Bringing the DR up to date - New company law for the Dominican Republic
Latin Lawyer (2009)
The Dominican Republic has enacted a new law that represents a complete revision andoverhaul of its company law. Sarah De León Perelló, a partner at Headrick Rizik Alvarez & Fernández, outlines the law at a glance. The Law on Business Associations and Individual Proprietorships with Limited Liability – number 479-08 was passed on 11 December 2008 and comes into effect on 19 June 2009. The law constitutes a move from an outdated and deregulated company law system to a modern and more regulated one.
The new law aims at a complete modernisation of title III of the Dominican Code of Commerce, which it repeals and replaces. It is intended to regulate company processes that previously lacked regulation and to strengthen protection for interested parties and stakeholders. In this vein, the new law introduces two new vehicles for doing business: limited liability companies (LLCs) and individual proprietorships with limited liability (IPLLs), which allow individual business owners to keep their personal property from the reach of their business creditors by placing their business assets in a limited liability entity.
The also law regulates the most significant corporate processes (mergers, spin-offs, increase and decrease in capital, purchase and redemption by a company of its own shares, dissolution and liquidation) and sets forth corporate governance rules and greater transparency. Law No. 479-08 retains the existing types of business associations the corporation (sociedad anónima), the partnership (sociedad colectiva) and the limited partnership (sociedad en comandita) ” and adds the LLC (sociedad de responsabilidad limitada) as a new form of business organisation.