PUERTO RICO Law and Practice Contributed by: Dianette Rivera-Melendez, Oreste Ramos, Maria Trelles-Hernandez and Rosangela Sanfilippo, Pietrantoni Mendez & Alvarez LLC
interests of the shareholders and the corporation. Corporations with shares of stock listed in a stock exchange and registered with the SEC must also com - ply with the applicable requirements of the Securi - ties Exchange Act of 1934, the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which provide a framework of rules and disclosure and other require - ments, as detailed in 5. Capital Markets . 4.2 Relationship Between Companies and Minority Investors Controlling Shareholders Under the Puerto Rican General Corporations Act, controlling shareholders owe a fiduciary duty (duty of loyalty) to the corporation and its shareholders in situations where they might have a conflict of inter - est with respect to a corporate matter. For certain types of entities, such as LLCs, members may agree to eliminate the fiduciary duties for officers, directors and controlling members. Shareholder Litigation The Puerto Rican General Corporations Act allows for shareholder litigation in the two following ways: • shareholders can pursue a direct action against the corporation and its management for damages suf - fered as an individual shareholder; or • shareholders can present a derivative action on behalf of the corporation and against its manage - ment if the directors or officers violate their fiduci - ary duties. 4.3 Disclosure and Reporting Obligations Federal beneficial ownership and insider disclosures applicable to publicly traded companies in the USA also apply to Puerto Rican publicly traded companies. Beneficial Ownership Disclosures Under the Corporate Transparency Act Under the beneficial ownership information disclo - sure rule adopted by the Financial Crimes Enforce - ment Network (FinCEN) of the US Department of the Treasury during 2022, which came into effect on 1 January 2024 (the “CTA Rule”), certain “reporting companies” will be required to file certain identifying information regarding the reporting company and its
“company applicants” and “beneficial owners” with FinCEN. While the CTA Rule treats entities organised in Puerto Rico, as well as foreign entities authorised to do business in Puerto Rico, the same as their analo - gous counterparts in other US jurisdictions, exemp - tions available to certain large companies may not be available to Puerto Rican entities that would otherwise meet certain thresholds because they generally do not file US federal income taxes. Any available exemp - tions from the CTA Rule disclosure requirements must be evaluated on a case-by-case basis, as they rely on technical criteria. Pre-Merger Filing Thresholds Under the federal Pre-Merger Notification Programme established by the Hart-Scott-Rodino Act of 1976 (HSR), parties to certain transactions involving large mergers and acquisitions must submit pre-merger notification to the FTC and the US Department of Jus - tice. Notification is required at certain filing thresholds, depending on transaction size and size-of-person tests; see 6. Antitrust/Competition for more details. The BEA The BEA of the US Department of Commerce moni - tors inbound FDI in the US (including Puerto Rico) by compiling statistics on the scale of foreign-owned business activities in the US. Companies are required to report inbound FDI transactions to the BEA within 45 days after formation or acquisition of a company if the transaction was executed by a foreign person or entity or by an existing US entity with 10% or more foreign ownership.
5. Capital Markets 5.1 Capital Markets Overview Structure and Sources of Financing
As Puerto Rico is a US territory, Puerto Rican entities and investors have access to and participate in the US capital markets. The Puerto Rican government lost access to the capi - tal markets in 2014, and has been under the supervi - sion of a federally appointed financial oversight and management board for Puerto Rico following the enactment of the PROMESA in 2016. As of 2024, the
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