PUERTO RICO Trends and Developments Contributed by: Ivan G Marrero and Antonio J Pietrantoni, Pietrantoni Mendez & Alvarez LLC
be treated as a separate entity for local tax purposes and must file its own partnership income returns with the Puerto Rico Treasury Department. In general, a Series LLC organised under Puerto Rico law has the following characteristics: • each series is separate from all other series of the Series LLC; • each series consists of a separate pool of assets, liabilities and streams of earnings; • the members associated with a series participate in the income only of that series; • the ownership interests of the members associated with a series are limited to the assets of that series upon redemption, liquidation or termination of such series; • the payment of expenses, charges and liabilities of a series is limited to the assets of that series; and • the creditors of a series are limited to the assets of that series for the recovery of expenses, charges and liabilities. In effect, the Series LLC structure has further opti - mised fund structures by enhancing asset protection, risk segregation and operational efficiency. In addi - tion, structuring multiple investment vehicles under a single master LLC can reduce certain legal, filing and operational costs compared to creating separate entities for each investment portfolio. Each series may have separate management, targeted investor pools and tailored governance rules – useful for specialised asset allocations or co-investments. However, the Series LLC framework still requires meticulous com - pliance with statutory formalities, including separate accounts and record-keeping for each series and spe - cific disclosure requirements. Given its uniqueness, coupled with the tax incen - tives provided by the Private Equity Funds Act or the Puerto Rico Incentives Code, as applicable, many private equity firms in Puerto Rico have pursued the Series LLC structure for their private equity funds, private credit funds and other alternative investment vehicles. This trend is generally expected to continue among local private equity firms as managers seek to optimise risks, reduce costs and mitigate operational complexities. As the Puerto Rico private equity market
continues to expand and diversify, the Series LLC is emerging as a vehicle of choice for pursuing asset segregation and liability protection within a flexible fund structure. Regulatory Developments On the regulatory side, recent developments reflect a general trend towards maturation, increased sophis - tication, and a desire to align local and US federal standards, the effect of which has been to push the Puerto Rico private equity fund industry into a more rigorous, transparent and dual-jurisdictional over - sight environment. Although a new local government administration was sworn into office in January 2025, and a new Commissioner of Financial Institutions was recently appointed, they are expected to main - tain rigorous regulatory oversight of the private equity fund industry while also fostering a flexible framework designed to promote Puerto Rico’s economic devel - opment. The enactment of Regulation No 9461 in May 2023 (“Regulation 9461”) marked a turning point for the regulation of private equity funds in Puerto Rico, as it requires private equity funds to, among other things, comply with strict record-keeping requirements and periodically submit comprehensive financial reports to the OCIF similar to those filed by other financial institutions. Regulation 9461 also provides for fines and other penalties, including the possible mandatory liquidation of a fund in cases of non-compliance, indi - cating a sharper, more enforcement-driven regulatory approach that is expected to continue going forward. More recently, on 10 May 2025, the Business Incen - tives Office ( Oficina de Incentivos para Negocios OIN) of the Puerto Rico Department of Economic Devel - opment and Commerce, a government instrumen - tality that grants and regulates tax incentives under the Puerto Rico Incentives Code, issued an informa - tion bulletin addressing certain regulatory reporting requirements applicable to tax grantees, including pri - vate funds, under the Puerto Rico Incentives Code. It specifically provides the due dates for filing annual reports with the OIN and clarifies, among other things, that the OIN will issue an annual reporting form for tax grantees that are currently not covered by an OIN annual reporting form. As provided in the bulletin,
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