2023 Laws of Puerto Rico › TITLE THIRTEEN - Taxation and Finance (§§ 1 — 33423) › Subtitle 15 - Puerto Rico Industrial Incentives Generally (§§ 10001 — 10855) › PART I - Industrial Incentives (§§ 10001 — 10052) › Chapter 903 - Industrial Incentive Act of 1978 (§§ 10024 — 10037) › § 10028 - Transfer of an exempted business

(a) General rule. — The transfer of a tax exemption concession or shares of stock or the property of, or any other proprietary interest in, an exempted business without the prior written approval of the Governor of Puerto Rico, shall cause the exemption to be forfeited from the date the transfer was made, except in the cases specified in subsection (b) of this section.
Notwithstanding the preceding provision, the Governor may approve with retroactive effect any transfer made without his previous written approval, when in his judgment the circumstances of the case so justify it, considering the best interests of the People of Puerto Rico, and the industrial and economic development purposes of this chapter.
(b) Exceptions. — The following transfers shall be permitted without the need of prior consent, except as expressly required:
(1) The transfer of the assets of a decedent to his estate or transfer by bequest or inheritance.
(2) The exchange within the provisions of § 10029 of this title.
(3) The transfer of corporate shares or stock when such transfer does not directly or indirectly result in a change in ownership or control of the exempted business.
(4) The transfer of shares of a corporation that owns or conducts an exempted business which occurs after the Governor has determined that any and all transfers of shares of such corporation shall be allowed without his prior approval. The Governor may make this determination after considering the extent to which availability of investment capital may depend on the existence of securities which may be freely transferable, the nature of the exempted business and its importance to the industrial development of Puerto Rico, the integrity and financial standing of the stockholders, and the paid-in capitalization and number of stockholders that the corporation expects to have at the time of the commencement of operations of the exempted business. Provided, That before making a determination of this nature, the Governor shall consider the reports on each such case which must be submitted to him by the agencies reporting on tax exemption applications.
(5) The pledge or security given in the normal course of business, solely for the purpose of creating security for bona fide indebtedness. Provided, That any transfer of control, title or interest pursuant to such contract shall be subject to the provisions of subsection (a), and
(6) the transfer by operation of law, or by order of a court or bankruptcy judge to a receiver, or trustee. Provided, That any subsequent transfer to a third party other than the same debtor or former bankrupt person shall be subject to the provisions of subsection (a).
(c) Notice. — Any transfer included in the exceptions of subsection (b) of this section shall be reported to the Governor by the exempted business within thirty (30) days after it has been effected, except that those transfers included under subsection (b)(4) of this section which do not make the stockholder a holder of ten percent (10%) or more of the capital stock issued by the corporation shall not have to be reported. The exempted business shall render annually to the Governor, through the Office of Industrial Tax Exemption, not later than the first day of March following the close of each calendar year, a list containing the names and addresses of all its stockholders with the number of shares of stock owned by each, as listed in the books of the corporation on a given date, which may be any date between December 31 and March 1, at the option of the exempted business.
(d) Discretion of Governor. — The Governor, in considering and granting the order approving the transfer authorized by subsection (a) of this section, may accept any consideration offered for the benefit of the People of Puerto Rico, and may require and provide any other terms or conditions not exceeding the benefits provided by this chapter, which under his best judgment may be necessary to make sure that such transfer shall be for the best interests of the People of Puerto Rico and the industrial and economic development purposes of this chapter.
History —June 2, 1978, No. 26, p. 55, § 5.