The basic regulatory principles in Próspera ZEDE are: (1) screen for criminal and/or irresponsible actors at the front‐end through background checks and a mandatory minimum insurance requirement; and (2) based on the filtering process in (1), avoid prescriptive regulation in favor of self‐regulation with clear lines of accountability and demonstrated financial capacity to make restitution. These basic regulatory principles ensure maximum freedom to innovate and catalyze economic development while supporting strengthened responsibility.

All (e)Residents are required to submit to a background check and also secure a minimum level of liability insurance. (e)Residents operating in a "Regulated Industry" (e.g. Health Care) are also required to elect their applicable regulatory system affirmatively or by default. Their three options are: (1) Honduras or Best Practice Peer Country regulations (elected by notice to the Próspera General Service Provider ("GSP") and in all relevant private contracts); (2) self-proposed and Próspera ZEDE‐approved "optimal" regulations (elected by notice to the GSP and in all relevant private contracts); or (3) exposure to treble damages, attorneys’ fees, and personal liability for owners, directors and officers for injuries (default setting).

1. U.S. common law restatements and model U.S. business codes adopted as the “Roatan Common Law Code”

establish the baseline framework of legal rights, duties and liabilities.

2. To access and do business within Próspera ZEDE, natural persons and legal entities need to enter into an Agreement of Coexistence with Próspera ZEDE to become an (e)Resident of some type. The annual fee ranges from zero (limited eResident), to $130 (legal entity physical Resident/eResident), to $260 ("full time" Honduran physical natural person Resident), to $1300 USD ("full time" non-Honduran physical natural person Resident. This requires a background check, passport, proof of formation, Interpol, OFAC, AML and KYC background check. The Agreement itself guarantees certain service levels, requires the use of the default Arbitration Service Provider to resolve all legal disputes arising within Próspera ZEDE or in connection with rights and privileges of being a resident of Próspera ZEDE; and in the case of full-time Residency, the Agreement grants a legal stability agreement to “grandfather” resident into current laws, protecting them from adverse changes in the legal environment. A side letter to the Agreement of Coexistence requires Residents who engage in the intentional torts of battery, assault, trespass, fraud or contractual interference to pay civil penalties up to 10x the sum of consequential damages and litigation expenses from the resultant injury.

3. Non‐ZEDE legal entities need to register to do business as a Foreign Entity.

4. To comply with the Próspera Financial Responsibility Statute, full-time legal entity/natural person physical Residents need to obtain regulatory insurance from a Qualified Insurer (or the GSP-affiliated insurer of last resort) with loss limits of $20,000.00 USD as to liability for final awards of the default Arbitration Service Provider (Próspera Arbitration Center LLC). The insurer of last resort may adjust mandatory insurance terms by transparent negotiation and agreement to make the market (published here); and the annual premium must not exceed $260.00 USD.

5. All residents must comply with Próspera ZEDE’s Coral Reef Protection Statute, which prohibits any activity within Próspera ZEDE that damages the living coral reefs in the proximity of Roatan (subject to liability for restoration/remediation plus attorneys’ fees shifting).

6. All residents must comply with Próspera ZEDE’s Hazard Precaution Statute, which prohibits or restricts the import, production, storage, transport, use, manipulation, export or final disposal of hazardous activities, chemicals, wastes, emissions, or conditions that are abnormally dangerous (defined generally in reference to treaty‐restricted radiologics, biologics, chemicals, and controlled substances/precursors), subject to the right to secure a no‐action letter from the GSP or Próspera Council, or confirmation of an exemption from the Hazardous Activity Division of the default Arbitration Service Provider (decided within 60 days of an application). Compliant Regulated Industry Persons that disclose hazards enjoy a safe harbor from strict liability.

7. All employers need to comply with the Próspera Labor Statute, which requires (a) “covered employees” (also known as "statutory employees") to be paid either at least 10% or 25% more than the Honduran national minimum wage as well as 125% overtime pay for work in excess of 48 hours or 6 days per week, (b) employers to establish a Próspera Labor Benefit fund into which the employer must make a contribution equal to 10% of the gross compensation paid for employee work (if employee waives customary Honduran labor benefits and wage is 25%+ more than minimum wage) or 25% of the gross compensation paid for employee work (if wage is only 10% more than minimum wage), which the employee can then use for healthcare, education, legal, emergency housing and retirement (employees who refuse to waive customary Honduran labor benefits and receive 25% labor benefit contributions may also use the fund for vacations and holidays in conformity with expectations regarding customary Honduran labor benefits), and (c) employers to recognize the right of employees to unionize while also requiring unions to conduct themselves peaceably and with respect for property rights. Exempted employees include immediate family members of the employer, natural persons in substantial ownership of the firm, interns, entry level hires (that is, people with no previous work experience in the industry), and small business hires.

1. Best Practice Peer Country regulatory election options for Health Industry Regulated Industry Persons currently include the relevant national and subnational Health Industry regulations, respectively, of any of United States of America, Australia, Austria, Belgium, Canada, Chile, Colombia, Costa Rica, Denmark, Dubai, El Salvador, Estonia, Finland, France, Germany, Hong Kong, Iceland, Ireland, Israel, Italy, Japan, South Korea, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Panama, Poland, Singapore, Spain, Sweden, Switzerland, or United Kingdom (as if the Health Industry Regulated Industry Person were operating and/or the project were located therein).

2. Optimal Regulation regulatory options currently include the Próspera Health Services Regulation A and the Próspera Medical Innovation and Safety Regulation.

3. All Health Industry Regulated Industry Persons (those who apply independent, professional or expert judgment; not ministerial servants) may utilize (in the manner approved) any pharmaceutical, medical device, medical procedure, or biological agent that has been approved for use by the governing regulatory authority(ies) of Honduras or any of the foregoing Best Practice Peer Countries.

4. Health Industry Regulated Industry Persons must secure informed patient consent, including the disclosure of their regulatory election status and licensure status, except in emergencies, or be presumptively liable for battery.

5. The titles “Doctor,” “Surgeon,” “Nurse Practitioner,” or any commonly used derivation thereof is reserved to Health

Industry Regulated Industry Persons who have elected to operate under Best Practice Peer Country or Optimal Regulations.

6. Health Industry Regulated Industry Persons (those who apply independent, professional or expert judgment; not ministerial

servants) in the Health Industry must comply with the Personal Financial Responsibility Statute by obtaining insurance from a Qualified Insurer with annual loss limits of $500,000.00 USD/12,412,500 Lempira covering liability for final awards of the default Arbitration Service Provider; or, alternatively, regulatory insurance from the insurer of last resort, in which case the annual premium must not exceed $7,080.00 USD/180,000 Lempira.