Introduction

Acquiring an International Financial Entity (IFE) in Puerto Rico presents a lucrative opportunity for investors looking to capitalize on the favorable banking regulations and strategic geographic location. However, the process involves a detailed regulatory framework that must be strictly adhered to. This article outlines the key requirements for purchasing an IFE in Puerto Rico as of 2024.

Key Requirements

1. Notification to the Commissioner of the OCFI

•  A 30-day advance notification to the Office of the Commissioner of Financial Institutions (OCFI) is mandatory for any transfer involving change of control or capital transfer.
•  The notification must include:
  •  Names and Addresses: The transferor and transferee.
  •  Transaction Description: Detailed explanation of the transaction.
  • Board Resolution: A copy of the resolution from the board of directors, shareholder’s agreement, members, or partners approving the proposed transaction and change of control.
  • Legal Business Documents: These should indicate:
    • Total issued voting shares.
    • Number of shares involved in the transaction.
    • Total voting shares held by the seller and the buyer or assignee, or the proportion of the capital of the corporation or limited liability company held by the seller or assignor, the buyer or assignee.
    • Number of voting shares or participations issued by the entity as of the date the proposed transaction is submitted.
    • Name of the buyer, buyers, or acquirers of rights over the shares involved in the transaction.
    • Total purchase and sale price.
  • Reason for Transaction: The justification for the transaction.
  • Personal Information: Statement of personal history form, resume, a two by two (2″ x 2″) picture, and financial statements of each person acquiring ten percent (10%) or more of the shares or participations, and official identification with photo and signature.
  • Investigation Fee: Submit a certified check for $25,000 payable to the Puerto Rico Secretary of the Treasury for investigation expenses.

2. Application Fee

• Every application for the transfer of capital or control to a non-affiliated entity resulting in a direct or indirect holding of ten percent (10%) or more for the first time requires a non-refundable application fee of $50,000.

3. Definition of Control

• According to Art. 9 of Act 273-2012, as amended, “control” refers to the holding, ownership, or right to vote ten percent (10%) or more of any class of capital stock or equity interests in an international financial entity.

4. Authorization Requirements

• Regardless of the amount or percentage involved, any merger, sale, encumbrance, exchange, assignment, swap, or other transfer of any kind of capital stock or equity interests in an international financial entity shall be null and void if prior written authorization from the Commissioner is not obtained.

Conclusion

Purchasing an international bank in Puerto Rico involves a comprehensive set of requirements designed to ensure transparency and regulatory compliance. At Premier, we have decades of experience assisting clients in purchasing international banks in Puerto Rico and the offshore industry. If your budget is between $5 million to $55 million, plus an additional $5 million to $15 million in capital, we can provide expert guidance and support throughout the process. Let us help you navigate the complexities of acquiring an IFE in Puerto Rico, ensuring a smooth and successful transaction.