Expanding businesses into Central America and the Caribbean should take into account the prospects of the different economies available for establishing their presence. Lately, there has been a growing trend to incorporate a company in the Dominican Republic, driven by several economic and strategic factors.
When deciding to incorporate a company in the Dominican Republic, it is beneficial to have a map of the country and its main cities, which can be obtained from Biz Latin Hub. The Dominican Republic, situated in the heart of the Caribbean Sea, captivates visitors with its stunning beaches boasting white sands and azure waters. Surrounded by the sea, it stands as one of the most popular destinations in the region, attracting a significant influx of tourists and offering diverse entertainment activities, luxurious accommodations, abundant natural beauty, captivating historical landscapes, and promising business opportunities.
This country exhibits a rich cultural heritage, diverse geography, and abundant natural resources. With direct flights available from the United States, Europe, and Latin America, it boasts excellent connectivity. In terms of size, the Dominican Republic is slightly larger than New Jersey and comparable to the territorial extent of Costa Rica. With these attributes in mind, we can now outline the essential steps involved when looking to incorporate a company in the Dominican Republic.
When looking to incorporate a company in the Dominican Republic, it is important to choose the best city for your business. The graphic above highlights the major cities throughout the country.
Why incorporate a company in the Dominican Republic?
The Dominican Republic offers a favorable business environment and several advantages that make it an excellent choice for registering a company. Here are some additional reasons why it would be beneficial to incorporate a company in the Dominican Republic:
- Strategic Geographic Location: Situated in the heart of the Caribbean, the Dominican Republic enjoys a strategic position that facilitates access to North and South American markets. Its proximity to the United States and Latin American countries makes it a convenient hub for regional operations.
- Strong Economic Growth: The Dominican Republic has experienced robust economic growth in recent years, driven by sectors such as tourism, manufacturing, agriculture, and services. This growth creates a conducive business environment and provides opportunities for companies to thrive.
- Investment Incentives: The government of the Dominican Republic actively promotes foreign investment by offering attractive incentives and benefits. These include tax exemptions, free trade zones, streamlined procedures, and various investment protection laws. Such incentives contribute to the country's competitiveness and make it an appealing destination for businesses.
- Skilled Workforce: The Dominican Republic has a well-educated and skilled workforce. The country's emphasis on education and vocational training ensures a talented pool of professionals across different industries.
- Infrastructure Development: The Dominican Republic has invested significantly in infrastructure development, including transportation, telecommunications, and energy. This reliable infrastructure supports business operations and facilitates connectivity within the country and with international markets.
To incorporate 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:
Foreign Company
In the Dominican Republic, a foreign corporation is referred to as a Foreign Branch Office, which is the equivalent terminology used in neighboring countries. Within the framework of the Foreign Branch Office, a Manager or Director is entrusted with adequate authority to legally represent the company and undertake its operations within the jurisdiction of the Dominican Republic.
It is mandatory for the capital invested in the Foreign Branch Office to correspond to the capital amount registered by the parent company. This requirement ensures parity and consistency between the registered capital of the parent company and the capitalization of the Foreign Branch Office.
Sociedad Anónima (SA)
A Sociedad Anónima (SA) is a commercial enterprise that can be formed with a minimum of 2 or more stakeholders. These stakeholders can be either domestic or international. The SA operates under the governance of a board of directors, comprising at least 3 members appointed for a 6-year term. Reappointment of directors is permissible upon completion of this tenure.
Your investment in the company will be represented by transferable financial instruments known as shares. There is no upper limit to the share capital. However, a minimum capital of RD$30,000,000 is required.
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 Sociedad de Responsabilidad Limitada (SRL) is the Spanish term for a Limited Liability Company. It can be formed with a minimum of 2 shareholders and a maximum of 50. The management structure of an SRL is simpler compared to other types of companies, as it can be overseen by a Manager and/or a Sub-Manager who serve as the legal representatives of the company. Their appointment typically lasts for a six-year period.
Unlike other types of companies, the SRL does not have a minimum share capital requirement. However, there is a minimum amount per share set at RD$100. This indicates that the SRL usually operates with a smaller structure, making it suitable for businesses of varying sizes. Each legal entity type varies significantly and selecting the best one for your business is crucial to ensuring success when deciding to incorporate a company in the Dominican Republic.
One of the key steps when deciding to incorporate a company in the Dominican Republic is to open a corporate bank account.
2. Check name availability
To ensure your company differentiates itself from competitors and captures the attention of the general public, it is crucial to establish a distinctive brand, product, or service of high quality. The most effective way for customers to remember your brand is by selecting a clear and unique name for your company.
In order to ensure that your company's name stands out from established brands in the Dominican Republic, it is advisable to seek the guidance of an expert and verify the availability of the desired name in the database of the Mercantile Registry of the Dominican Republic. Taking an active approach in checking name availability will help guarantee that your company's name is distinguishable from others and compliant with registration requirements.
3. Agree on the constitution and create the bylaws
Upon finalizing the choices regarding the legal entity, name,
capital, and business purpose, the subsequent crucial step is to
establish the internal regulations of the company, commonly
referred to as bylaws or the company constitution.
This step carries significant importance in the process to incorporate a company in the Dominican Republic, as it ensures the smooth functioning and effective administration of the company. The bylaws serve as a pivotal legal framework that provides guidance to the partners and members of the board of directors for restructuring the company throughout its entire existence.
4. Sign the constitution act
Before a Public Notary, the shareholders must announce that they have:
- Been formally appointed in a Meeting of Partners
- Agreed to incorporate a company
- Verified the constitution
- Signed the deed of incorporation
Once this has been done, the company is permitted be officially registered before the Commercial Registry.
5. Payment of duties, stamps and taxes
Before you incorporate a company in the Dominican Republic, the effective payment of the fees, taxes and stamps determined by law for the creation of a new company must be established.
The commercial register will assess the incorporation application so that a new commercial company is finally written into law.
6. Register the company with the tax authority and other institutions
Before commencing business operations, it is essential to register your newly incorporated company with the National Taxpayers Registry (RNC). This registration process requires providing details about the economic activity you plan to undertake. Additionally, if you intend to hire employees, you must register any applicable social security obligations for your company.
Failure to register with the RNC in advance can hinder various procedures, including something as basic as opening a bank account for your company.
To avoid any delays and ensure a fully operational company, it is crucial to have a well-prepared business strategy with carefully scheduled timelines. This approach will enable you to proactively move forward with the establishment of your new company without unnecessary complications.
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
- Scotiabank
Originally published 05 January 2020 | Updated on: 18 July 2023
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
