Overview of Dominican Corporations

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priji

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As we have mentioned in other articles, the Dominican Republic is probably one of the last places people think of when exploring a list of tax-haven countries. Certainly, It cannot be mentioned in the same vein as a traditional tax haven like Panama, Belize, The Isle of Man or any number of other well-known jurisdictions. However, as part of an overall strategy, owning your real estate or investment accounts through your Dominican company makes perfect sense. Of course I only referring to investments or property purchases that are physically done in the Dominican Republic
 
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Seachange

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New Changes

The overview may be out dated. There are some new changes which recently when into effect such as a lower number of shareholders now required. My understanding is that the new law is intended to make forming a Dominican Corporation easier.
 
cobraboy

cobraboy

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Seachange said:
The overview may be out dated. There are some new changes which recently when into effect such as a lower number of shareholders now required. My understanding is that the new law is intended to make forming a Dominican Corporation easier.
Click to expand...
Is this law in effect now? As of when? I thought they were proposals and not yet enacted.
 
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Sanson

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Hello.
I have just read the new Commercial societies law, Ley 479-08, and according to it, all Sociedades Anonimas, must have a minimum of 30 million pesos of authorized capital. Considering that the majority of the Dominican companies do not meet this rule, and the law says that everyone has to comply the law in 180days, what are the possible changes for an S.A. comply with the law? I understand that increasing the capital to 30 millions is an option, however I think that a great number of companies will not be capable of doing it.
 
Robert

Robert

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From what I have read, the new law passed at the end of Dec 2008 will come into effect mid 2009. In my opinion, the new law is completely ridiculous, especially the 180 day retroactive aspect for existing S.A. companies.

Alternatively you can start a new SRL company.

Below is some info I received from our lawyer on the new SRL's.

======================

The minimum social capital required for incorporation is RD$100,000.00. This also has to be deposited at a local bank.

The minimum of partners required is 2. (You don’t need other shareholders to complete the minimum)

The name of the company does not have to be registered at ONAPI, but under the new legal provisions the last name of the partners has to be included in the name of the company.

Other characteristic is that the participation on the benefits is not negotiable. This means that neither of you can sell your part in the company to a third-party unless the other consents it. (Except for cases of divorce or inheritance from you to your beneficiaries)

The manager of the company has every power to act on behalf of the company without any assembly meeting or power of attorney (this means less formality and more practical solutions). Nevertheless, this means that you will have to elect your manager carefully, since the company will be bound to comply with all acts signed by the manager under the corporate name.

The liability of the partners is limited to the investment made in the capital of the company.

======================

Can they put up any more barriers for small business and investment? Not only do we have one of the highest electricity costs in the world, but now they DR will have the highest incorporation costs in the world.

This country has 1000's of small businesses and now they are telling them they will need to deposit at least RD$30 million pesos in cash to legally operate or will need to convert to a SRL. An SRL that has ridiculous rules and regulations. More money for lawyers and BS Government agencies etc.

My guess is that the small business community will fight this, at least I hope so. Then again, they have shown they are pretty apathetic and powerless when it comes to actually forcing "real world" change or lobbying for common sense solutions.
 
MikeFisher

MikeFisher

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The minimum of partners required is 2. (You don’t need other shareholders to complete the minimum)

The name of the company does not have to be registered at ONAPI, but under the new legal provisions the last name of the partners has to be included in the name of the company.

Other characteristic is that the participation on the benefits is not negotiable. This means that neither of you can sell your part in the company to a third-party unless the other consents it. (Except for cases of divorce or inheritance from you to your beneficiaries)

now we are back to stoneage.
that law is done by idiots without any clue about small or medium sized businesses.
Pichardo, is that what you named the neccessary move to go forward??
in the deepest Congo i would not expect such stupidity.
the part i highlighted above means the follwoing:
a small businesses run by several(i.e. 3 partners) can not longer exist legally unless the partners are good for a 30 millions deposit. from my til now gathered info they can not make a transition to an SRL as 3 partners who decide together what's going on and what decisions have to be taken to run the small business. not even 2 partners can do so, because there has to be a assigned head manager who has 100% of all powers to move/operate the company. why they still need the 2nd partner for an SRL, i don't know, because it will be only 1 of them who has the power. shares can not be sold to 3rd parties, what a BS, so all til now existing partnerships, all leagl S.A.'s or CxA's til now run by a number of partners with different shares, have to fall apart and stop to exist BY LAW unless they are able to deposit 30 millions pesos minimum on a local bank account so that corrupt goverment of brainless law producers can steel it and build an other Metro instead of sending their politicians to school to learn to think.
looks like we have a new kind of idiots around making laws.
i knew that huge leak of education will have it's effects someday.
this new law is the best example.
Mike
 
MikeFisher

MikeFisher

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the SRL's company names need not to be registered by ONAPI!!!!!
my name is registered and by doing so protected against getting copied by some Pirates since many years, does that mean that from mid 2009 on everybody can copy my long term existing company's name unless i am able to deposit 30Millions and keep it an S.A.???
SRL company names need to contain the last names of both partners??
what a stupidity,
i don't want to change my company's name in a first place,
and heck, i do not have any partner, why do they want to pressure me to ;ook for a Partner and to put His/Her last name in my company name?
the end of this song will be that a very much bigger number of small businesses will look for ways to operate without a registration, much more than today. til now that law smashs existing small companies to the ground.
Mike
 
MikeFisher

MikeFisher

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THE SOLUTION:
small company registration with bank account outside of the country, i.e. in Panama.
so no need to pay taxes over here and no need to deposit any money on any dominican bank.
what ever money needed can be taken by credit card from the foreign account.
hey Gubmin,
whatcha think about the loss of all those taxes and the mass closing of bank accounts on the Isle?
or do you plan to bring up the next law which says it is not allowed for the owners of foreign companies to life and spend their money here in the DR? many businesses are run by the internet, they do not need a visual office on the Isle, nor do they depend on a dominican bank account. felicidades a la economia dominicana.
es pa'lante que vamos
what a joke
Mike
 
Robert

Robert

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I agree 100% with you Mike.

If what we are reading and hearing is true, then this has to be the death nail for small businesses in this country, especially in the current global economic crisis.

The government do nothing to help small business here, all they do is throw barriers in front of its development and squeeze it for more and more taxes.

Unfortunately at DR1 we deal with many local companies, so this could seriously effect how we do business in the Dominican Republic.

Maybe time to move to Colombia or Chile, at least they have a clue.

Get ready for the nightmare!
 
MikeFisher

MikeFisher

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right Robert.
and DR1 is like my own a typical business which can be registered at an other country to pay some taxes there without the need of any registration in the DR.
i never closed accounts or such once opened in other countries, even that i did not use some since a long time, but i keep them alive with a low balance.
Mike
 
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rubio_higuey

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Feb 7, 2007
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I have spoken to several small business owners here in Higuey, they didn't even knwo about the law. When I showed them the law online and pointed them to some provisions of the law, I heard the same reactions I, mike and Robert had when looking into this.
 
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rubio_higuey

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Art?culo 90. La sociedad ser? designada por una denominaci?n social, la cual podr? comprender el nombre de uno o varios socios

podra - might --- does no mean "must"

Mike you don't have to rename your company
 
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rubio_higuey

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Do the 180 days the SA companies have for transformation start counting from the date of effect in mid-2009 or from December 2008? Because in the law its says "180 days from publication of this law"
 
MikeFisher

MikeFisher

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thanks for pointing that name-thingy out Rubio,
after 14 years in the business i really will not change my company's name.
that 180 days, yeap, like i read it beginning with publication i would understand it as counting/started december 2008, but not sure.
i spopke the last 2 days of course to several business owners about that theme, and til today not even one heard about it til i started the laptop to show 'em what the heck i am talking about.
the reactions:
exactly like described above.
my lawyer in st dgo did not have a clue neither, we are on a long weekend now, i expect some info on tuesday afternoon.
Mike
 
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