PUERTO RICO Law and Practice Contributed by: Fernando J. Rovira-Rullán and Andrés I. Ferriol Alonso, Ferraiuoli LLC
obtained from the Office of Incentives for Business - es in Puerto Rico (OIBPR), which is ascribed to the Department of Economic Development and Com - merce. 2.3 Restrictions on Foreign Investments As an unincorporated territory of the USA, Puerto Rico enjoys US constitutional, legal, financial and regula - tory protection, and almost all US federal laws and regulations apply to Puerto Rico. Thus, the Foreign Investment and National Security Act 2007 and the Exon-Florio Amendment to the Omnibus Trade and Competitiveness Act 1988 both apply to Puerto Rico. These statutes grant the Committee on Foreign Invest - ment in the United States the authority to investigate and block transactions that may threaten the national security of the USA. 2.4 Antitrust Regulations The Puerto Rico Monopoly Act (the “Monopoly Act”) governs, from a state law perspective, the antitrust considerations that could arise in connection with the purchase or sale of an ongoing concern, expressly prohibiting business combinations that result in an unreasonable restraint of trade or commerce in Puerto Rico. The Monopoly Act does not require that the par - ties to a transaction obtain the prior approval of the Office of Monopoly Affairs of the Puerto Rico Depart - ment of Justice, but it may issue advisory opinions if voluntarily requested by the parties. While a negative advisory opinion does not prohibit the consummation of the proposed transaction, a favourable advisory opinion provides a certain degree of immunity if the transaction is closed under the terms and conditions previously disclosed to the Office. The Clayton Act, as amended by the Hart-Scott- Rodino Antitrust Improvements Act 1976 (the “HSR Act”), also applies to Puerto Rico. The HRS Act and applicable regulation prohibits M&A transactions that may substantially lessen competition or tend to create a monopoly. The HSR Act grants to the Federal Trade Commission and the federal Department of Justice the power to review and object to certain transactions that, given the size of the transaction and/or the size of the parties involved, may have antitrust implica - tions.
The HSR Act requires parties that meet certain trans - action or party size criteria to file pre-merger notifica - tions with both the Federal Trade Commission and the Department of Justice Antitrust Division prior to the consummation of the transaction (unless otherwise exempted under the HSR Act and its regulation). As of 17 February 2026, if a transaction is in excess of USD133.9 million, it must comply with the HSR Act if the “size of parties” test is met, which is met if one of the parties involved in the transaction has USD267.8 million or more in annual net sales or total assets and the other party has USD26.8 million or more in net annual sales or total assets. Further, if, as a result of the transaction, the purchaser acquires or holds vot - ing securities or assets of the seller that are valued in excess of USD535.5 million, the “size of transaction” test is met and the parties will have to comply with the requirements of the HSR Act, since acquisitions in excess of such amount are reportable regardless of the size of the parties unless an exemption applies. 2.5 Labour Law Regulations One of the most significant legislations with regard to labour matters in connection with M&A transactions in Puerto Rico is Act 80 of 1976, as amended (“Act 80”). Act 80, which applies to employees hired for an unfixed period of time, provides that employees who have completed the statutory automatic probation - ary period and are discharged without just cause, as defined by Act 80, have a right to severance pay based on a formula under Act 80 that takes into account the duration of their employment and the highest salary received by the employee during the prior three years. Thus, within the context of the purchase of an ongo - ing concern, if the purchaser does not retain all of the employees of the target entity, the purchaser is required by Act 80 to retain from the purchase price an amount equivalent to the severance payments to the employees who are not hired by the purchaser. Act 80 also provides that if the purchaser hires all or some of the employees of the target entity, the pur - chaser must recognise the seniority of the retained employees and their years of service with the target and, in the event of any termination without just cause after the closing of the transaction, the purchaser will be responsible for the severance payment taking in
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