ARTICLE
20 November 2003

Corporate Legislation

GP
Guerrero, Pereyra, Leger Y Asocs.

Contributor

Guerrero, Pereyra, Leger Y Asocs.
Dominican Republic Finance and Banking
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Commercial and civil corporations exist in the Dominican Republic. Commercial corporations are those that are incorporated in order to carry out acts of commerce or intermediary action for profit.

They are classified into four categories:

Partnerships (Sociedad en Nombre Colectivo): This is a corporation made up of partners, whose essential element is the person of the partner who assumes an obligation of joint liability for the commitments of the company. The shares of this corporation can’t be transferred or assigned without the consent of the other partners.

Share Corporations (Sociedad Anonima o Compañia por Acciones): This is a corporation formed by shareholders, whose essential element is not the person but rather the contribution of capital. The capital is divided into shares that can be assigned and transferred. Each shareholders participates in the profits and losses in proportion to the number of shares they have in the company .The liability of the shareholders is limited to the amount of their capital contribution.

Limited Partnerships (Sociedad en Comandita): This corporation is constituted by two kinds of partners: The full partners with unlimited liability for the commitments of the company; and the limited partners, with liability limited to the amount of their contribution.

Participation Associations (Sociedad en Participación): Associations in which each partner acts in his own name as if he were alone in the corporation. These corporations are constituted for effecting a transaction; once effected, the entity is terminated. They are not incorporated; they are created by a simple agreement

The formation of a Share Corporation

  • The name of the company formed ad its domicile;
  • object of the corporation;
  • Full name of the founders, including: nationality; civil status; profession; residency and number of identification card or Passport or Social Security number;
  • List of Shareholders with their full name, including: nationality; civil status; profession; residency and number of identification card or Passport or Social Security number, and the number of shares subscribed by each one. The Law requires a minimum of seven (7) shareholders, among which another company can be included, in which case, its corporate seat; the law of the country or state where it was incorporated and the full name and birth date of the person representing it must be listed;

  • The amount of authorized corporate capital and that of subscribed and paid in capital;
  • The number of shares in which the corporate capital is divided, with an indication of what type of shares they are (bearer, nominative, or if preferential shares exist). Nominal value of the shares, which cannot be less than RD$5.00.
  • Manner and terms of payment of the shares and the specifications and approval of the contributions or additions not made in cash;
  • Description and value of the assets contributed in kind. If they are registered real estate properties attach a copy of the Title Certificate and if they are non-registered real estate properties attach a copy of the sale contract;
  • The Administrative Structure. The member of the first Board Directors (President, Vice-president, Treasurer and Secretary). When a company opts for a President-Administrator, it can forego the other officers. The person who will act commissary and the dates of the annual shareholders meetings

  • -The accounting or financial closing date;
  • -How the profits will be distributed;
  • -The procedure for liquidation;
  • -Any other clauses agreed to by the shareholders

Ways in which to channel Foreign Investment

Branch: It is possible for foreign investors to establish a branch in the Dominican Republic. In order to enjoy the same rights granted to a Dominican Republic Corporation, it is recommended that an authorization for establishing domicile be obtained.

Consortia: While these are not mentioned in the Code of Commerce, the possibility exists for creating consortium agreement, between foreign companies and Dominican companies, for the execution of projects in which the Dominican State participates. The foreign participation in the consortium must not exceed 50 per cent (50 %).

Subsidiaries: Another alternative for channeling foreign investment is the constitution of a company that is a subsidiary of the foreign company. It is sufficient for the formation of this company to comply with the requires a Dominican company must meet for the constitution of companies in general. It also possible to buy shares of an existing company, subject to the percentage limitations established by same special laws.

Joint Venture: The concept of Joint Venture is allowed in the Dominican Republic.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

 

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