Corporate Alert: New Company Law Enacted

[MikeFisher]

Fabio,
thank you very much for the always up to date and accurate info.
hey guys,
for the 99% of 'faked/just by family for the paper done existing S.A.'s that means you guys need to do on the papers a 'meeting' of all your shareholders to sign the papers which state that all of them are in agreement to switch 'their' existing S.A. into a new form of company, i.e. a SRL or like in my case a EIRL.
i have the same stuff to do myself, or i had top do so, my existing S.A. is in reality a 1 person company since ever, just ME, the boss, the President aso aso aso.
but back in the day to form a company it was neccessary to have shareholders, like in my case i brought in part of the family, everybody who had a valid cedula, like granny, cunada, primo-hermano aso.
then later on after some years i bought their shares back to have all in my own name, not just the 94% which i had prior to that.
to start the transition still can not be done, my last notification about that is that i can not start it/do it before end june 2009.
if somebody want's to constitute a new company right now he/she would need to do that by the old way, a S.A. in the way it had been before/all the time, and make the transition june 2009.
so i would guess(i am not a lawyer or such, just my own personel guess) if somebody wanna constitute a new company right now and there's no need to do that TODAY, just wait til end june and do it right away in the new form/way, may be less hassle/work.
Mike

[socuban]

Originally Posted by MikeFisher

if somebody wanna constitute a new company right now and there's no need to do that TODAY, just wait til end june and do it right away in the new form/way, may be less hassle/work.
Mike

I agree. Another question that comes to mind is; Can you register a new company name with ONAPI now, omitting the type of corporate structure, i.e. S.A., S.R.L. (stating company in formation) and add it later in the formation process?

[MikeFisher]

Originally Posted by socuban

I agree. Another question that comes to mind is; Can you register a new company name with ONAPI now, omitting the type of corporate structure, i.e. S.A., S.R.L. (stating company in formation) and add it later in the formation process?

i would say yes,
you can register a company name and there is no law i would know about that states you have to start the constitution of the company right away. so i guess it is o.k. to reserve the name now and start the constitution process in june or after by the new rules.
i have a additional/new company's name registered since last month and wait with the constitution for exactly that reason to not need to switch/change it right away again.
Mike

[slas7713]

Can anyone tell me if a foreign corporation can own shares in a new SRL or do all the share holders have to be individuals?

Thanks,

DL

[slas7713]

One more question on an EIRL.

We were told that when forming this type of company that one of the requirements was that you will need to designate a second person that would have the power to sign on behalf of the company.

Is this true and can you elaborate.

DL

[Fabio J. Guzman]

No, the owner of the EIRLcan also be the manager if he/she so wishes. There is no need to name another person for the post.

[Kozy]

My understanding is that S.R.L. shareholders must be individuals, not another corp.(foreign or Dominican), in an effort to make things more transparent. Does anyone know for sure? K

[MikeFisher]

Originally Posted by Robert

President Fernández signed into law on December 11, 2008, a new company law (Law #479-08") which will revolutionize the way business is done in the Dominican Republic. The most important innovation brought about by the new statute is the creation of two new business entities: the "Sociedad de Responsabilidad Limitada or SRL" (Limited Liability Company or LLC) and the "Empresa individual de Responsabilidad Limitada or EIRL (Limited Liability Individual Business). The "Sociedad Anónima or S.A.," currently the entity of choice of 99% of Dominican businesses, has been amended to make it the vehicle for medium or large businesses. Here are the characteristics of the two new business entities (SRL and EIRL) and the most important changes made to the S.A.

Limited Liability Compan
y (SRL):

• Based mostly on the current LLC's in French Company Law with certain similarities with American LLC's.
• Chief company officer(s): one or various managers ("gerentes"). Must be individuals.
• Minimum of two shareholders; maximum of 50. Spouses may be the sole shareholders.
• RD$100,000 minimum capital (full amount must be paid up and deposited in a bank in order to be able to record company at Business Registry).
• Shares not readily transferable, depending on wishes of shareholders.
• Shareholders' liability limited to their investment in the company.
• Ideal for small or family businesses.


Limited Liability Individual Business (EIRL):

• No shareholders; one sole individual owns the business.
• Owner must be an individual; companies cannot be an owner.
• Owner's liability limited to his or her investment in the company
• No minimum capital.
• Chief Officer(s): the owner and the manager. The owner may be the manager.
• Ideal for businesses owned by a single individual.


Sociedad Anónima (SA):

• Minimum capital: RD$30,000,000 (approx. $850,000 US).
• Board of Managers (“Consejo de Administración) required with a minimum of 3 members.
• “Comisario de Cuentas” required. (The Comisario de Cuentas is an independent company officer in charge of overseeing the company accounts. Comisarios de Cuentas must be Certified Public Accountants).
• Tougher criminal penalties for SA managers compared to SRL managers.

The new law will come into effect on June 19, 2009. By then, every S.A. must comply with the new requirements IF its shareholders wish to remain as an S. A.

If, on the other hand, shareholders wish to convert their S.A. into an SRL (LLC) or an EIRL (Individual Business), the conversion period will start on June 19, 2009.

Guzman Ariza attorneys have been active participants in the changeover process. Fabio J. Guzman-Ariza and Alfredo A. Guzman, senior partner and associate, respectively, in the firm, partnered with the Fermin Taveras Law Firm in the preparation of the regulations that will be used by the Business Registries ("Registro Mercantil") in the new process. They have also prepared for publication in April 2009 a book of company forms for the SRL’s and the EIRL’s, and a comparative study on the operation of the SRL’s.

the description with the differences between the different new company forms is right here in this quote,
which been btw the OP of this thread.

for single business owners without partners like myself that EIRL is the perfect solution, but it has to be owned by an individual, not an company/corporation.

Mike

[Kozy]

Thanks for responding Mike. I did read this post previously, but did not find the answer to my question. I have a S.A. which I want to convert to an SRL. One of my stockholder's shares are actually listed in my company's registro mercantil in the name of a foreign corp., not as an individual or a Dominican corp.
Thus, I am wondering if these shares can be transferred to the new SRL without a problem. The post states that the officers must be individuals, but appears to not address my specific question. K

[MikeFisher]

right Kozy,
let's see what Fabio brings up as an answer, he will join in soon.
from my understanding that EIRL which i want to switch to with my first company can on;ly be hold by a individual, not a Corp, which is fine for myself b/c i am running my stuff by myself.
let's see what answer comes below, Fabio will be here soon.
Mike