PUERTO RICO Law and Practice Contributed by: Fernando J Rovira-Rullán and Andrés I Ferriol-Alonso, Ferraiuoli LLC
4.3 Board Composition Requirements/ Recommendations The only requirement is that directors be natural persons of legal age. There are no composition requirements, such as regarding independent directors, etc. 4.4 Appointment and Removal of Directors/Officers The members of the board of directors of a cor - poration are elected annually by a majority vote of the shareholders present at the annual meeting of shareholders, in person or via proxy, who have the right to vote at such meeting. It is important to note that the certificate of incorporation may provide for the creation of a staggered board with two or three groups of directors, who may serve for a period of one to three years. In a stag - gered board, only one group of directors will be elected at each annual meeting of shareholders. Through its articles of incorporation and/or it by- laws, a Puerto Rico Corporation may establish other restrictions or requirements for directors. In a non-staggered board of directors, any one director or the whole board of directors may be removed with or without cause by the holders of a majority of the shares entitled to vote for the election of directors. In a staggered board of directors, sharehold - ers may only remove a director for just cause, unless otherwise provided in the certificate of incorporation. Furthermore, if the certificate of incorporation authorises cumulative voting, no director may be removed if the cumulative votes against their removal are sufficient to elect such director as a member of the board of directors. In the event of a vacancy as a result of the removal, resignation or death of a director, the remaining members of the board of directors
board structure is to provide continuity and sta - bility to the corporation’s leadership. In the case of an LLC, if the limited liability com - pany agreement provides for a board structure, one salient difference is that a legal entity (as opposed to a natural person) may be a member of the board of an LLC. 4.2 Roles of Board Members In a Puerto Rican corporation, there are no set roles for directors; nevertheless, if the corpora - tion is so structured through its by-laws and/or certificate of incorporation, directors may hold various offices with particular roles, such as the following. • The chairman of the board is usually respon - sible for leading board meetings and set - ting the agenda, and often acts as a liaison between the board and senior management. • The vice-chairman is a senior board member who supports the chairman of the board, and may step in to fulfil their duties in their absence. The vice-chairman often plays a leadership role in board committees and pro - vides guidance to other directors. • The secretary of the board of directors of a Puerto Rican corporation must be present at all meetings of the board of directors and take minutes of the discussions and decisions taken at any such meetings. (May be different to a secretary who is an officer.) • Committee chairs – directors may serve as chairs of various board committees, such as the Audit Committee, Compensation Commit - tee and Nominating Committee. Committee chairs are responsible for leading committee meetings, overseeing specific areas of corpo - rate governance and making recommenda - tions to the full board.
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