The main provisions governing business entities in the Dominican Republic are found in the General Law on Commercial Entities and Individual Enterprises of Limited Liability No. 479, of December 2008. This new legislation was enacted in an effort to modernise local corporate legislation in order to better harmonise its corporate processes and good governance principles with other more modern foreign laws.
In fact Law No. 479 is the result of a comparative legislative investigation effort to take advantage and use provisions from the most modern corporate laws in the world, such as the French, Spanish, Chilean, German and Mexican laws.
Before this law, provisions on corporate entities were included in our Commercial Code which, even though they provided various possible corporate structures for business organisations, the fact that the types of corporate structures available did not reflect the commercial reality and the needs of businesses locally made the law outdated and it somewhat hindered business transactions within corporate scenarios. One type of business organisation was primarily used: the Limited Liability Corporation, the only one that provided limited liability to the shareholders investing therein.
Under this new law new corporate structures are available and are just starting to be used locally. For businesses handled by one only owner, the law created Individual Enterprises of Limited Liability; for medium size businesses, the law provided the possibility of using the Limited Liability Company, which has lower procedural and organisational requirements and documentation and provides a more closed capital structure than the corporation.
The corporation, which is still used for larger businesses and for publicly traded companies, has also been revamped in terms of regulatory framework. Now, corporate processes that reflect the new international commercial tendencies, such as mergers, corporate acquisitions and consolidations are regulated. Foreign entities can do business in the Dominican Republic and get registered in the local mercantile registry as any other local company can.
The Law was enacted in 2008, but local companies can until December 2010 change their bylaws to comply with the changes made by the law or change their corporate status and assume other structures available.
Ricardo A Pellerano