Establishing my company in the Dominican Republic: what type of company is right for me?
5 December 2022
Author: Amalia Pérez
To start your operations or formalize your company in the Dominican Republic, it is essential that you know the main types of companies established by Dominican legislation and the characteristics of each one.
Below we share some general considerations of the available corporate vehicles, to serve as a guide when identifying the ideal type of company in your investment project.
Main types of Dominican companies
Law No. 479-08, which governs commercial companies and individual limited liability companies in the Dominican Republic, establishes three main types of companies:
-Limited Company (SA)
-Simplified Limited Company (SAS)
-Limited Liability Company (SRL)
SA’s are companies generally used for large businesses or investments, SAS’s for companies with a larger volume of business, and SRL’s are generally used for small and medium-sized businesses (PYMES).
Differences between SA, SAS and SRL companies
a) SHARE CAPITAL
The SA have a minimum Authorized Share Capital of DOP 30,000,000.00 or its equivalent in foreign currency and the minimum par value of the shares is DOP 1.001. One tenth (1/10) of the Authorized Share Capital must be fully subscribed and paid.
The SAS have a minimum Authorized Share Capital of DOP 3,000,000.002 or its equivalent in foreign currency and the minimum par value of the shares is DOP 1.00. One tenth (1/10) of the Authorized Share Capital must be fully subscribed and paid.
The SRL have a Share Capital determined by the partners in the corporate bylaws and will be integrated by social quotas with a value of not less than DOP 100.003 each or its equivalent in foreign currency.
b) ADMINISTRATION BODY
The SAs are managed by a board of directors made up of at least 3 members4. The board of directors will be vested with the broadest powers, to act in any circumstance on behalf of the company, within the limits of the corporate purpose5.
The SAS are managed by their president – who may be their sole administrator or the main member of a collegiate management body -, as provided in the bylaws. The president, in all circumstances, will be vested with the broadest powers to act on behalf of the company within the limits of its company purpose6.
The SRLs will be managed by one or several managers who must be natural persons and may or may not be partners of the company7. In relation to third parties, the manager or managers will be vested with the broadest powers to act, in all circumstances, on behalf of the company.
In the SA, SAS and SRL, the provisions of the corporate bylaws that limit the powers of the board of directors, the president or the manager, will no longer be enforceable against third parties; for which the company will still be bound by the acts of the board, president or manager that do not correspond to the company’s corporate purpose. In the latter, unless it is proven that the third party was aware that the act was outside that object.
SAS are supervised by one or more auditors, who may have alternates in accordance with the bylaws. The auditors of accounts will be appointed for two (2) fiscal years. The appointment of an external auditor is mandatory for this type of company.
The SAS and SRL may or may not designate one or more external auditors to supervise the company. For these types of companies, the appointment of an auditor is not mandatory.
Register a foreign company in the Dominican Republic
Commercial companies incorporated abroad are recognized by full right in the Dominican Republic.
As for its existence, capacity, operation and dissolution, they will be governed by the law of the place of its constitution. However, in their operation and activity in the Dominican Republic, they will be governed by Dominican law9.
Foreign companies will be required to register in the Business Registry, as long as they establish a branch or permanent establishment in the Dominican Republic.
How to identify the correct type of company for your investment project?
The type of company that you will choose to locally formalize your investment or business will depend largely on the amount of the investment and the volume of your operations in the Dominican Republic.
-We suggest the SA to companies whose investment is considerable, have large-scale operations or those companies that for regulatory reasons require this type of company. For reference, they can be financial intermediation institutions, insurance and reinsurance companies, and foreign exchange agents, among others.
-We suggest the SAS for medium investment companies with volume of operations, but who wish to manage the operation and administration of the company via a collegiate body, which requires a certain level of consensus for decision making.
-We suggest SRL for companies with small to medium investment and volume of operations, whose administration is centered on a single manager or on multiple managers who respond to the interests of a single group of partners. This by virtue of the fact that, before third parties, the managers will individually have broad powers and faculties of representation of the company, except for the cases set forth above.
It is important that you obtain professional advice for your specific case and, in order to determine the corporate structure that mitigates or eliminates possible legal risks, in the formalization of your investment or business in the Dominican Republic.
1 Article 160 Law 479-08 modified by Law 31-11
2 Article 369-6 Law 479-08 modified by Law 31-11
3 Article 3 Law 68-19 that modifies art. 91 and its paragraphs I and IV of Law No. 479-08
4. Article 208 Law 479-08 modified by Law 31-11
5. Article 216 Law 479-08 modified by Law 31-11
6. Article 369-3 Law 479-08 modified by Law 31-11
7. Article 100 Law 479-08 modified by Law 31-11
8. Article 241 Law 479-08 modified by Law 31-11
9. Article 11 Law 479-08 modified by Law 31-11