2023 Laws of Puerto Rico › TITLE SEVEN - Banking (§§ 1 — 3116) › PART III - Other Financial Institutions (§§ 551 — 1390) › Chapter 61 - Government Development Bank for Puerto Rico (§§ 551 — 607i) › Subchapter I - General Provisions (§§ 551 — 569) › § 552 - Charter

The Charter of “the BANK” shall be as follows:
First:— The existence of the Bank shall be perpetual.
Second:— The principal office of the Bank shall be at San Juan, Puerto Rico.
Third:— The purposes for which the Bank is formed and the business or objects to be carried on and promoted by it are as follows:
(A) To act as fiscal agent and as paying agent and as a financial advisory and reporting agency of the Commonwealth Government and of the agencies, instrumentalities, commissions, authorities, municipalities and political subdivisions of Puerto Rico, the Governor of Puerto Rico, the Council of Secretaries of Puerto Rico and the Secretary of the Treasury of Puerto Rico.
(B)
(1) To act as depositary or trustee of funds for the Commonwealth Government or for the United States and for any agency, instrumentality, commission, authority, municipality or political subdivision of Puerto Rico or the United States and of funds within the custody or jurisdiction of any court, to give security for the repayment of any such funds and to pay interest thereon, and to act as depositary of funds for any bank or trust company doing business in the Commonwealth of Puerto Rico.
(2) Such sums of money and other liquid assets in the custody of the Bank, plus the interest or dividends that the same have accrued or accumulated, after deducting the charges legally imposed thereon, shall be presumed as abandoned and unclaimed when, within the five (5) preceding years, including such time elapsed prior to the effective date of this act, the owner has shown no interest in said money or liquid assets, in any of the following ways:
(a) Such sums of money and other liquid assets in the custody of the Bank, plus the interest or dividends that the same have accrued or accumulated, after deducting the charges legally imposed thereon, shall be presumed as abandoned and unclaimed when, within the five (5) preceding years, including such time elapsed prior to the effective date of this act, the owner has shown no interest in said money or liquid assets, in any of the following ways:
(a) Making some transaction with regard to said money or other liquid assets;
(b) Completing a deposit or withdrawal of funds into, or from, the account; or
(c) Communicating in writing with the Bank regarding such assets.
(4) ) (i) Such amounts of unclaimed money and other liquid assets that are presumed abandoned pursuant to clause (2) of this subsection and which remain unclaimed after November 1 of the year in which the notice required pursuant to clause (3) of this subsection is published and (ii) such amounts of unclaimed money and other liquid assets whose aggregate value is $100 or less and that are presumed abandoned pursuant to clause (2) of this subsection, shall be transferred to the Puerto Rico Infrastructure Financing Authority of the Commonwealth of Puerto Rico, up to the amount of twenty million dollars ($20,000,000.00) for infrastructure projects and improvements. Any amount above the limit of twenty million dollars ($20,000,000.00) established herein shall be applied as follows: (I) to the payment of the debts and obligations owed to the Bank by those persons that appear as registered owners of the abandoned funds, pursuant to the Bank’s records and, (II) if the registered owners do not have any debts and obligations with the Bank, said unclaimed monies and other liquid assets shall be applied to the payment of the debts and obligations owed to the Bank by the Commonwealth of Puerto Rico or its agencies.
(C) To lend money, with or without security, to the Commonwealth government or to any agency, instrumentality, commission, authority, municipality or political subdivision of Puerto Rico.
(D) To lend money, in or outside Puerto Rico with or without security, to any person, firm, corporation or other organization or legal or political entity where such moneys are to be used to further the governmental purpose of developing the economy of Puerto Rico, particularly with respect to its industrialization, such loans to be represented by the promissory notes, bonds, debentures, convertible debentures, warrants, equipment trust certificates, securities received through the organization of the issuer thereof or other obligations or evidences of debt of such borrowers; Provided, That the Bank may hold, negotiate or in any other manner dispose of such promissory notes, bonds, debentures, convertible debentures, warrants, equipment trust certificates, securities received through the organization of the issuer thereof, or other obligations or evidences of debt of such borrowers, or the securities obtained through the exercise of the rights and/or privileges contained therein. The power herein granted to the Bank to lend money outside of Puerto Rico shall be exercised only if:
(1) The financing creates or promotes the retention of jobs in Puerto Rico, and/or
(2) the financing results in the establishment of new industries in Puerto Rico.
The power herein granted shall be exercised to finance complementary operations involving any combination of production, transformation or use of goods and services between Puerto Rico and the location abroad, or to finance infrastructure essential to establish or expand such operation, or to finance exportations of Puerto Rican industries.
Provided, That the total amount of financing herein authorized shall never exceed eighteen percent (18%) of the total capital of the Bank outstanding at any point in time. Provided further, That the aggregate indebtedness of any such borrower to the Bank shall not exceed at any time ten percent (10%) of the capital funds and surplus of the Bank plus an additional fifteen percent (15%) of such capital funds and surplus if such indebtedness, either in whole or in part, but in any event, that part thereof in excess of ten percent (10%) of such capital funds and surplus is secured by collateral of any ascertained value of at least twenty-five percent (25%) more than the amount of such indebtedness in excess of ten percent (10%) of such capital fund and surplus.
(E) To invest its funds in direct obligations of the United States or obligations guaranteed as to both principal and interest by the United States, or obligations of any agency, instrumentality, commission, authority or other political subdivisions of the United States; or obligations of Puerto Rico, guaranteed as to both principal and interest, by Puerto Rico; or obligations of any agency, instrumentality, commission, authority, municipality or other political subdivisions of Puerto Rico; or obligations of international banking institutions recognized by the United States and to which the United States may have contributed capital; or obligations or common or preferred stock issued by domestic or foreign, public or private corporate entities which are classified by a credit-rating agency that is nationally recognized in the United States of America in one of its three (3) generic rates of the highest credit or, in case these are not classified by such credit-rating agencies, they should be of a quality comparable to that of these. The Bank also may invest its funds in bank acceptances or other obligations, or certificates of deposit endorsed or issued, as the case may be, by banks organized or authorized to do business under the laws of the Commonwealth of Puerto Rico, the United States, or any State of the Union.
(F) To discount, at a uniform rate or rates of interest to be fixed from time to time by the Board of Directors of the Bank, for banks or trust companies organized under or subject to the “Banking Law”, §§ 1 et seq. of this title, negotiable drafts, notes, bills of exchange and acceptance, bearing the endorsement of the bank or trust company for which discounted; Provided, however, That the aggregate amount of notes, drafts, bills of exchange and acceptance upon which any person, partnership, association or corporation is liable as maker, acceptor, endorser, drawer or guarantor discounted for any bank or trust company shall at no time exceed the amount for which such person, partnership, association or corporation may lawfully become liable to such Bank or trust company under the applicable provisions of the “Banking Law”, §§ 1 et seq. of this title, as from time to time amended.
(G) To lend money, at a uniform rate or rates of interest to be fixed from time to time by the Board of Directors of the Bank, to any bank or trust company organized under or subject to the “Banking Law”, §§ 1 et seq. of this title, for a period not exceeding ninety (90) days, on the promissory note of such bank or trust company, secured by notes, drafts, bills of exchange or acceptance eligible for discount by the Bank under the provisions of the preceding subsection (F) hereof, or secured by obligations of the Commonwealth Government or of the United States or guaranteed as to both principal and interest by the Commonwealth Government or the United States or obligations of any agency, instrumentality, commission, authority, municipality or political subdivision of Puerto Rico, or secured by other collateral satisfactory to the Bank; Provided, however, That in case the security consists of such other collateral, the rate of interest on such loan shall in no event be less than one-half of one percent (0.5%) per annum higher than the highest rate then currently applicable to discounts provided for by the preceding subsection (F) hereof.
(H) To lend securities, on a fully secured basis, to any of the following entities:
(1) Any bank or trust company organized under or subject to the Banking Law, §§ 1 et seq. of this title;
(2) any bank or financial institution organized under the laws of the United States, its territories or a state, and that is subject to regulation as a bank or financial institution by a federal or state agency;
(3) any branch or agency of a bank organized under the laws of a foreign country located in the United States, provided such branch or agency is subject to regulation as a bank by a federal or state agency, and
(4) any broker-dealer or investment company, that is registered to operate as such with either:
(a) The United States Securities and Exchange Commission under the Securities and Exchange Act of 1934 or the Investment Company Act of 1940, as applicable, or
(b) the Office of the Commissioner of Financial Institutions of Puerto Rico.
(I) To borrow money and contract debts for its corporate purposes upon such terms and conditions as the Bank may from time to time determine, with or without security, to dispose of its obligations evidencing such borrowing, to make, execute and deliver trust indentures and other agreements with respect to any such borrowing, contracting of debt, issuance of bonds, notes, debentures or other obligations, and by the authority of the Government of Puerto Rico which is hereby granted, to issue its bonds, notes, debentures or other obligations in such form, secured in such manner, and subject to such terms of redemption with or without premium, and to sell the same at public or private sale for such price or prices, all as may be determined by its Board of Directors.
(J) To enter into transactions for the purchase or sale of securities with agreements to repurchase or resell such securities.
(K) To exercise all such incidental powers as may be necessary or convenient for the purpose of carrying on the forgoing business and objects. The power granted in subsections (C), (D), and (E) above shall not include the power to lend moneys on short term or to invest in short term securities other than marketable securities, where the borrower or obligor has facilities available to it in banks organized under or subject to the “Banking Law”, §§ 1 et seq. of this title.
(L) Carry out any transaction involving the trading of currency of foreign countries through the transfer of funds in bank accounts, and participate in the trading of Latin American currency after complied with the terms established in a special provisions note under this section. Provided, That the term “currency” shall be deemed to include bills and coins, bank deposits, credit instruments and all types of securities and credit documents in foreign currency denominations of any country, which are deemed to be of prime rate in international markets. The business of currency trading contemplates incurring in financial risks inherent to any business. Therefore, the Board of Directors, by recommendation of the President of the Bank, should approve a policy to diminish the risk for the business of currency trading. The Board of Directors will take into consideration, within their risk policy, the optimal use and protection of the State resources.
Fourth:— The Bank shall also have the following powers:
(A) To have a common seal and to alter the same from time to time.
(B) To acquire property for its corporate purposes by grant, gift, purchase, devise or bequest, and to hold and to exercise the rights of ownership of and to dispose of the same.
(C) To acquire any property in the settlement or reduction of debts previously contracted or in exchange for investments previously made in the course of its business, where such acquisition is necessary to minimize or avoid loss in connection therewith, and to hold such property for such periods as the Board of Directors may deem advisable and to exercise the rights of ownership of and to dispose of the same.
(D) To establish one or more branches, offices or agencies necessary or convenient for the transaction of its business within or without Puerto Rico.
(E) To purchase, hold, lease, mortgage and convey real property as follows:
(1) A plot whereon there is or may be erected a building suitable for the transaction of its business, from portions of which not required for its own use a revenue may be derived;
(2) such real estate as may be conveyed to it in settlement or reduction of debts previously contracted or in exchange for investments previously made in the course of its business;
(3) such as it shall purchase or otherwise acquire at sale under judgments, decrees or mortgages held by it, and
(4) such as may be necessary for residence of its employees; Provided, however, That real property purchased or acquired by it shall be sold within ten (10) years of the date of such purchase or acquisition unless there shall be a building thereon occupied by it as an office or by its employees as a residence or the Secretary of the Treasury of Puerto Rico shall have extended the time within which such sale shall be made.
(F) To sue and be sued.
(G) To appoint, employ and contract for the services of officers, agents, employees and professional assistants and to pay such compensation for their services as the Bank may determine, and to fix and pay directors’ fees.
(H) To exercise such other corporate powers, not inconsistent herewith, as are conferred upon corporations by the laws of Puerto Rico and to exercise all its powers within and without Puerto Rico to the same extent as natural persons might or could do.
(I) To acquire, hold and dispose of stocks, warrants, participations (with or without preference) in partnerships and joint ventures, as well as debentures, convertible debentures and other securities issued by any corporate entity, organized under the laws of the Commonwealth of Puerto Rico or authorized to do business in Puerto Rico, or any partnership or joint venture organized under the laws of the Commonwealth of Puerto Rico, of the United States, or of any other country in the world engaged in projects which promote the economic development of Puerto Rico; and to exercise any and all powers or rights in connection therewith, as well as to guarantee, through guarantees or letters of credit, loans and other obligations incurred by public and private entities.
(J)
(1) To create subsidiary or affiliate corporations by resolution of its Board of Directors, when in the opinion of the Board, such creation is advisable, desirable or necessary to carry out the functions of the Bank, or to meet its institutional purposes or to exercise its powers. The Bank may sell, lease, lend, give, or transfer any of its properties to any subsidiary corporation. Such subsidiaries of the Bank, by virtue of the powers conferred in this subsection, shall constitute government instrumentalities of the Commonwealth of Puerto Rico, independent of and separate from the Bank, and shall have all those powers, rights, functions and duties as are conferred to the Bank by §§ 551—568 of this title and delegated to them by its Board of Directors. The Board of Directors of the Bank shall be the Board of Directors of each and every one of such subsidiary corporations, with the exception of:
(a) The subsidiary known as the Puerto Rico Housing Financing Authority, which shall have a Board of Directors composed of seven (7) members appointed by the Governor. The following two (2) shall be ex-officio members: The Secretary of the Department of Housing, who shall preside the Board of Directors, and the President of the Board of Directors of the Government Development Bank for Puerto Rico. The Board shall also be composed of three (3) members of the Board of Directors of the Government Development Bank for Puerto Rico to be designated from among its members, and two (2) members from the private sector, and
(b) the subsidiary known under the name of Puerto Rico Tourism Development Fund (“Tourism Development Fund”), which shall have a Board of Directors composed of the President of the Government Development Bank, the Executive Director of the Puerto Rico Tourism Company, the Secretary of the Treasury and two additional members to be selected by the Board of Directors of the Bank.
(2) The Board of Directors of the Bank shall have the power to provide the funds necessary to capitalize the Tourism Development Fund; Provided however, That any request to capitalize the Tourism Development Fund, in excess of fifty million dollars ($50,000,000) of initial capitalization, shall be remitted by the Executive Director of the Tourism Development Fund to the consideration and approval of:
(a) the Director of the Office of Management and Budget;
(b) the Secretary of the Treasury;
(c) the President of the Government Development Bank for Puerto Rico, and
(d) the Executive Director of the Puerto Rico Tourism Development Fund.
The approved increase in the capitalization of the Tourism Development Fund shall be notified by the Executive Director of the Tourism Development Fund to the Legislative Assembly.
(3) Each year, the Executive Director of the Tourism Development Fund shall certify to the Director of the Office of Management and Budget the net disbursement, if any, that shall be reimbursed to the Tourism Development Fund. “Net disbursement” means the amount, if any, by which the disbursements (excluding disbursements to acquire investments) made by the Tourism Development Fund during a calendar year (including such year’s realized loss) are in excess of the revenues collected by the Tourism Development Fund said calendar year. The disbursements made by the Tourism Development Fund for (i) loans to third parties, (ii) the acquisition of loan participations, and (iii) the acceleration of maturities of loans, notes, bonds or other type of debt guaranteed or insured by the Tourism Development Fund, shall not be deemed made in the year in which said amounts are disbursed by the Tourism Development Fund, instead shall be deemed in the year in which the Executive Director of the Tourism Development Fund determines that a loss was incurred with respect to said loan, note, bond or debt (such determination being referred to as “realized loss”). The Director of the Office of Management and Budget shall proceed to include the net disbursement in the General Budget of Puerto Rico for the following fiscal year. The certificate issued by the Executive Director shall be certified by an external auditor of the Bank and shall be based on an evaluation of the disbursements made (excluding disbursements to acquire investments) and the revenues collected by the Tourism Development Fund, but the determinations of the Executive Director of the Tourism Development Fund regarding the year in which a realized loss has incurred shall be conclusive. The reimbursement of the net disbursement shall be subject to consideration by the Legislative Assembly.
(4) The provisions of § 553 of this title shall apply to all the subsidiary corporations thus organized and which are subject to the control of the Bank, except for any subsidiary corporation which is authorized by the Board of Directors of the Bank in its constitutive resolution to issue bonds, notes, mortgage obligations or other obligations the interest on which is not subject to the provisions of said § 553 of this title.
Fifth:— The affairs of the Bank shall be managed and its corporate powers exercised by a Board of Directors of seven (7) in number. The Governor of Puerto Rico shall appoint the first members of the Board of Director, two (2) of whom shall be appointed for a term of two (2) years, two (2) of whom shall be appointed for a term of three (3) years and three (3) shall be appointed for a term of four (4) years. Thereafter, as the terms of office of directors expire, successor directors shall be selected by the Governor, for terms of four years. All vacancies in the office of directors shall be filled by appointment of the Governor. Provided, however, that any vacancy occurring between such appointment shall, within a period of sixty (60) days, be filled by the Governor, for the unexpired term. All director shall, unless sooner removed, disqualified, resignation or death, hold office during the term for which appointed and until their successors are appointed and qualified. A majority of the directors in office shall constitute a quorum of the Board of Directors for all purposes. After January 1, 2018, all new appointments made by the Governor to the position of member of the Board of Director of the Bank shall require the counsel and consent of the Senate of Puerto Rico.
Sixth:— The Board of Directors, by the affirmative vote of a majority of the whole Board, may adopt, add to, amend, alter or repeal bylaws of the Bank, not inconsistent herewith or with law, providing for the management of the business of the Bank, the regulation of its affairs, the organization, conduct and meetings of the Board of Directors, notice of meeting of the Board of Directors and waivers of notice, the appointment of committees of the Board of Directors and the power of such committees, the number, titles, qualifications, terms, election or appointment, removal and duties of officers, the form of the seal of the Bank and the preparation and submission to the Legislature of annual and other reports; Provided, however, That the bylaws shall not be added to, amended or altered nor shall any bylaw be repealed at any meeting of the Board of Directors unless written notice of the proposed addition, amendment, alteration or repeal shall have been delivered or mailed to each director at least one (1) week before such meeting.
Sixth:— The Board of Directors, by the affirmative vote of a majority of the whole Board, may adopt, add to, amend, alter or repeal bylaws of the Bank, not inconsistent herewith or with law, providing for the management of the business of the Bank, the regulation of its affairs, the organization, conduct and meetings of the Board of Directors, notice of meeting of the Board of Directors and waivers of notice, the appointment of committees of the Board of Directors and the power of such committees, the number, titles, qualifications, terms, election or appointment, removal and duties of officers, the form of the seal of the Bank and the preparation and submission to the Legislature of annual and other reports; Provided, however, That the bylaws shall not be added to, amended or altered nor shall any bylaw be repealed at any meeting of the Board of Directors unless written notice of the proposed addition, amendment, alteration or repeal shall have been delivered or mailed to each director at least one (1) week before such meeting.
The Board of Directors of the Bank shall establish an Audit Committee, a Risk Management Committee and any other such committees as the Board of Directors may deem appropriate, whose members shall be Directors of the Board and those officers as the Board may appoint from time to time. Provided, that the officers appointed in the committees of the Board of Directors of the Bank, if any, are not entitled to vote.
The Audit Committee shall assist the Board of Directors in fulfilling its responsibility to oversee management with regards to: (1) accounting and financial reporting principles and policies and internal accounting controls and procedures of the Bank, its subsidiaries and affiliates, (2) financial statements of the Bank, its subsidiaries and affiliates, (3) governance and the internal control system, (4) the audit process, including the evaluation of outside auditor´s qualifications, independence and performance, and (5) compliance with legal requirements of the Bank, its subsidiaries and affiliates, in relation to the accounting and financial reporting processes of the Bank, including those restrictions and limitations imposed on the Bank, especially certifying compliance with the provisions of § 607g-7 of this title and the audits of the financial statements of the Bank, its subsidiaries and affiliates.
The Risk Management Committee´s responsibilities shall include, among others, assisting the Board of Directors in the oversight of management´s exercise of its responsibility to assess and manage: (1) market risk, credit risk, structural interest rate risk, principal risk, liquidity risk and model risk, (2) the governance frameworks or policies for operational and fiduciary risk, (3) capital and liquidity planning and analysis, and (4) any other risk management responsibilities assigned by the Board of Directors.
Eighth:— Out of the net income resulting at the end of the business year, such amount shall be added to the reserve account of the Bank as the Board of Directors may consider necessary or pertinent; and the balance of such income, may, in whole or in part, be added to the surplus account of the Bank or remain in an unassigned income account, as the Board of Directors may determine. From time to time the Board of Directors may in its discretion make transfers from the reserve account to the surplus account, from the surplus account to the reserve account and from the surplus account to the capital account of the Bank.
History —Sept. 23, 1948, No. 17, p. 290, §§ 2, 22; Apr. 26, 1957, No. 3, p. 1, §§ 1, 3; May 30, 1960, No. 13, p. 23, §§ 1, 3; June 19, 1965, No. 55, p. 105; June 26, 1974, No. 97, Part 1, p. 328, § 1; Sept. 11, 1986, No. 1, p. 787, § 1; Sept. 17, 1992, No. 69, § 1; Sept. 7, 1993, No. 75, § 2; Aug. 13, 1998, No. 236, § 2; Oct. 10, 2000, No. 418, § 1; Aug. 4, 2001, No. 93, § 2; Aug. 8, 2002, No. 125, §§ 1, 2; Dec. 16, 2009, No. 173, § 2; July 1, 2015, No. 97, § 1.