Get an entity health check in the Dominican Republic

If you are planning to purchase or do business with a company in the Dominican Republic, you should have an entity health check done. Because an entity health check in the Dominican Republic will involve a full examination of that company’s compliance with local regulations, as well identifying structural or operational inefficiencies that you will want to iron out early on in order to maximize your profitability.

A map of the Dominican Republic, where you may wish to have an entity health check carried out
A map of the Dominican Republic

You may also opt for an entity health check in the Dominican Republic if you already run a business there and simply wish to audit your existing operations to identify potential options to improve your bottom line.

The Dominican Republic has the largest economy in the Caribbean and the eighth-largest in Latin America, having experienced consistent and rapid growth over the last fifteen years to make it an exciting country to invest in. According to World Bank’s figures, the country’s gross domestic product (GDP) hit $88.94 billion in 2019 (all figures in USD), while gross national income (GNI) — a key marker of general prosperity — reached $8,080 per capita that same year, consolidating the island nation’s status as an upper-middle income country.

The Dominican Republic has free trade agreements (FTAs) in place that provide its businesses with preferential access to key regional markets, including the United States, which is a party to the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR), as well as the Caribbean Community (CARICOM). The country also has bilateral investment agreements established with Chile, Finland, Morocco, the Netherlands, Panama, South Korea, and Taiwan.

The Dominican Republic is famed as a tourist destination, and a considerable proportion of its GDP derives from the tourism and hospitality industry. Other important sectors include telecommunications, mining, and agriculture, with major exports including cocoa, coffee, gold, nickel, silver, sugar, and tobacco.

If you are interested in doing business in the Dominican Republic, or are already operating there, read on to understand better what an entity health check is and why you should consider getting one. Or go ahead and contact us now to discuss your business options.

A snapshot of the market in the Dominican Republic, where you may wish to undertake an entity health check

What is an entity health check?

An entity health check is an in-depth analysis carried out by legal and financial auditors to discover if any non-compliance issues or major inefficiencies can be identified in a company’s operations. When this is carried out on a company you are planning to purchase or partner up with, it forms a crucial aspect of the due diligence you must undertake to ensure the money you are investing is going to be safe.

Hiring an external provider to carry out an entity health check is the best way to guarantee that it is undertaken comprehensively and impartially, and that the conclusions drawn are reliable. The external provider will have to be authorized by the owner of the business you are doing business with to access current and historic financial, accounting, and legal records.

In the event a company you are doing business with or planning to do business with shows reluctance to submit to such a process, or proves resistant in offering up its records, that should act as a red flag that something is likely not right and offer you good cause to reconsider your venture.

When to get a self-check

A photo of a business man checking records, representing someone undertaking an entity health check in the Dominican Republic
A self-check preemptively finds issues

While it is most common to have an entity health check done as part of a merger or acquisition, it is also worth considering having a self-check done. That can be especially useful to a business that has seen its profits diminish or operating costs rise significantly, but it can even be useful to a business that appears to be running smoothly and profitably.

Because an entity health check in the Dominican Republic will still be able to identify unnoticed inefficiencies, while it may flag up potential non-compliance issues before they become a legal headache.

Types of entity health check

There are two main types of entity health check — namely a high-level corporate health check or an in-depth gap analysis. 

High-level corporate health check: This type of entity health check examines three crucial areas of a company’s legal compliance: registry filings, statutory registers, and minutes of meetings. A thorough examination of all documentation related to these will highlight issues related to legal non-compliance.

In-depth gap analysis: This type of entity health check is more focused on finances and accounting, with auditors analysing a company’s history of transactions and financial statements to try to identify gaps in record keeping that could point to a non-compliance or other legal issue. Such a process will also be able to help you identfy inefficiences in current tax planning.

While an in-depth gap analysis is likely to be the most useful to carry out on your own business, a combination of both types of audit will be critical to due diligence related to a merger or acquisition.

Biz Latin Hub can do an entity health check in the Dominican Republic

At Biz Latin Hub, our team of due diligence experts has deep knowledge of the regulatory framework in the Dominican Republic and is experienced in carrying out entity health checks in support of foreign investment into the country. With our comprehensive portfolio of back-office services, including legal, accounting, and recruitment, we can be your single point of contact to support your market entry and ongoing operations in the Dominican Republic, or any of the other 15 countries around Latin America and the Caribbean where we have a local team in place.

Reach out to us today for a quote or free consultation.

Or learn more about our team of expert authors.

A graphic depicting the market entry and back-office services offered at Biz Latin Hub, which includes an entity health check in the Dominican Republic
Market entry and back-office services offered at Biz Latin Hub

The information provided here within should not be construed as formal guidance or advice. Please consult a professional for your specific situation. Information provided is for informative purposes only and may not capture all pertinent laws, standards, and best practices. The regulatory landscape is continually evolving; information mentioned may be outdated and/or could undergo changes. The interpretations presented are not official. Some sections are based on the interpretations or views of relevant authorities, but we cannot ensure that these perspectives will be supported in all professional settings.

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