PUERTO RICO Law and Practice Contributed by: Fernando J Rovira-Rullán and Andrés I Ferriol-Alonso, Ferraiuoli LLC
the corporation for their consideration and approval; and • legal and regulatory compliance – the board ensures compliance with applicable laws, regulations and corporate governance. The governance structure of a Puerto Rican LLC is generally set forth in the limited liability company agreement. The LLC can be member- managed, manager-managed or can even adopt a more traditional corporate board structure. Where the limited liability company agreement is silent, the holders of a majority of the company’s membership interest shall control, but any mem - ber can bind the company before a third party. 3.3 Decision-Making Processes The decision-making process for a board of directors and/or other governing bodies typically occurs through one of two methods: • meetings; or • written consent. The Corporations Act does not impose a statu - tory requirement to hold a minimum number of board of directors’ meetings, nor does it provide or establish specific guidelines as to how to con - duct the order of business in a board meeting. The Corporations Act simply requires, unless otherwise stated in the certificate of incorpo - ration or the by-laws, that the board of direc - tors’ meeting be held in person or by electronic means of communication (such as telephone or video conferences) provided that all members of the board of directors assisting such meeting can listen to each other simultaneously. Furthermore, unless prohibited by the corpora - tion’s by-laws, any action required or permitted to be taken at any meeting of the board of direc - tors may be taken without a meeting, if all mem -
bers of the board of directors consent thereto in writing, and such consents are filed with the min - utes of the proceedings of the board of directors. Thus, any rules governing the meetings of the board of directors, such as minimum notification periods, frequency of meetings and quorum, are most commonly specified in the corporation’s by-laws. The Corporations Act does not govern the meet - ings of the members of an LLC, nor does it pro - vide or establish rules governing the structure or process for the meetings of the members or any governing body. Given that the Corporations Act does not require that a meeting of the manage - ment body of an LLC be held, such requirements are generally established in the company’s lim - ited liability company agreement. A typical board structure of a Puerto Rican cor - poration consists of one or more natural persons who are elected to act as directors of the corpo - ration by the shareholders. In a standard board structure, all directors are elected for a one-year term, and shareholders vote for the entire board at the annual meeting. However, a Puerto Rican corporation may choose to implement a staggered board struc - ture, where the board is divided into multiple classes, with each class serving a different term length. For example, the board may be divided into three classes, where one class is elected for a one-year term, another for a two-year term, and the third for a three-year term. Each year, shareholders vote to elect directors for the class that is up for election, and this process is repeat - ed over the years. The purpose of a staggered 4. Directors and Officers 4.1 Board Structure
689 CHAMBERS.COM
Powered by FlippingBook