Businesses expanding into Central America and the Caribbean should consider the prospects of the various economies available for them to base themselves. It’s become more popular in recent times to incorporate a company in the Dominican Republic, due to a number of economic and strategic factors.
The country is located in the heart of the Caribbean Sea, which surprises its visitors with its beautiful beaches of white sand and blue waters. Surrounded by the sea, it is one of the countries with the greatest tourist influx in the area, offering entertainment activities, luxury accommodation, lush nature, historical landscapes and striking business opportunities.
The country has a wide cultural, geographic and natural diversity, direct flights from the United States, Europe and Latin America. It has a size that slightly doubles the size of New Jersey and is more similar to the territorial size of Costa Rica. We outline key steps to incorporate a company in the Dominican Republic.
Incorporate a company in the Dominican Republic
Choose the Dominican Republic when doing business in the Caribbean; its strong economy and natural diversity offer many opportunities for investors, and favorable living conditions.
When incorporating a company in the Dominican Republic, there are 6 main steps to follow. It’s important to first understand what kind of legal entities are available for your business. Following that, you’ll need to prepare formal constitution and other documents, and register with the local authorities.
1. Establish the initial size, objective and capital of the company
When expanding your business to the Dominican Republic, it is important to choose the type of society that is closest to your business needs.
There are eight types of legal entities you can choose from to incorporate your company in the Dominican Republic. However, the most common in the country are the following:
The Foreign Company in the Dominican Republic is what in other countries of the region call a Foreign Branch Office. With the Foreign Company, a Manager or Director with sufficient powers to represent the company and act on its behalf within the territories of the Dominican Republic, and thus carry out the commercial activity of the company.
The capital must be the same as that registered by the parent company.
Sociedad Anónima (SA)
A Sociedad Anónima (SA) is a mercantile company, which can be established with a minimum of 2 or more shareholders. These shareholders can be nationals or foreigners. The SA is directed by a board of directors, composed of a minimum of 3 members appointed for terms of 6 years. These directors can be reappointed after this period of time.
Your capital contribution will be represented by negotiable securities called shares, and does not have a maximum share capital limit. The minimum capital is RD$30,000,000.
Simplified Public Limited Company (SAS)
This type of company is very similar to the Public Limited Company. Unlike the Public Limited Company, the Simplified Public Limited Company (SAS) offers greater contractual freedom in its creation and the drafting of the bylaws.
The SAS is constituted with a minimum of 2 shareholders, and is managed by a board of directors of at least 3 members. The minimum share capital to subscribe is around RD$3,000,000.
Limited Liability Company (SRL)
The Limited Liability Company is known as the Sociedad de Responsabilidad Limitada (SRL) in Spanish. The SRL can be constituted with a minimum of 2 shareholders and a maximum of 50. Its governing body is simpler, as it can be managed by a Manager and/or a Sub-Manager who will act as the legal representative for the company over a six-year appointment.
There is no minimum share capital for this company, however, there is a minimum amount per share of RD$100. This indicates that the SRL typically has a much smaller structure.
2. Check name availability
It is important that your company stands out from its competitors and the general public for its brand, product or service, and quality. The best way for your customers to remember your brand is through deciding on a clear, unique name for your company.
The name must be distinguishable against brands from other established companies in the Dominican Republic. For that, it is better to be accompanied by an expert and check the availability of the name that the company will use in the database of the Mercantile Registry of the Dominican Republic.
3. Agree on the constitution and create the bylaws
Once you have decided on the legal entity, name, capital and business purpose, you must establish the internal regulations of the company, known as bylaws or the company constitution.
This step is very important to incorporate a company in the Dominican Republic as it will allow the proper functioning and administration of the company. The bylaws will provide a legal framework to the partners and members of the board of directors to restructure the company throughout its existence.
4. Sign the constitution act
Before a Public Notary, the shareholders must declare that they have:
- been formally appointed in a Meeting of Partners
- agreed to form a company
- approved the constitution
- signed the deed of incorporation
Once they have done this, the company may be duly registered before the Commercial Registry.
5. Payment of duties, stamps and taxes
Before the new company is registered, the effective payment of the fees, taxes and stamps determined by law for the creation of a new company must be made.
The commercial register will review the registration application so that a new commercial company is finally born into legal life.
6. Register the company with the tax authority and other institutions
Prior to starting business activities, your must register your newly incorporated company with the National Taxpayers Registry (RNC). You’ll need to provide information about the economic activity you intend to carry out. Additionally, you’ll need to register any social security obligations applied to your company in the event that you hire staff.
Without prior registration with the RNC, the activity of the new company could be prevented in simple procedures such as even opening a bank account.
That is why having a business strategy prepared with properly scheduled times will allow you to get ahead with the creation of the new company without delay and fully functional.
7. Open a corporate bank account
Finally, you’ll need to open a corporate bank account to finish the process to incorporate a company in the Dominican Republic. Wait times and requirements on what you need to provide may vary from bank to bank.
Generally speaking, you’ll need to provide your bank with information about your company’s activities, shareholder details, and identification.
The available banks in the Dominican Republic to open an account are:
- Central Bank
- Banco Popular
- Banco Leon
- Banco Reservas
Incorporate a company in Dominican Republic with Biz Latin Hub
The Dominican Republic poses a number of opportunities for businesses and investors expanding into Central America and the Caribbean. When incorporating your company in the Dominican Republic, be sure to consult a local legal expert to ensure you correctly navigate corporate regulations and adhere to all aspects of local tax and accounting legislation.
At Biz Latin Hub, we’re a market leader in the provision of market entry and back-office services in Central and South America. Our legal and accounting specialists are your single point of contact for multilingual support to expand into the Dominican Republic.
Reach out to us today here at Biz Latin Hub for personalized advice and support.
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