Law No. 73-10 of the Dominican Republic, dated June 9, 2010, extended for an additional six months, until December 2010, the time period granted to Dominican companies to either adopt a different corporate form or remain as a corporation (sociedad anonima) while fully complying with the provisions of the General Law on Companies and Individual Limited Liability Entities, No. 479-08.
Law 479-08 was enacted by the Executive Power on December 11, 2008, repealing Title II of the Dominican Commercial Code (Articles 18 to 64) and completely reforming corporate legislation in the Dominican Republic. Until this reform, Dominican corporate law dated from the 19th century and, as a result, lacked adequate legal guidelines for corporate processes in the modern world economy. In addition, a lack of adequate corporate regulations presented a competitive disadvantage for the country when compared to others with principle-based corporate legislation and dynamic and transparent institutions that facilitate and attract investment.
Among its most significant changes, the new law:
- Provides multiple options for corporate vehicles, allowing investors to choose the most suitable options for their particular businesses;
- Specifically regulates corporate processes such as mergers, spin-offs, increases and decreases in capital, dissolutions and liquidations;
- Abolishes the cautio judicatum solvi bond for non-Dominican Republic-based corporations that conduct business or carry out legal actions in the Dominican Republic; and
- Establishes the basis for disregarding or lifting the corporate veil.
Initially, Law 479-08 granted companies a six-month time period to either transform into another type of entity or comply with its provisions. Before Law No. 73-10 was enacted, another law, No. 178-09, had extended this time period to 24 months. With the most recent extension, companies will have had 30 months to prepare for and comply with the changes.
For more information on the new laws, please contact Awilda M. Alcántara Bourdier at +1.809.289.4903 or Squire Sanders' Santo Domingo office.