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1. What are the different types of commercial companies that can be incorporated in the Dominican Republic?
The General Law for Commercial Entities and Individual Limited Liability Companies No. 479-08, modified by the Law 31-11, recognizes in the article 3 the following corporate typologies with legal personality: a) General Partnerships (Sociedades en Nombre Colectivo); b) Limited Partnerships (Sociedades en comandita simple); c) Limited Partnerships with shares (Sociedades en comandita por acciones); d) Limited liability companies (Sociedades de responsabilidad limitada); e) stock companies (sociedades anónimas and f) simplified stock companies (sociedades anónimas simplificadas). 479-08, modified by Law 31-11, recognizes in its article 3 the following business typologies with legal personality: a) Companies in collective name; b) Limited partnerships; c) Limited partnerships for shares; d) Limited liability companies (SRL); e) Corporations (SA) and f) Simplified corporations (SAS).

The law also recognizes accidental or joint ventures, which will not have legal personality, and individual limited liability companies (EIRL), which do have legal personality.

2. What are the steps to follow to set up a commercial company in the Dominican Republic?
In the first place, the interested party must register the name of the company before the National Intellectual Property Office (ONAPI). Second, the payment for the company incorporation, according to the intended company capital, must be made to the General Office of Internal Taxes (DGII). Third, the registration of the company in the Mercantile Registry must be requested by submitting the documentation related to the social type that is to be registered at the corresponding Chamber of Commerce and Production. Finally, the registration with the National Register of Contributors must be requested at the General Office of Internal Taxes (DGII).
3. How long does the process of setting up a company in the Dominican Republic take?
On average, the process takes 20 business days. If you intend to set up a limited liability company (SRL) the applicant has the option of using the one-stop formalization process. This is a virtual process with an average duration of 7 working days.
4. What is the process to register the commercial name of a commercial company in the Dominican Republic?
The interested party must fill out an application form for the registration of a commercial name and submit it together with a copy of their identity document and a power of representation (in cases that apply) at the National Intellectual Property Office (ONAPI). Simultaneously, the corresponding fee must be paid. The request will be examined by two aspects: form and content. If the application is approved, a registration certificate is issued stating the applicant’s rights to use the registered name. If, on the other hand, the request is challenged, the applicant is given a period of 60 days to withdraw, modify or limit their request, or to respond to the objections made.
5. From when on are the owner rights over the trade name protected in the Dominican Republic?
Article 113 of Law 20-00 on Industrial Property expressly establishes that the right to the exclusive use of a commercial name is acquired by virtue of its first use in commerce. The trade name will be protected without obligation of registration, whether or not it is part of a trademark.
6. For what reasons can a trade name be challenged in the Dominican Republic?
A trade name cannot be constituted, totally or partially, of a designation or sign that, by its nature or potential use, is contrary to morality or public order. Nor can a name be registered that could create confusion in the commercial media or among the public about the identity, nature, activities or any other aspect related to the company or establishment identified with that trade name, or its services and produces. This is all by virtue of article 114 of the Law 20-00 on Industrial Property.
7. What are the elements that must be included in the company’s contracts or bylaws of a company that wishes to register in the Dominican Republic?
According to article 14 of the General Law of Commercial Companies and Individual Limited Liability Companies No. 479-08, these documents, instrumented either publicly or privately, must contain:

  • The names, general information and legal documents of identity of the parties, in the case of a natural persons. In the case of a legal entity, the company name, the permanent address, the trade register number and the National Register of Contributors number must be included, as well as the general information of its representatives or proxies;
  • The name of the undertaking;
  • The established corporate form;
  • The intended corporate address;
  • The nature of the undertaking;
  • The duration of the company;
  • The amount of the corporate capital and how it will be divided, the requirements that are met or will have to be met regarding the capital for the company incorporation, including the shares that must be subscribed and paid;
  • The form of issuance of shares or social quotas and their nominal value;
  • The different categories of shares, if any, with the stipulations of their different rights; the particular conditions of its transfer, as well as the restrictive clauses to the free negotiation of the same, in those societies that apply;
  • In-kind contributions, their descriptions, evaluations and the indication of the natural or legal person who realizes the contribution, unless the information is included in another document, in accordance to the specific rules of each type of company;
  • Industrial contributions, in those companies where they are admissible, unless the information is included in another document, in accordance to the specific rules of each type of company;
  • The particular advantages and their beneficiaries, as well as the accessory benefits, if any;
  • The composition, function and powers of the administrative and supervisory bodies of the company; as well as the official or officials that represent it in front of third parties;
  • The way in which the deliberative bodies will be constituted, discussed and adopt their resolutions;
  • The closing date of the fiscal year and the way to distribute the profits and losses, the constitution of legal or optional reserves;
  • The causes of dissolution and the liquidation process;
8. Can spouses be associates in a commercial entity in the Dominican Republic?
Under article 19 of the General Law for Commercial Entities and Individual Limited Liability Companies No. 479-08, spouses can only integrate joint stock companies (SA), simplified corporations (SAS) and limited liability companies (SRL).
9. What is the minimum number of associates that can form a limited liability company (SRL) in the Dominican Republic?
The number of partners can not exceed 50 as stipulated in article 93 of the General Law of Commercial Companies and Individual Limited Liability Companies No. 479-08. If for any reason the number of associates exceeds 50, it must regularize its situation or be transformed, within a period of 2 years from the date of the change in the number of members, under sanction of dissolution.
10. What is the application process for the registration in the National Taxpayers Registry?
The interested person will have to complete the Statutory Declaration for the Register and Data Update of Companies and its annexes. This request can be made through the virtual office of the General Directorate of Internal Taxes (DGII) or in person at the local administration or taxpayer attention center.
11. In which trading companies is the appointment of an account commissioner mandatory?
In principle, the appointment of an account commissioner is only mandatory for public limited companies and limited partnerships for shares, being optional in other types of companies.
12. What are the causes of dissolution of a corporation?
In accordance with articles 298 and 299 of Law 479-08 and its amendments, the early dissolution of the corporation may be ordered by the extraordinary general meeting. Any corporation may be dissolved for the following reasons:

  1. By decision of the extraordinary general meeting, provided that the concurrence of shareholders to it is adopted by at least two thirds (2/3) of the subscribed and paid capital with voting rights.
  2. For compliance with the duration term established in the bylaws.
  3. Because of the manifestly impossibility of the society to carry out its social purpose, so that its operation is impossible.
  4. As a result of losses that reduce the social patrimony to an amount less than half of the subscribed and paid social capital, unless it is reduced or increased sufficiently.
  5. Due to the reduction of the share capital below the legal minimum.
  6. Due to the merger or total split of the company.
  7. By reducing the number of shareholders to less than two (2) for a period of one year.
  8. For any other cause established in the bylaws.
13. How are non-profit associations classified in the Dominican Republic?
In accordance with article 10 of Law 122-05 and article 6 of Regulation 40-08, non-profit associations are classified as follows:

  1. Associations of public benefit or service to third parties, whose activities are oriented to offer basic services for the benefit of the whole society or segments of the whole.
  2. Partnerships of mutual benefit, whose activities have as their main mission the promotion of development activities and the defense of the rights of their membership.
  3. Mixed associations, which carry out activities specific to the nature of both sectors, public benefit and mutual benefit.
  4. Inter-associative body of non-profit associations. Within this classification fall: consortiums, networks and / or any other denomination of sectoral or multisectoral organization, made up of non-profit associations.

For the purposes of Law 122-05 and without prejudice to the above classification, all non-profit associations that undertake their activities in the form of a membership organization shall be considered, in principle and unless they do not expressly provide the contrary, associations of mutual benefit.

14. How is the internal regime of non-profit associations organized?
In accordance with Article 14 of Regulation 40-08, and if the bylaws do not otherwise provide for it, the internal regime of associations shall be as follows:

  1. The faculties of the organ of management and representation will be extended, in general, to all the acts proper to the purposes of the association, provided that they do not require, in accordance with the bylaws, express authorization of the general assembly.
  2. The general assembly will be convened by the management and representation body.
  3. The general assembly will be validly constituted, subject to prior notice made fifteen days before the meeting, if, when the session opens, more than half of the members of the Committee are present or represented. In a second meeting, which will be held two hours after the one established as the first meeting, the presence of a third part of the members will be sufficient.
  4. The general assembly may be ordinary or extraordinary. Those that are celebrated with the periodicity established in the statutes of the association shall be ordinary. Those held by agreement of the board of directors, the president of the association, or when requested by at least fifteen (15) percent of the registered members will be extraordinary. When, for reasons of urgency or force majeure, an extraordinary meeting is to be held without respecting the term of fifteen days, from its convocation; the meeting will begin with the justification, by the convening organ, of the reasons for its holding and the first point of its agenda will be the ratification of it. If it was not, it will be terminated.
  5. The celebration of an extraordinary assembly requested by the associates as established in the preceding paragraph, may not be delayed for more than twenty (20) days from the day being requested. The matter may not be incorporated into the agenda of an ordinary meeting or another extraordinary with more issues, if not expressly authorized by the applicants of the convocation. If the president does not call the assembly within the specified period, it will be automatically convened for the tenth business day following the end of that period, at twelve o’clock am, which will be notified by the secretary of the association to all members of the association, the day after the end of the deadline that was provided to the president. In the absence of the President or his legal replacement, the assembly will be validly constituted, provided that the quorum established in this article is present and will be presided over by the most senior member of the association, among those present.
  6. The agreements of the General Assembly shall be adopted by simple majority of the people present or represented, when the positive votes exceed the negative ones. However, a qualified majority of the people present or represented will be required for agreements related to the disposition or transfer of assets, which will result when the affirmative votes exceed half of the registered associates that make up the association. The modification of the bylaws and the dissolution of the association will require the favorable vote of three quarters.
  7. Annually, the chair or direction of any association or its board of directors must present a detailed report of their work, accompanied by the financial statement of the income and expenses that occurred during the year to the Ordinary General Assembly of Shareholders.
15. What are the main taxes in the Dominican Republic?
The main taxes in the Dominican Republic are the following:

  1. Income Tax: This tax levies all income, profit or benefit, obtained by individuals, companies and undivided estates, in a given fiscal period. The natural persons resident or domiciled in the country, will pay on the net taxable income of the fiscal year, a stepped rate of 15%, 20% and 25%, as appropriate. For their part, legal persons will pay a rate of 27% on the net taxable income for the 2019 fiscal year.
  2. Tax on the Transfer of Industrialized Goods and Services (ITBIS): The ITBIS is a value-added tax, which taxes the transfer and import of industrialized goods, and the provision and lease of services. This tax’s rate is 18%, and it is calculated on the price of the encumbered transfer or the service provided.
  3. Property Tax or Real Estate Property (IPI): It is a tax applied on the total sum of real estate assets of natural persons. This tax also applies to commercial, professional and industrial establishments owned by natural persons, regardless of their location. The current rate of this tax is 1% applied on the surplus of the total sum of the real estate, provided it is higher than RD $ 7,438,197.00. For trusts, the rate is 1% of the value of the property unless it has an exemption.
  4. Assets Tax. Asset Tax applies to all assets included in the general balance sheet of the taxpayer, not adjusted for inflation, after applying deductions for depreciation, amortization, reserves for uncollectible accounts, investments in shares in other companies, land located in rural areas, real estate by nature of agricultural holdings and tax advances. The tax rate is 1% per year, calculated on the total amount of taxable assets.
  5. Other Taxes: In addition to the foregoing, the taxpayer of the Dominican Republic is subject, depending on the origin of the tax obligation, to the payment of: Selective Consumption Tax; Taxes on Inheritances and Donations; Taxes on Motor Vehicles; Casinos Tax; Tax on Conditional Sale of Furniture, among others.
16. What are the acquired rights of employees for an indefinite period of time in the Dominican Republic?
The acquired rights of employees for an indefinite period of time are vacations, Christmas salary and the participation of employees in the profits of the company, if it obtained benefits in the fiscal year. These rights are acquired from the beginning of the employment relationship.

The employee keeps the right to his annual vacation, if he has been providing services for more than a year and if he has not taken them. He can also benefit from the proportional scale established by Article 180 of the Labor Code.

The Christmas salary, consisting of one twelfth of the salary earned by the employee in that year, is due from December 20 of the current year.

The participation of the employee in the net benefits of the company, is due beginning 120 days after having closed the commercial year of the company, and if the company obtained profits. This participation is equivalent to 10% of said benefits.

17. What are the labor benefits of employees in the Dominican Republic?
Labor benefits are “indemnities” that the Law has provided in favor of the employee when the contract is ended by the employer. They include prior notice and the unemployment assistance.

In order to be entitled to the prior notice and the unemployment assistance, it is required to have carried out continuous work for no less than three months.

In the employment contract for an indefinite period, each of the parties may terminate the contract without just cause, respecting the period of notice established by Law. The prior notice, according to article 76 of the Labor Code, must be treated in the following manner:

1º. After a continuous work not less than three months nor more than six, with a minimum of seven days in advance.

2º. After a continuous work that exceeds six months and is not more than one year, with a minimum of fourteen (14) days in advance.

3º. After a year of continuous work, with a minimum of twenty-eight days in advance.

The party that ignores or limits the established period of notice must pay the other party a substitute compensation equivalent to the renumbering that would correspond to the employee during the established periods of time.

The unemployment benefit, on the other hand, must be remunerated, according to article 80 of the Labor Code, in the following manner:

1º. After continuous work no less than three months nor more than six, a sum equal to six days of ordinary salary.

2º. After continuous work not less than six months nor more than one year, a sum equal to thirteen days of ordinary salary.

3º. After continuous work not less than one year nor more than five years, a sum equal to twenty-one days of ordinary salary, for each year of service provided.

4º. After continuous work not less than five years, a sum equal to twenty-three days of ordinary salary, for each year of service provided.

18. Who can make public offerings of securities in the Dominican stock market?
According to the 46 of Law 249-17, the issuer that wants to make a public offering in the Dominican stock market, must be constituted in one of the following ways:

  1. Limited company in accordance with the Companies Act.
  2. Limited liability company and simplified corporation, in accordance with the Companies Act, only as issuers of fixed income securities.
  3. Financial intermediation entity authorized by the regulating law.
  4. Foreign limited company or its equivalent.
  5. Differentiated issuer, and
  6. Another type of commercial company or legal entity that the Board establishes by regulation.
19. What is the trusteeship?
The trusteeship, or trust, understood as the act by which one or more persons, called trustors, transfer property rights or other real or personal rights, to one or several legal persons, called fiduciaries, for the constitution of a separate patrimony, called trust patrimony (Art. 3 Law 189-11). The trust can, without limitation, adopt several objects, namely:

  1. Succession Planning Trust;
  2. Cultural, Philanthropic and Educational Trust;
  3. Co-Investment Trust
  4. Real Estate Investment and Real Estate Development Trust;
  5. Guarantee Trust;
  6. Trust for Public Offer of Securities and Products.
20. What is the minimum content that the constitutive act of trust must include?
Pursuant to Article 13 of Law 18-11, the act that creates the trust must contain, under penalty of nullity, the following elements:

  1. Express declaration of the intention of the trustee(s) to create a trust.
  2. A sworn statement by the trustor(s) that the transferred assets have legitimate origin and declaration of the legal status of said assets, with express mention of the charges and encumbrances that may be affecting them; that the act that creates the trust does not suffer from illicit cause or object and that it is not constituted with the intention of defrauding rights of creditors of the trustee or of third parties.
  3. The names, profession, occupation, nationality, marital status, name of the spouse or partner in free union and their generals as they appear on the identity card or passport of the latter, and the matrimonial regime, if applicable; domicile and residence and other information related to the identity card or passport of the trustor or trustee, as well as the general details of their representatives or legal guardians, in cases in which the trustor is a natural person; and in those cases in which the trustor is a legal entity, corporate name, as recorded in the Commercial Register, National Taxpayer Regist number (RNC), if applicable, address, names and surnames and other general information of its legal representative and reference to the act by virtue of which they exercise said power, as provided in the bylaws.
  4. The appointment of the trustee (s), including their corporate name, as recorded in the Mercantile Registry, National Taxpayer Registry number (RNC), if applicable, address, names and surnames and other generals of their legal representative and reference to the act by virtue of which they exercise said power, as provided by the bylaws.
  5. The appointment of the trustee (s). In the event that the trustee (s) were not appointed at the time of the constitution of the trust, the rules that allow their appointment apply.
  6. Individualization of the assets object of the trust. In case such individualization is not possible at the moment of the trust’s constitution, the act must express the form and the necessary requirements that these assets must meet, for the purpose of future identification.
  7. Term or condition to which the trust is subject.
  8. Inclusion of the requirement to notify the creditors of the assets in question regarding their transfer to the trust, in case that the same assets are affected by attachment, charges or encumbrances.
  9. Indication of the irrevocability of the trust, when applicable or the possibility of revocation by the trustor (s), a right that must be expressly stated.

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