About Structured Finance Law in Puerto Rico
Structured finance in Puerto Rico refers to the practice of creating tailored financial products and legal frameworks that address unique business, investment, and governmental needs. Unlike traditional lending, structured finance often involves pooling assets, securitization, and the use of complex instruments to manage risk, enhance capital, or achieve particular project goals. In Puerto Rico, structured finance has a significant role due to the island's unique economic landscape, which often requires innovative financing solutions for infrastructure projects, public-private partnerships, and corporate transactions.
Why You May Need a Lawyer
Engaging a lawyer experienced in structured finance in Puerto Rico can be critical in several situations. Common reasons include structuring and closing corporate or municipal bond transactions, negotiating credit enhancements and special purpose vehicles, ensuring compliance with local and federal securities laws, and handling the legal intricacies of asset-backed securities or project finance deals. Additionally, legal counsel is necessary for due diligence, risk assessment, documentation, and resolving regulatory or tax-related issues that frequently arise in structured finance transactions.
Local Laws Overview
Puerto Rico's structured finance landscape is heavily influenced by its dual legal system, which incorporates both local Puerto Rican statutes and relevant United States laws and regulations. Key aspects include:
- Puerto Rico Financial Oversight and Management Board: This board governs certain fiscal and restructuring matters under the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), impacting municipal and structured finance.
- Securities Laws: Securities transactions are subject to US federal securities laws, in addition to Puerto Rico's local regulations, administered by the Office of the Commissioner of Financial Institutions (OCIF).
- Bankruptcy and Restructuring: Puerto Rico is not covered under the US Bankruptcy Code in the same way states are, but PROMESA establishes unique rules for public sector restructuring.
- Taxation: Puerto Rico offers various tax incentives and exemptions essential for structuring finance deals, especially through Acts 60 (previously Acts 20 and 22).
- Public-Private Partnerships: The Public-Private Partnerships Authority oversees rules for structuring PPP projects, which often rely on customized financing structures.
Frequently Asked Questions
What is structured finance?
Structured finance involves using sophisticated legal and financial instruments to manage risk and fund projects by pooling or securitizing assets, often going beyond standard loans or credit.
How does structured finance differ from traditional finance in Puerto Rico?
Structured finance focuses on custom solutions and risk management, such as asset-backed securities or project financing, while traditional finance relies on typical loans and straightforward debt or equity investment.
Is Puerto Rico subject to both US and local laws in structured finance?
Yes, Puerto Rico is governed by local statutes and regulations as well as US federal laws, particularly in areas related to securities and taxation.
Can individuals benefit from structured finance products, or are they only for large institutions?
Structured finance is most commonly used by corporations, government bodies, and public-private partnerships, but certain products may be available for qualified investors or business owners seeking specialized solutions.
What is PROMESA, and how does it affect structured finance?
PROMESA is a US federal law that created an oversight board for Puerto Rico’s fiscal affairs and establishes processes for restructuring its public debt, affecting many municipal and public sector financing arrangements.
What role does the Public-Private Partnerships Authority play in Puerto Rico?
This authority regulates and facilitates the creation of public-private partnerships, setting standards for financing, governance, and oversight of PPP projects.
Are there special tax considerations for structured finance deals in Puerto Rico?
Yes, Puerto Rico provides various tax incentives and credits that are crucial for structured finance, especially for inbound investments and export services under Acts 60, 73, and others.
How can a lawyer assist in a structured finance transaction?
A lawyer can help with transaction structuring, documentation, due diligence, compliance, negotiation, and regulatory approvals, protecting your interests and ensuring legal soundness.
What are common risks in structured finance transactions in Puerto Rico?
Risks include regulatory changes, counterparty default, market fluctuations, and tax law changes. Legal counsel helps mitigate these with careful structuring and compliance strategies.
Where can I find laws and regulations related to structured finance in Puerto Rico?
You can consult the Puerto Rico Office of the Commissioner of Financial Institutions, the Public-Private Partnerships Authority, and the text of federally applicable laws such as PROMESA for official rules and guidance.
Additional Resources
For those seeking more information or legal support in structured finance in Puerto Rico, consider these helpful resources:
- Pública Corporación para la Supervisión y Seguro de Cooperativas de Puerto Rico (COSSEC) for cooperative financing regulations
- Puerto Rico Office of the Commissioner of Financial Institutions (OCIF) for local banking and securities regulations
- Puerto Rico Public-Private Partnerships Authority (P3)
- United States Securities and Exchange Commission (SEC) for federal securities guidance
- Puerto Rico Bar Association, which can provide referrals to lawyers with structured finance experience
- Legal aid foundations or pro bono legal clinics for qualifying individuals or small businesses
Next Steps
If you are considering or involved in a structured finance transaction in Puerto Rico, your next steps should be:
- Gather relevant documents about your project or financial needs
- List out your objectives, concerns, and any deadlines
- Identify and consult with a qualified attorney who specializes in structured finance in Puerto Rico
- Prepare questions about local and federal compliance, tax implications, and risk management
- Stay informed about changes in regulations or economic conditions that may impact your transaction
Taking these steps with the support of an experienced legal professional can greatly improve the likelihood of a successful and legally compliant structured finance transaction in Puerto Rico.
Lawzana helps you find the best lawyers and law firms in Puerto Rico through a curated and pre-screened list of qualified legal professionals. Our platform offers rankings and detailed profiles of attorneys and law firms, allowing you to compare based on practice areas, including Structured Finance, experience, and client feedback.
Each profile includes a description of the firm's areas of practice, client reviews, team members and partners, year of establishment, spoken languages, office locations, contact information, social media presence, and any published articles or resources. Most firms on our platform speak English and are experienced in both local and international legal matters.
Get a quote from top-rated law firms in Puerto Rico - quickly, securely, and without unnecessary hassle.
Disclaimer:
The information provided on this page is for general informational purposes only and does not constitute legal advice. While we strive to ensure the accuracy and relevance of the content, legal information may change over time, and interpretations of the law can vary. You should always consult with a qualified legal professional for advice specific to your situation.
We disclaim all liability for actions taken or not taken based on the content of this page. If you believe any information is incorrect or outdated, please
contact us, and we will review and update it where appropriate.
