P.R. Laws tit. 7, § 3032
Involuntary conversions of the proprietary interests of a fund shall be governed by the following norms:
(a) Revocation, suspension or denial of license. — The Commissioner may revoke, suspend, or deny the license of a fund for violations of this chapter or its regulations. In any of said cases, if the Commissioner should determine that the total liquidation of the fund is not in the best interests of the investors or other interested parties, he/she shall immediately notify the Bank, which shall create a trust, or the Commissioner shall authorize the creation of another fund which shall receive the assets and moneys of the first, and shall continue the operation thereof. The Commissioner, at his/her discretion, may appoint a trustee to manage or liquidate the fund, in lieu of the procedures mentioned above.
(b) Investors and conversion. —
(1) Investors in the fund who cease to operate because their license is not renewed or is revoked, but whose operations continue under subsection (a) of this section, shall receive in exchange for the proprietary interests they may have in said fund, shares in the trust created by the Bank, or in the new fund authorized by the Commissioner, equivalent to their respective shares in the fund which ceased operations.
(2) For the purposes of §§ 8401 et seq. of Title 13, the terms “involuntary conversion” and “conversion in similar property” include the permutation of an investment in proprietary interests of a fund for shares in a trust created by the Bank, or in a new fund authorized by the Commissioner pursuant the provisions of subsection (a) of this section.
(c) Recognition of profit or loss. — For the purposes of §§ 8401 et seq. of Title 13, the investor in a fund shall not recognize profits or losses in a exchange carried out according to subsection (b)(1) of this section, of an investment in proprietary interests of a fund for shares in a trust created by the Bank, or in a fund authorized by the Commissioner pursuant to the provisions of subsection (a) of this section.
(d) Tax base. — The tax base of the investor in shares in the trust created by the Bank or in the new fund authorized by the Commissioner pursuant to the provisions of subsection (a) of this section, shall be equal to the base that the investor had in proprietary interests in the original fund immediately before the exchange.
(e) Internal base. — For the purposes of § 3030(e) of this title, the internal base with regard to each proprietary interest in the trust created by the Bank or in the new fund authorized by the Commissioner pursuant to the provisions of subsection (a) of this section, shall be equal to the internal base regarding the equivalent proprietary interest in the original fund immediately before the exchange.
History —Jan. 28, 2000, No. 46, § 13.