P.R. Laws tit. 7, § 366
A trust company subject to the provisions of §§ 301—503 of this title:
(1) Shall not directly or indirectly lend to any individual, partnership, unincorporated association, corporation or body politic, an amount which, including therein any extension of credit to such individual, partnership, unincorporated association, corporation or body politic, by means of letters of credit or by acceptances of drafts for, or the discount or purchase of the notes, bills of exchange or other obligations of such individual, partnership, unincorporated association, corporation or body politic, will exceed one—fifth ( 1 / 5 ) part of the capital stock and surplus of such trust company, with the following exceptions:
(a) The restrictions in this section shall not apply to loans to, or investments in the interest bearing obligations of, the United States, of Puerto Rico or of any municipality of Puerto Rico.
(b) The total liability to such trust company, of any other territory or state of the United States, or of any foreign nation, or of a corporation subject to the jurisdiction of a public-service commission of Puerto Rico, may equal but not exceed thirty percent (30%) of the capital and surplus of such trust company; and the total liabilities to such trust company of any individual, partnership, unincorporated association or of any other corporation or body politic, may equal but not exceed thirty percent (30%) of the capital and surplus of such trust company; provided, such liabilities are upon drafts or bills of exchange drawn in good faith against actually existing values, or upon commercial or negotiable paper actually owned by the person negotiating the same to such trust company, and are endorsed by such person without limitation, or provided such liabilities in excess of twenty percent (20%) of such capital and surplus, and not in excess of an additional ten per centum of such capital and surplus, are secured by collateral having an ascertained market value of at least fifteen percent (15%) more than the amount of the liabilities so secured.
(c) In computing the total liabilities of any individual to a trust company for the purpose of §§ 301—503 of this title there shall be included all liabilities to the trust company of any partnership or unincorporated association of which he is a member, and any loans made for his benefit or for the benefit of such partnership or association; and in computing the total liabilities of any partnership or unincorporated association to a trust company for the purposes of §§ 301—503 of this title, there shall be included all liabilities of its individual members and all loans made for the benefit of such partnership or unincorporated association or any member thereof; and of any corporation to a trust company there shall be included all loans made for the benefit of the corporation.
This section shall not be construed to render unlawful the continued holding of any securities heretofore lawfully acquired.
(2) Shall not make any loans secured by the stock of another moneyed corporation if by the making of such loan the total stock of such other moneyed corporation owned and held as collateral security by the trust company will exceed ten percent (10%) of the total capital stock of such other moneyed corporation.
(3) Shall not make any loan upon the securities of one or more corporations the payment of which loan is undertaken in whole or in part severally, but not jointly, by two (2) or more individuals, firms or corporations:
(a) If the prospective borrowers or underwriters be obligated absolutely or contingently to purchase the securities, or any of them, collateral to the proposed loan, unless they shall have paid on account of the purchase of such securities an amount in cash or its equivalent equal to at least twenty-five percent (25%) of the several amounts for which they remain obligated in completing the purchase.
(b) If the trust company considering the making of the loan is liable directly, indirectly or contingently, for the repayment of the proposed loan or any part thereof.
(c) If the term of the proposed loan, including any renewal thereof, by agreement, express or implied, exceeds the period of one (1) year.
(d) If the amount under any circumstances, exceeds thirty percent (30%) of the capital and surplus of the trust company.
(4) Shall not make a loan, directly or indirectly, upon the security of real estate upon which there is a prior mortgage, lien or incumbrance, if the amount unpaid upon such prior mortgage, lien or incumbrance, or the aggregate amount unpaid upon all prior mortgages, liens or incumbrances exceeds ten percent (10%) of the capital and surplus of such trust company, or if the amount so secured, including all prior mortgages, liens and incumbrances shall exceed two-thirds ( 2 / 3 ) of the appraised value of such real estate as found by a committee of the directors of such trust company; but this provision shall not prevent the acceptance of any such real-estate securities to secure the payment of a debt previously contracted in good faith.
Every mortgage and every assignment of a mortgage taken or held by such trust company shall immediately be recorded in the office of the proper recording officer for the place in which the real estate described in the mortgage is located.
(5) Shall not, nor shall any of its directors, officers, agents or servants, directly or indirectly, purchase or be interested in the purchase of any promissory note or other evidence of debt issued by it, for less than its face value. Every trust company or persons violating the provisions of this subdivision shall forfeit to the Commonwealth of Puerto Rico three (3) times the face value of the note or other evidence of debt so purchased.
(6) Shall not make any loan or discount on the security of the shares of its own capital stock, or be the purchaser or holder of any such shares, unless security or purchase shall be necessary to prevent loss upon a debt previously contracted in good faith, and stock so purchased or acquired shall be sold at public or private sale, or otherwise disposed of, within six (6) months from the time of its purchase or acquisition. Any trust company violating any of the provisions of this subdivision shall forfeit to the Commonwealth of Puerto Rico twice the amount of the loan or purchase.
(7) Shall not knowingly lend, directly or indirectly, any money or property for the purpose of enabling any person to pay for or hold shares of its stock, unless the loan is made upon security having an ascertained or market value of at least fifteen percent (15%) more than the amount of the loan. Any trust company violating the provisions of this subdivision shall forfeit to the Commonwealth of Puerto Rico twice the amount of the loan.
(8) Shall not, nor shall any officer thereof, lend directly or indirectly any sum of money to any officer, director, clerk or employee of the trust company without the written approval of a majority of the board of directors thereof filed in the office of the trust company or embodied in a resolution adopted by a majority vote of such board, exclusive of the director to whom the loan is made, or in any event, to any officer thereof; and if such officer, director, clerk or employee shall own or control a majority of the stock of any other corporation a loan to that corporation shall be considered for the purpose of this subdivision as a loan to him. Every trust company or officer thereof violating this provision shall, for such offense, forfeit to the Commonwealth of Puerto Rico twice the amount of such loan.
(9) Shall not, directly or indirectly, make any loan exceeding in amount one-tenth (1 / 1 0) of its capital stock to any director thereof.
(10) Shall not invest or keep invested in the stock of any private corporation an amount in excess of ten percent (10%) of the capital and surplus of such trust company; nor shall it purchase or continue to hold stock of another moneyed corporation if by such purchase or continued investment the total stock of such other moneyed corporation owned and held by it as collateral will exceed twenty-five percent (25%) of the stock of such other moneyed corporation; Provided, however, That this limitation shall not apply to the ownership of the capital stock of a safe deposit company the vaults of which are connected with or adjacent to an office of such trust company.
(11) Neither the company nor any of its directors, officers, agents or servants shall purchase or be interested in any manner, directly or indirectly, in any kind of property, actions or rights under executorship, trusteeship, custody or administration.
History —Apr. 23, 1928, No. 40, p. 234, § 14, eff. 90 days after Apr. 23, 1928.