The new Securities Market Law No. 249-17 repeals Law No. 19-00
2 August 2018
Law No. 249-17, which regulates the securities market in the Dominican Republic, enacted on December 19 2017, repeals and replaces Securities Market Law No. 19-00 dated May 8 2000 and all the legal provisions, regulations or rules that may be contrary to the new law.
Law 249-17 incorporates the fundamental purposes and principles of the International Organization of Securities Commissions (IOSCO) that apply to the regulation of securities markets, of the Organization for Economic Cooperation and Development (OECD).
Purpose of Law 249-17
Its purpose is to regulate, supervise, develop and promote an orderly, efficient and transparent securities market, with the purpose of protecting the rights and interests of the investing public, minimizing systemic risks, encouraging healthy competition and preserving confidence in the securities market.
Likewise, Law 249-17 sets forth the conditions for the information to be truthful, sufficient and timely, to contribute to the economic and social development of the Dominican Republic.
Scope of Law 249-17
Applicable to all individuals and legal entities that carry out activities, operations and transactions in the Dominican Republic’s securities market with public offer securities that are offered or negotiated in the national territory.
All activities and services regulated by Law 249-17 and its regulations are exclusive of the securities market.
Individuals and legal entities that carry out any of the activities or services provided for in Law 249-17, will be subject to the regulation, supervision and oversight of the Securities Superintendency (“SIV” for its acronym in Spanish), in relation to the exercise of the indicated activities or services.
Regulations Applicable to the Securities Market
The Dominican Republic’s securities market is governed by the Constitution of the country, Law 249-17, the regulations and resolutions issued by the National Securities Market Council (“Board”) and the SIV, in their respective area.
In a supplementary manner, the general provisions of administrative, corporate, commercial, monetary and financial law, trusts, common law and commercial usage apply.
Vehicles to Carry Out Public Offering of Securities
The issuer wishing to make a public offer in the Dominican securities market must be incorporated in one of the following forms:
-Limited company (S.A.) in accordance with Law No. 479-08 on Commercial Companies and Individual Limited Liability Companies (as amended) (“Companies Law”);
-Limited liability company (S.R.L.) and simplified corporation (S.A.S.) in accordance with the Companies Law, only as issuers of fixed income securities;
-Financial Intermediation Entity authorized by the law that regulates it;
-Foreign Corporation or its equivalent;
-Another type of commercial company or legal person that the Board establishes by regulation.
Micro, Small and Medium Enterprises
The SIV and securities market participants will promote access to the securities market to small and medium enterprises, according to Law No. 488-08, for the Development and Competitiveness of Micro, Small and Medium Enterprises (MIPYMES), establishing for this purpose differential and preferential rates.
The securities registered in the Securities Market Registry (“Registry”) submitted to a public offering process, prior to their placement in the primary market and those traded in the secondary market must be dematerialized through an account entry system managed by an authorized centralized securities deposit.
Public Offer Authorization
The SIV will be the only institution with the faculty to authorize the public offering of securities throughout the territory of the Dominican Republic, upon presentation of the requirements established in Law 249-17 and its regulations.
Public Exchange Offer
The public exchange offer consists in a sale or acquisition of securities registered in the Registry and traded on a securities exchange, when a single issuer offers to pay totally or partially with other securities registered in the Registry, in accordance with the provisions contained in the Civil Code of the Dominican Republic, or in other regulations that may apply.
Public Offerings of Acquisition of Shares
It is an operation through which one or more natural or legal persons publicly offer to acquire, directly or indirectly, in a single act or in successive acts, a certain amount of shares, to the shareholders of a company whose shares are registered in the Registry and a securities exchange market with the purpose of obtaining an important stake on said entity or to increase an already existent participation.
Negotiation of Foreign Securities
The Registry and stock exchanges may establish a special list of foreign securities. In the case of stock exchanges, it will be called “Foreign securities negotiation wheel”.
The negotiation of securities of public offer in the aforementioned wheel may only be done by securities intermediaries registered in the Registry.
Representation of the Public Offer Securities
The securities subject to public offer susceptible of being negotiated in the national territory must be represented by means of book entries.
Types of Autonomous Patrimonies
Law 249-17 recognizes the following types of autonomous patrimonies:
-Investment funds managed by a fund management company.
-The trust assets of public offering of securities managed by a trust company, authorized to act as such, and
-The separate assets managed by a securitization company.
The Board must complete the issuance of the following regulations that develop the application of Law 249-17, no later than twenty-four (24) months after the date of its entry into force:
-Regulation on Sanctioning Administrative Procedure.
-Regulation of Securities Intermediaries.
-Public Offer Regulation.
-Regulation to establish and operate Centralized Negotiation Mechanisms.
-Regulation to establish and operate in the OTC Market and Securities Transaction Registration Systems.
-Regulation for Centralized Securities Depositories.
-Regulation for Risk Rating Companies.
-Prices Providers Regulation.
-Regulation of Management Companies and Investment Funds.
-Regulation for the Public Offering Fiduciaries and the Titling Companies and the Securitization Process.
-Regulations for Intervention and Supervision of Participants in the Stock Market.
-Corporate Governance Regulation.
-Risk Management Regulations.
-Regulation on Relevant Facts, Privileged and Reserved Information.
-Regulations for the Prevention of Money Laundering and Financing of Terrorism.
Law 249-17 entered into force as of its enactment and publication in December 2017. Until the regulations for the development of Law 249-17 are published, the regulatory existing provisions will remain in force in the sections that are not expressly repealed by Law 249-17.
If there is a conflict as to the scope of the repeal, the Board will rule on the matter without further recourse until the publication of the new regulations.