Under the Puerto Rico Uniform Securities Act (the PRUSA), the grant of equity compensation awards under an employee share plan to employees in Puerto Rico is subject to securities registration requirements unless an exemption is available. One of the most common exemptions that US publicly-traded companies rely on is set forth in Section 402(a)(8) of the PRUSA, which provides an exemption from the registration requirements for companies listed on most U.S. stock exchanges (e.g., the NYSE or Nasdaq).
Previously, publicly-traded US companies generally could rely on this exemption without being required to complete any filings with the Puerto Rico Commissioner of Financial Institutions (OCFI). We recently have learned, however, that the OCFI informally is taking the position that this exemption is not a self-executing, automatic exemption and that the PRUSA generally requires any company wishing to rely on an exemption under Section 402 of the PRUSA to file a petition of exemption with the OCFI and pay a filing fee of US $100.
In light of this development, any company granting equity compensation awards to employees in Puerto Rico first should determine whether it will be relying on an exemption available under Section 402 of the PRUSA to avoid the local registration requirements and, if so, the company should determine whether it must submit a petition of exemption to the OCFI.