As shown by its 2016 economic performance, the Dominican economy continues growing steadily, ranking among the fastest-growing economies in Central America and the Caribbean. Currently, the Dominican Republic is experiencing a great moment of economic, institutional and legislative renewal, which will positively impact commercial relations and encourage investment. These ongoing changes have also resulted in the sustained growth of key economic areas such as agriculture, construction, tourism, financial services and manufacturing.
The most relevant legislative and institutional changes that have recently taken place comprise of: a) the entry into force of Law No. 42-08 on Antitrust; b) the entry into force of Law No. 141-15 on Restructuring and Liquidation of Companies and Business Persons; c) the enactment of Law No. 155-17 against Money Laundering and Financing of Terrorism; d) the enactment of Law No. 688-18 on Entrepreneurship (Special regime for the promotion of the creation and formalization of companies); and e) the enactment of Law 140-15 on Public Notaries.
Law No. 42-08 on Antitrust, which came into effect on January 6 2017, creates mechanisms to promote and defend effective competition in the goods and services markets, that will lead to a higher index of legal certainty. This law sanctions acts and behaviors that artificially alter the market such as concerted practices between competitors, abuse of a dominant position and unfair competition. The next step is to issue the Regulation for the Application of Law 42-08. Public hearings have been held where the interested parties have submitted observations. It is expected that the regulation will be approved and promulgated in the coming months.
Law No. 141-15 on Insolvency and its Regulation came into effect in February 7 2017. These represent an important advancement in regards to the previous regulation on bankruptcy and will bring great benefits in the business and economic sphere. This law enables a business or individual business person in financial difficulties to reach an agreement with its creditors in order to keep operating under a business operation restructuring process. In the event that a restructuring is not possible, the law provides for an expeditious liquidation procedure that allows the distribution of the business’ assets among creditors.
The procedures and legal actions regulated by this law are presented and filed before a specialised jurisdiction created by the same law. This is a modern standard, which properly guarantees the rights of creditors and workers. This law will also allow the Dominican Republic to significantly reduce the time it takes to close a business, which contributes to improving the business climate in the country.
On June 1 2017, Law No. 155-17 against Money Laundering and Financing of Terrorism was approved. It seeks to establish in the Dominican Republic the highest standards for the prevention, detection and sanction of money laundering and financing of terrorism, as set forth in the recommendations of the Financial Action Task Force (FATF) and the international conventions subscribed to by the country.
The main features of this law include: a) increasing the list of compelled subjects, who must implement standards of knowledge of their clients; b) extending the list of offences by incorporating, among others, the illicit enrichment of public officials in the exercise of their duties, typical actions against public affairs and tax offences; c) establishing more severe penal and administrative sanctions to deter these crimes; and, d) incorporating an effective investigation, cooperation and international judicial assistance system.
On November 10 2015, Law No. 688-18 on Entrepreneurship (Special Regime to promote the creation and formalization of companies) was enacted. This law pursues the generation of new businesses and therefore aims to have a favourable impact on economic development and growth. Its main objectives are to simplify the legal and tax procedures for the creation and formalization of companies, facilitate access to financing for entrepreneurship and provide technical and administrative support to entrepreneurs.
Law No. 140-15 on Public Notaries was enacted on August 7 2015. This law is intended to regulate the notarial practice and introduces important changes to the previous legislation. It establishes new mechanisms for supervision and training of notaries and creates a rigorous disciplinary regime that seeks to deter notaries from committing prohibited acts. This law is intended to provide greater legal certainty to transactions.
In addition to the aforementioned reforms, the legislative changes that are going to be discussed before Congress in the near future include: a) the draft law on Secured Transactions; b) the reform of the Civil Code; and, c) the Electrical and Fiscal agreements.
The Bill on Secured Transactions is currently being discussed by Congress and it is expected to be approved and become Law soon thereafter. A new Law on Secured Transactions would facilitate any immovable property to be used as a collateral for credit, which improves access to credit for companies and entrepreneurs, encouraging financial inclusion, as well as positively affecting the development of new free market productive initiatives.
Similarly, a comprehensive reform of the Civil Code is currently being discussed by Congress. The reform aims to update the rules relating to the person and the family in addition to simplifying the succession regime. With regard to contracts, it incorporates new types of contracts, modifies some aspects of the regime of certain contracts and adapts the rules of contracts to the electronic form.
Under the mandate of the National Development Strategy 2030 (Organic Law No.1-12), an instrument that indicates the steps that the country must take to become a developed country in 2030, the Dominican Republic is in the process of reaching an agreement for an Electric Pact and a Fiscal Pact.
The Electric Pact will allow the sustainability and development of the electric power industry, attract investments in the sector and strengthen the institutions that make up the country’s electricity sector. The Fiscal Pact is conceived as a way to conclude a comprehensive tax reform to reduce tax evasion, raise the quality, efficiency and transparency of public spending, raise the equity of the tax structure and increase tax revenue.
All these legislative initiatives pursue the development of regulations and institutions in order to ensure a more efficient distribution of resources in the economy. Furthermore, these laws have all been discussed and to some degree agreed upon between the various economic sectors involved in order to guarantee an adequate balance of the existing interests.
