INNOVATIONS IN THE NEW COMPANY LAW
New Business Entities:
Sociedad de Responsabilidad Limitada (SRL)
• Based mostly on the current SRL’s in French Company Law.
• Certain similarities with American LLC’s.
• Chief company officer(s): one or various managers (“gerentes”). Must be individuals, no companies allowed.
• Minimum of 2 shareholders; maximum of 50.
• RD$100,000 minimum capital.
• Shares not readily transferable to third parties; other shareholders have right of first refusal.
• Shareholders’ liability limited to their investment in the company.
• Ideal for small or family businesses.
Empresa individual de Responsabilidad Limitad (EIRL)
• No shareholders; one sole person owns the business.
• Owner must be an individual, not a company.
• Owner’s liability limited to his or her investment in the company.
• No minimum capital.
• Chief Company Officer(s): the owner and the manager. The owner may name himself manager.
• Ideal for businesses owned by a single individual.
Old Business Entities
Sociedad Anónima (S.A.)
• Minimum capital: RD$30,000,000.
• Minimum of 2 shareholders; no maximum.
• Governed by a “Consejo de Administración” of at least 3 members.
• Shares readily transferable.
• Shareholders’ liability limited to their investment in the company.
• Ideal for medium and large businesses
Changeover from Old to New Law
• All existing companies must adjust to the new statute by June 11, 2009. Adjustment process cannot start, however, until the Business Registry (“Registro Mercantil”) issues a so-called “instruction manual”. Because of the lack of trained personnel at the Registro Mercantil and the DGII, and the high number of companies involved (approx. 100,000), it is to be doubted that the process will go smoothly.
• Most existing S.A.’s will have to change to SRL’s or EIRL’s or increase their authorized capital to RD$30 million pesos.
• Of the approximately 100,000 existing S.A.’s, less than 1% have an authorized of RD$30 million or more.
PRELIMINARY THOUGHTS
[*]Definitely an advance in comparison to the old legislation[*]Legislation comparable to present-day French and Spanish company law[*]Adjustment process will be a mess, though.[/LIST][/LIST]