CORPORATE TRANSACTIONS & COMPLIANCE BLOG

Registering to Do Business in Puerto Rico

By: Teri Mayor, COGENCY GLOBAL INC. on Mon, Jun 10, 2013

Registering Business Entities in Puerto RicoA U.S. company desiring to do business in Puerto Rico may choose to form a subsidiary entity as a domestic Puerto Rico company or register the U.S. company to do business in Puerto Rico. To determine the best option, the company should consult an attorney familiar with tax laws and the company’s business, structure and activities.

The purpose of this article is to provide information on the filing procedures for corporations and LLCs in Puerto Rico, whether a company is forming a new Puerto Rican entity or authorizing the U.S. company to do business there. 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. Still, there are differences in the filing requirements and procedures that can be significant.

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 has a website that allows for a search of the entity name which can help determine if the name to be used is available. However, it is important to realize that the website does not reflect all filings at the time it is searched. Filings which have been submitted over the counter face a significant backlog in processing and it can often take several weeks or more for a filing such as a name amendment to be processed and appear on the online records. 

Expansion of Online Filing Services

In recent months, Puerto Rico has made many more types of filings available online, including formation, qualification to do business, amendments and annual reports. Electronic filings provide more immediate evidence, (usually available upon filing) and the information for the company is usually updated on the website within a few days. Yet, because not all filings can be done online, and because there is still a significant backlog of over the counter filings that were submitted before online filing was possible, the website will not necessarily reflect the current name of all companies. Keep in mind a possible conflict could be missed on a search of the website.

Completing the Forms

Incorporation:  As in Delaware, the company must file a Certificate of Incorporation which requires such basic information 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 of a Foreign Corporation or of a Limited Liability Company:  In addition to the basic information that is usually requested on these types of applications, Puerto Rico is somewhat unusual in that it also requires the company to list its current assets and liabilities in the certificate.

Filing the Forms: As mentioned above, it is now possible to file these certificates online in Puerto Rico. The person filing must be one of the following:

  • Employee or owner of the company
  • Certified Public Accountant
  • Attorney
  • Paralegal

In certain cases, however, the filing must be submitted over the counter. Puerto Rico’s online system automatically inserts a comma directly before the corporate indicator in the company name (i.e.  ABC Company, Inc.). If the name of the company does not include this comma, the online filing system cannot be used. Similarly, the online filing system only allows the name to be displayed on the certificate in all capital letters. If the company does not wish this formatting for the name on its certificate, it must submit the filing over the counter. If the filing is not submitted online, an original signature is required.

Puerto Rico’s basic process for forming or registering entities is very similar to other U.S. states, and as the new online filing system develops and becomes more widely used, the process should become simpler, quicker and more straightforward.

 

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

Topics: International Corporate Services