PUERTO RICO Law and Practice Contributed by: Fernando J Rovira-Rullán and Andrés I Ferriol-Alonso, Ferraiuoli LLC
5.5 Disclosure by Shareholders in Publicly Traded Companies See 1.3 Corporate Governance Requirements for Companies With Publicly Traded Shares . 6. Corporate Reporting and Other Disclosures 6.1 Financial Reporting There is no statutory requirement for private companies regarding corporate governance disclosures to private parties, besides compila - tion of the company’s organisational documents (such as the certificate of incorporation and by- laws), the shareholders’ agreement (if adopted), the certificate of organisation and the limited liability company agreement, available to the shareholders and members of the corporation and/or LLC. See also 7. Audit, Risk and Internal Controls . However, the Corporations Act requires that all corporations file an annual report to the Puerto Rico Department of State, detailing, among oth - er things, the identity of at least two officers and/ or directors of the corporation. The Corporations Act does not require such disclosure for LLCs with the Puerto Rico Department of State. Such annual reports are available to the public through the Department of State’s website. However, no other requirement for public disclosure on web - sites exists in Puerto Rico. 6.2 Disclosure of Corporate Governance Arrangements See 6.1 Financial Reporting . 6.3 Companies Registry Filings In addition to annual reports as discussed in 6.1 Financial Reporting , corporations and LLCs
have to register the following with the Puerto Rico Department of State: • the certificate of incorporation or organisa - tion; and • amendments, mergers, consolidations and dissolutions. Additionally, corporations and LLCs are now obligated to file their existence or dissolution with the Registry of Legal Entities. Such filings, including annual reports, are publicly available. Failure to make such filings would result in such acts being regarded as having not taken place. Not presenting the annual reports or not paying annual dues may result in the cancellation of the entity. 7. Audit, Risk and Internal Controls 7.1 Appointment of External Auditors Under the Corporations Act, corporations with an annual business volume in excess of USD3 million are required to file with the Puerto Rico Department of State an audited balance sheet, together with their annual report. LLCs are not required to file financial reports with the Puerto Rico Department of State. 7.2 Requirements for Directors Concerning Management Risk and Internal Controls Under Delaware case law, which, as previously indicated, is highly persuasive in Puerto Rico, directors have certain requirements and respon - sibilities regarding risk management and internal controls. While Delaware courts generally afford directors considerable discretion in managing the affairs
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