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CORPORATE TRANSACTIONS & COMPLIANCE BLOG

Registering to do Business in Puerto Rico

By: Tristan Emrich, COGENCY GLOBAL on Thu, Jan 06, 2022

Registering to do Business in Puerto Rico_Header Image

A U.S. company that wishes to do business in Puerto Rico may choose to either form a new subsidiary entity or register an existing company. In order to determine the best option, the company should consult an attorney familiar with tax laws and the company’s business activities and structure. Whether a company is forming a new Puerto Rican entity or authorizing the U.S. company to do business there, here is an overview of the filing procedures for corporations and LLCs on the island.

The Puerto Rico General Corporations Act of 2009 indicates that it takes the General Corporation Law of Delaware as a model, so the laws in Puerto Rico will likely be familiar to those who form business entities in the United States. The filing procedures for incorporation or registration follow a similar pattern beginning with the name availability check.

Checking for Name Availability 

As in Delaware, a corporation or LLC in Puerto Rico must have a name which can be distinguished from the names of other registered entities. The name will need to reflect certain corporate indicators:

  • For a Corporation: Corporation, Corp., Incorporated, Inc., CRL, SRL (Note that abbreviations of like import used in other countries may also be used, but the company must then add “Corporation” or “Corp.” to the end of its name, with no change of the corporate name implied)

  • For an LLC: Limited Liability Company, Compania de Responsabilidad Limitada, L.L.C., LLC, C.R.L., or CRL

Puerto Rico’s website offers an entity name search that can help determine if a name is available for use. However, it’s important to note that the website does not reflect all filings at the time of the search. For example, filings that have been submitted over-the-counter face a significant processing backlog, thus it can take weeks for these to appear online.

Expansion of Online Filing Services

In recent months, Puerto Rico has made great advancements with their online filing capabilities, such as annual reports and Change of Agent/Office. Electronic filings provide immediate evidence (usually available upon filing) and company information is usually updated within a few days. Online filing evidence is in PDF form and is available in English. Please note that over-the-counter filing is still necessary for some types of filings, and processing times are longer in these cases.


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Completing the Forms

Incorporation

As in Delaware, the company must file a Certificate of Incorporation which requires such basic information such as the name of the corporation, the registered agent and office in Puerto Rico, the number and value of the authorized shares, the purposes (a general-purpose clause may be used) and the name and address of the incorporator.

In addition, there are requirements not found in a standard Delaware Certificate of Incorporation form. If the faculties of the incorporators will end upon the filing of the Certificate of Incorporation, the names of the directors who will act until the first meeting of members must also be provided. Also, the corporation must choose whether its term of existence will be perpetual, indefinite or if it will end on a specific date. In addition to these required matters, a corporation may wish to include other provisions regarding directors’ and shareholders’ liability, rights, etc.

LLC Formation

In addition to the company name and the name and address of the registered agent (which is the required information for a Delaware limited liability company), companies wishing to form an LLC in Puerto Rico must also include a statement of purposes, the name and address of each person authorized to file the Certificate of Formation, the name and address of the people who will act as administrators until the first meeting of members and the term of existence. Other optional clauses may also be included.

Certificate of Authorization to Do Business as a Foreign Corporation or as a Limited Liability Company 

In addition to the basic information that is usually requested on these applications, Puerto Rico requires officer titles, emails, and telephone numbers (a general email and phone number will suffice to list with PR). With regard to the assets and liabilities of the corporation or LLC, this section can be listed as “zero” until the first annual report is filed since the entity is first qualifying.

The above forms must be signed by an Authorized Official (i.e. Director or Officer).

Puerto Rico’s basic process for forming or registering entities is very similar to U.S. states, and a filing can be completed easily. Once a decision has been made on formation or registration, Puerto Rico makes the process simple and quick!

This article is provided for informational purposes only and should not be considered, or relied upon, as legal advice.

Topics: International Corporate Services