may not be designated for those positions, unless they previously resign from the position that causes the impediment;

d). Their conduct, responsibilities, resignation and removal are regulated by the provisions of articles 9 and 11, in harmony with the provisions contained in this article. The special provision contained in article 18 is excepted as regards the removal of the deputy managers;

e). Except in the case of impediment, they must attend all the sessions of the board of directors that do not refer to their appointment or removal, with the right to be heard.

In the cases of exception expressly authorized by this law, the manager has the right to vote in said sessions.

The manager must be, in addition, a technician of recognized experience and capacity in matters of social security; he serves six years in the exercise of his functions and his appointment may be renewed for other terms.

Under equal circumstances, any deputy manager has preference to be promoted to manager in case of definitive absence of the latter, and for the special requirement that the preceding paragraph determines to be understood as fulfilled, the deputy manager in question must have performed his position satisfactorily for a minimum of two years.

The appointment of the deputy managers must be made for an indefinite time and the Board of Directors may remove them at any moment, freely and without expression of cause, provided that the respective resolution is adopted by a majority represented by a minimum of five votes, or at the proposal of the Manager, by simple majority.

In accordance with articles 3 and 15, the following are attributions of the board of directors and, also, rules that regulate the relations of the latter with the Management:

a). To issue, at the proposal of the manager, the regulations necessary for the correct application of this law, as well as those that the internal operation of the Institute requires.

The regulations that refer to the setting of contributions or of benefits, to the application of some class of these to a certain territorial circumscription or sector of the population, or to the determination of penalties, must be submitted to the Executive Branch, through the Ministry of Economy and Labor, for its approval and immediate publication in the Official Gazette. If the Executive Branch has observations to make, it must obligatorily return the draft regulation in question to the manager, within the ten working days following that on which it received it, together with a concrete and reasoned exposition of the technical motives on which it bases its disagreement. In this case, the manager must submit the draft regulation again to the consideration of the board of directors, together with his opinion on the observations of the Executive Branch, and said Board, after hearing the Technical Council beforehand, must make the corrections it deems pertinent before submitting the aforementioned regulation again to the Executive Branch for the purposes that the present paragraph indicates.

The regulations that do not refer to the matters that the preceding paragraph indicates must be sent directly to the Official Gazette for their publication.

The rules of the three preceding paragraphs also apply to the amendments to or repeals of the aforementioned regulations;

a). To agree in each case, at the proposal of the manager, the investments of the funds of the Institute;

b). To study and approve, based on the draft that the manager must present to it at least thirty days before the respective annual fiscal year, the general budget of expenditures of the Institute, as well as the estimate of the various items of income of the latter.

In said budget a percentage of the gross income of the Institute must be fixed for strictly administrative expenses, that is, the sums that are invested in wages, fees and materials that do not imply benefits in kind, subsidies in cash and, in general, benefits granted directly to the insured persons. The manager may make changes in the various items of this section of the budget, but without exceeding the expressed percentage and provided that he gives immediate and reasoned account, in each case, to the board of directors.

The audit has the obligation to report without delay to the manager, and the latter to the board of directors, any expense that infringes what is provided in the preceding paragraph.

The general budget of expenditures of the Institute may not enter into force until it is published in the Official Gazette. The same rule applies to the amendments that in the course of an annual fiscal year the board of directors introduces to it, at the proposal of the manager;

b). To approve or disapprove the report that the manager must present to it within the thirty days following the expiration of each annual fiscal year. Said report must contain a detail of all the operations carried out by the Institute, of the technical norms or procedures followed to carry them out and of their result.

The board of directors has the obligation to review that report carefully and its members are responsible individually and with their own property for the losses that the Institute suffers, in case they do not make or make badly the aforementioned review. To better fulfill its mandate, the board of directors may require the assistance of experts of recognized capacity, technical competence and impartiality, who are independent of the Institute, and is obliged to request the cooperation of the tribunal and comptroller of accounts, so that the latter complies precisely on that occasion with the functions that articles 188 and 189, subsection 2º, of the Constitution assign to it.

The board of directors must approve or disapprove the aforementioned report within the non-extendable time limit of seventy days counted from its receipt and send it to be published without loss of time in the Official Gazette. In the first case the manager is relieved of all responsibility for the operations to which the report refers, and in the second, the board of directors must add to it the observations that may be pertinent and leave record of the measures it dictated to correct the defects, errors or bad management it has noticed;

e). To study the balance sheets, statements and reports relating to the progress of the Institute, that the manager must present to it each month, or at any other moment in which the board of directors so requests;

f). To create, at the proposal of the manager, branches of the Institute in the various regions of the country where it deems it necessary, to fix their legal domicile and, in general, to issue the other organizational rules complementary to those that this law imposes;

g). To grant leaves of absence to the manager, to the deputy managers and to its own members; and,

h). Any others that this law or its regulations determine.

The Technical Council must be integrated by a group of advisers, with consultative functions, who, under their personal responsibility, must subject their conduct to the strictest and most modern scientific norms that regulate their respective specialties.

The operation of the Technical Council is governed by these rules:

a). Its members may be foreign nationals while there are not enough experts in Guatemala who can suitably fill the respective positions, in the judgment of the board of directors, and they must be appointed and contracted by the manager, with the approval of at least four members of said Board, which is obliged to ensure that those persons broadly meet the requirements of capacity, qualification, experience and professional ethics that must be demanded in each case;

b). Within the Technical Council there must be, at least, experts in each one of the fields of Actuarial Science, Statistics, Auditing, Investments and Medical-hospital, who may also have the character of heads of the respective administrative departments;

c). Neither the board of directors nor the Management may resolve any matter that has a direct bearing on problems of a technical order, without previously obtaining the written criteria of the member or members of the Technical Council that correspond;

d). Its members, individually or jointly, must inform the manager in writing about the differences of the Institute that they come to notice, indicating at the same time the manner of correcting them and, whenever they deem it necessary, about the manner of improving its services or activities. In both cases, the reports must be confined to the matters of the technical competence of their signatories.

The manager is obliged to bring these reports to the knowledge of the board of directors within the fifteen days following that on which he received them, together with the personal observations that they deem convenient to make to them; and,

e). Except in the case of impediment, its members must attend the sessions of the board of directors in which matters of their technical competence are dealt with and, in such case, they are obliged to record their opinion in the records.

It corresponds to the manager to appoint, promote, grant leaves of absence, exchange, correct disciplinarily and remove all the rest of the personnel in the service of the Institute, in accordance with the respective regulation, which must be issued with the purpose of guaranteeing that:

a). Every appointment must be made solely by reason of proven merits and efficiency. For the initial determination of both, the system of examinations by competition must be used, except in the cases in which, because that is not possible, other methods must be used;

b). Every promotion of salary scale class must be subject to the rules of the preceding subsection and, in addition, must be made taking into account, subsidiarily, seniority in the service;

c). The administration of the Institute must be carried out with a technical criterion and employing only the number of workers strictly necessary;

d). The workers of the Institute must earn decent wages, in accordance with their position and responsibilities.

For each salary scale class there must be: A minimum wage rate, which must be applied to every worker who enters it; a maximum wage rate, which in no case may be exceeded, and all the intermediate wage rates that are judged convenient, with the purpose of being able to grant the workers periodic wage increases within the same salary scale class, in accordance with factors such as seniority, efficiency, character, conduct, aptitudes and others that result from the valuation of their services;

e). No wage may be paid with funds of the Institute to the worker appointed or promoted against the prescriptions of said regulation; and,

f). The disciplinary corrections and the dismissals of the workers of the Institute may only be imposed once the interested party has been heard and in the cases and in accordance with the procedures that are determined for the purpose, as a means of protecting them against all reprisal, current or possible, of a political-party order, or that implies racial discrimination or coercion of the individual or social guarantees that the Constitution establishes.

The aforementioned regulation must also regulate, in a discretionary form, matters relating to probation periods, the salary scale, employment lists, promotion lists, re-employment lists, examination systems, juries, general employment requirements, special employment requirements, valuation of examinations, valuation of services, provisional appointments, emergency appointments, exchanges, social protection benefits for the workers and other duties and rights of the latter.

To issue, amend or add to the aforementioned regulation, a majority represented by a minimum of five members of the board of directors is needed.

It is prohibited to appoint for the service of the Institute those who have a bond of kinship up to the fourth degree of consanguinity or second of affinity, with the members of the board of directors, of the Management, of the Technical Council or of the rest of the personnel.

Nevertheless, said Board may, at the proposal of the manager and by a majority represented by a minimum of five votes in each case, authorize the latter to make appointments that by reason of very qualified circumstances merit contravening the prohibition of the preceding paragraph.

The members of the board of directors, of the Management and of the Technical Council are prohibited from:

a). Authorizing, proposing or advising operations that imply an economic charge or expenditure for the Institute, in which they, their respective spouses or their relatives, up to the fourth degree of consanguinity or second of affinity, are directly interested: and,

b). Attending the sessions in which matters of any class are discussed or resolved in which they or their aforementioned spouses or relatives are directly interested, or in which any company of which one and the other are general or limited partners, or directors or managers if it is a matter of a public limited company, is interested in equal form.

The prohibitions that this article contains do not affect operations carried out before the appointments of each one of said members, nor their possible obligation to be an insured person or to comply as employers with the affiliation of their workers and the legal duties inherent to it.

The members of the board of directors, of the Management, of the Technical Council or of the personnel of the Institute who take an active part in party political campaigns must be removed from their positions.

Nevertheless, they may broadly exercise their civic and political rights and comply with their duties of equal nature.

The members of the Board of Directors, of the Management, of the Technical Council or of the personnel of the Institute who through intent (dolo) or gross negligence execute, consent to execute or allow the execution of operations contrary to this law or its regulations, must answer with their own property for the losses that such operations may cause to the Institute, without prejudice to the criminal or other liabilities that may apply.

Those who disclose confidential data or information of the Institute are subject to the same liability as that provided for in the preceding paragraph. It is understood that this does not restrict the power of the members of the Board of Directors or of the Management, or of the personnel that the latter authorize, to supply or publish statistical or any other kind of information that does not refer to any insured person or employer in particular.

In order to be relieved of liability for any decision adopted in the sessions held by the Board of Directors, the members of the Board and of the Management must state, at the very moment in which the records are drawn up, their opposing opinion, or, if they did not attend the session in question, within the eight days following the day on which they learned of that decision.