Creating collateral security packages

Types of collateral

What types of collateral and security interests are available?

Under Dominican laws, security interests, such as mortgages, liens, privileges, encumbrances, pledges and endorsements, may be granted on the following assets:

  • real estate properties (collateral may cover the land and the improvements built thereon);
  • movable assets (motor vehicles, boats and vessels, aircraft, machinery, equipment, inventory, present and future agricultural crops, and other goods);
  • intellectual and industrial property rights (patents, industrial designs, trademarks, trade names);
  • contractual rights (credits, receivables, concessions, licences, promissory notes, insurance policies), provided the contract does not restrict transferability; and
  • financial instruments and securities (bank accounts, investments, certificates of deposit, shares, bonds and income derived from securities).

Dominican law does not recognise the possibility of granting blanket security interests over an entire business; security interests must be granted over specific assets. However, with the enactment of Dominican Trusts Law No. 189-11, a single collateral instrument denominated warranty trusts can now be created, comprising all or some of the assets listed above.

Collateral perfecting

How is a security interest in each type of collateral perfected and how is its priority established? Are any fees, taxes or other charges payable to perfect a security interest and, if so, are there lawful techniques to minimise them? May a corporate entity, in the capacity of agent or trustee, hold collateral on behalf of the project lenders as the secured party? Is it necessary for the security agent and trustee to hold any licences to hold or enforce such security?

Real estateRequirements for perfection of collateral for real estate properties and how priority is established

Mortgage securities are created by the execution of a mortgage agreement, which must be subject to local law, executed between the owner of the property or its representative and the creditor, and recorded at the local Registry of Titles.

A regulation enacted in 2016 requires foreign entities to obtain a Dominican tax identification number to be able to register and perfect a mortgage.

Although credit agreements may be subject to a foreign legislation and their registration is not required locally, a mortgage contract done and registered according to local law is mandatory if the collateral (real estate) is located in the Dominican Republic.

Priority and enforcement rights against third parties are perfected by filing the mortgage agreement and other required documentation at the Registry of Titles of the jurisdiction where the property is located. The first creditor who files a mortgage obtains a first-ranked security via the issuance of a creditor’s registry certificate, which enables such creditor to collect its debt through the foreclosure of the collateral, before all other lower-ranked registered mortgage creditors.

The following documents are required to record a mortgage:

  • a mortgage agreement, authenticated by a Dominican notary;
  • the owner’s certificate of title;
  • a certificate showing that the owner has paid property tax obligations;
  • a receipt showing payment of the 2 per cent mortgage registration tax;
  • a certificate showing ownership and legal status of the property;
  • the local tax ID of the creditor;
  • creditors’ and debtors’ registered assembly meeting or resolution authorising the registration of the mortgage (for corporate entities); and
  • registration of the power of attorney (POA), if a POA is used.
SharesRequirements for perfection of collateral for shares and how priority is established

The requirements to perfect the collateral based on shares of a Dominican company will depend on the type of entity (stock corporation, simplified stock corporation or limited liability company), and on the procedure established by the company bylaws.

In most cases, the shareholder who wishes to pledge his or her shares to a third party must notify the other shareholders, directly or via the board of directors, to receive approval prior to executing a share pledge agreement and registering the pledge.

All pledges must be registered at the Mercantile Registry Office of the company’s domicile.

If the company operates in a regulated sector, such as telecommunications, energy or the financial sector, government approval or notification would also be required.

The following documents are required: company by-laws; share pledge agreement; minutes of the shareholders’ meeting approving the pledge; share certificate (only applicable to stock corporations); shares transfer book (only applicable to stock corporations); and the local tax ID of the creditor.

Movable assetsRequirements for perfection of collateral of movable assets and how priority is established

There are various types of pledges over movable assets pursuant to local laws. Civil pledges require that the debtor hand over possession of the asset to the creditor or to a designated third party. Chattel pledges are commonly used for securing vehicles, machinery, inventory and other movable assets. This type of pledge enables the debtor to keep possession of the asset while the security is in place.

Pledge agreements are subject to local laws, but the financing agreement may be subject to a foreign legislation. In both cases, assets cannot be pledged to more than one creditor at the same time.

In the case of chattel mortgages, registration is made at the local office of the Juzgado de Paz (the lowest of all courts in the court system). Civil pledges are registered at the Civil Registry Office.

In addition, if the collateral is a motor vehicle, creditors file a lien at the Division of Motor Vehicles and at the Internal Revenue Office to further secure the pledge and make it effectively enforceable against third parties.

As for aircraft, security agreements need to be drafted before a notary public and executed and filed at the Civil Registry Office and the National Institute of Civil Aviation.

Securities over ships are registered at the Mercantile Marine Agency and the Naval Office.

The documents required include: a notarised pledge agreement; inventory of assets; owner’s certificate of registration (for aircraft, ships and vehicles); inventory of the assets to be pledged; and the local tax ID of the creditor.

Contractual rightsRequirements for perfection of collateral and how priority is established

Pledges over contractual and other intangible rights are regulated by article 91 of the Commercial Code and article 2075 of the Civil Code, which require the execution of a pledge agreement, its notification to the counterparty and registration of the notified documentation at the Civil Registry Office.

To guarantee its enforceability against third parties the pledge agreement must be served to the counterparty and registered as explained above.

The documents required are a notarised pledge agreement, notice by bailiff and civil registration of the act; and the local tax ID of the creditor.

RecievablesRequirements for perfection of collateral and how priority is established

Receivables are collateralised through the execution of a pledge agreement, its notice to the debtors and registration of the notice at the local Civil Registry Office.

To guarantee enforceability against third parties the pledge agreement must be notified to the debtor and registered as detailed above.

The documents required include: a pledge agreement; notice by bailiff act and civil registration of the act; and the local tax ID of the creditor.

Intellectual property rightsRequirements for perfection of collateral and how priority is established

Intellectual property rights are collateralised through the execution of a pledge agreement and its registration at the National Office of Intellectual Property.

The documents required are: a notarised pledge agreement, the original of the certificate of registration of the IP right and the local tax ID of the creditor.

Financial instruments and securitiesRequirements for perfection of collateral and how priority is established

There are various types of pledges over financial instruments and securities pursuant to local laws. For instance, a pledge over financial instruments must be executed via a notarised agreement, which is then notified to the financial entity where the instrument is held.

A pledge over a book-entry security is done through an authorised broker, who will proceed to notify and file it at the appropriate regulatory authority and security depository.

As for assignments of certificate of deposits and insurance policies, the pledge agreement is notified to the issuing institution for final approval and formal registry.

The documents required include: a notarised pledge agreement, the original of the certificate of deposit or insurance policy certificate, notice of the agreement to the issuing entity, registration of the notice act, and the local tax ID of the creditor.

Fees

Fees for filing real estate mortgages amount to 2 per cent of the mortgage amount.

Securities over aircraft are also subject to an administrative registration fee, and filing fees for the registration of the security at the National Institute of Civil Aviation.

Securities over ships and boats also generate a registration fee according to their size and tons.

Other securities, such as pledges, will generate minimal stamp duties and other fees.

There is no legal technique to minimise the impact on taxes and fees applicable to the registration of mortgages and other securities, aside from not registering them, which would leave the creditor unprotected with regard to third parties and would prevent him or her from foreclosing on the collateral until taxes and fees are paid and the collateral registered.

Law 189-11

Law 189-11 for the Development of the Mortgage Market and Trusts, introduced trusts and collateral agent structures for mortgage securities as an alternative to standard mortgages. The structures benefit from an expedited process for foreclosures. Multiple service banks, savings and loan associations or any other financial intermediary or foreign bank authorised by the Monetary Board can act as collateral agents, as well as any other commercial company incorporated under the laws of the Dominican Republic or foreign laws with the specific and exclusive purpose of acting as collateral agents.

Assuring absence of liens

How can a creditor assure itself as to the absence of liens with priority to the creditor’s lien?

In general terms, creditors may conduct a title search at the appropriate public registry to ascertain the legal status of the assets of a potential debtor.

For example, for real estate properties, a certification of liens and encumbrances from the Land Registry Office of the jurisdiction where the property is located can be obtained. This certification will identify the recorded owner of the property and if there are any registered mortgages, liens, etc. on that property.

For movable assets, the certification is issued by the Juzgado de Paz of the jurisdiction where the assets are located or from the domicile of the debtor, if they are not the same.

For motor vehicles, aircraft and boats, creditors can obtain information at the government offices where pledges on these assets are recorded.

For intellectual property rights, the creditor may obtain information at the National Office of Intellectual Property.

In the case of securities over shares, information is available at the office of the Mercantile Registry of the jurisdiction of the registered office of the company.

As for contractual rights and receivables, creditors must keep on file a copy of the notice given to the debtor.

Finally, for financial instruments and securities, the creditor must require its debtor to authorise the bank to disclose such information, when a bank is involved, or can search for it at the registry of the corresponding authorities.

Enforcing collateral rights

Outside the context of a bankruptcy proceeding, what steps should a project lender take to enforce its rights as a secured party over the collateral?

As mentioned, the first step every creditor should take is to register the collateral at the appropriate government. registry. After registration, the course of action will vary depending on the type of collateral, but all will entail, first, serving the debtor a notice via bailiff indicating the existence of an event of default and second, petitioning foreclosure on the collateral, which will ultimately lead to a public auction, at which, if there are no interested bidders, the creditor will be declared owner of the asset.

Dominican law prohibits the creditor taking control of the collateral without due process in court.

Enforcing collateral rights following bankruptcy

How does a bankruptcy proceeding in respect of the project company affect the ability of a project lender to enforce its rights as a secured party over the collateral? Are there any preference periods, clawback rights or other preferential creditors’ rights with respect to the collateral? What entities are excluded from bankruptcy proceedings and what legislation applies to them? What processes other than court proceedings are available to seize the assets of the project company in an enforcement?

Proceedings against debtors are automatically stayed or prohibited once the court accepts the bankruptcy petition. During the restructuring’s conciliation and negotiation stage, all creditors, including secured ones (registered securities, mortgages and pledges), that wish to have voting rights assigned to them for the execution of the restructuring plan, must formally register their credits before the Bankruptcy Court, before the court-appointed mediator submits its final report to the court.

If the sale regards an asset affected by a privilege, pledge or mortgage, the proportional price that corresponds to the creditors over such security will be deposited in a bank account opened for the purposes of the reorganisation process and the sums received for the sale will be distributed according to the reorganisation plan, if approved, or in a proportional basis in the case of liquidation, following the preference order of their securities.

Articles 60 and 107 of Decree No. 20-17 conceive the possibility of selling a group of assets or the entire business of the debtor. Whenever the sale of assets is approved by the court, all existing mortgages and privileges will be cancelled; the new owner is only obliged to pay for the sale price and the assets are transferred free of any liens or encumbrances.

Credits originated after the commencement of the insolvency proceedings, when approved by the court, have a higher priority in relation to all other secured and unsecured claims other than those owed to the tax authorities, to the employees or originated by the insolvency proceedings.

Article 86 of the law 141-15 establishes that the payment of debts must be performed in the order indicated below:

  • labour liabilities, whenever they have not been advanced in accordance with the provisions of the labour code or any other laws regarding social security or employees’ health;
  • the costs and expenses originated by the reorganisation process, including the fees of the officials and auxiliaries involved;
  • the loans approved by the court and granted by financial intermediation entities or third parties for the financing of the debtor;
  • the credits of essential and public service providers or suppliers, duly authorised by the court;
  • the debts resulting from the execution of contracts that remain in force after the commencement of the reorganisation process, when approved by the court and the corresponding creditor agrees to deferred payment; and
  • other liabilities, according to their priority (secured credits will prevail).

Ex officio or upon petition of any creditor, the conciliator may request to the court the nullity of any transaction that took place two years prior to the reorganisation request, when they constitute an unjustified dissipation of the debtor’s assets. Transactions regarding public offering securities originated prior to the reorganisation request and with subsequent payment date are not subject to the nullity action.

Transactions involving the free transfer of assets or any other entered into by the debtor after the commencement of the insolvency proceedings may be annulled. Some transactions are expressly considered to be null and void, such as:

  • transfers of assets free of charge or at a price below market value;
  • when the compensation given to the debtor or the creditor is notoriously superior or inferior than the compensation given or the obligation performed by the other party;
  • the partial or full compensations made by the debtor;
  • payment of obligations not due by the debtor;
  • grant of new securities or increase of existing securities for debts originated prior to the reorganisation request with no justification;
  • transfers of property in favour of creditors that results in the payment of a higher amount to that received as a result of the liquidation; or
  • transactions with related entities or companies where the debtor or any of the creditors serve as an administrator or are members of the board of administrators, among others.

Furthermore, Law 141-15 establishes the invalidity of any contractual clause that within 60 days prior to the commencement of the negotiation phase or after the initiation of the proceedings, aggravates the situation of the debtor or accelerates the enforceability of claims not due. Under the terms of the law, no legal provision or contractual clause could give rise to the division, termination, resolution or annulment of the contract solely due to the acceptance of a reorganisation request or designation of the conciliator.

Law 141-15 is applicable to all national or foreign companies and businesspersons with domicile or permanent presence in the country, but expressly excludes commercial entities that have a majority stake belonging to the state or controlled by it; financial entities are governed by the Monetary and Financial Law 183-02, dated November 2002, and its modifications; securities intermediaries, investment funds management companies, centralised security deposits, stock exchanges, securitisation companies and any other entity considered to be a stock market participant, with the exception of publicly traded companies and companies governed by Law 19-00 on Securities. Electrical, insurance, trustees and other regulated entities are also excluded and subject to their governing laws.

What processes other than court proceedings are available to seize the assets of the project company in an enforcement?

Aside from movable or chattel pledges procedures recognised by Law 6186, the law does not conceive of the possibility of seizing assets of a business outside of a court proceeding, except for those assets that were already awarded to a creditor by a court judgment prior to the commencement of the insolvency proceedings.

Bankruptcy proceedings in the Dominican Republic are governed by Bankruptcy and Restructuring Law 141-15, and Decree 20-17, in effect since February 2017.

Proceedings against debtors are automatically stayed or prohibited once the court accepts the bankruptcy petition.

Foreign exchange and withholding tax issues

Restrictions, controls, fees and taxes

What are the restrictions, controls, fees, taxes or other charges on foreign currency exchange?

There are no local restrictions, controls or taxes on foreign currency exchange in the Dominican Republic.

Investment returns

What are the restrictions, controls, fees and taxes on remittances of investment returns (dividends and capital) or payments of principal, interest or premiums on loans or bonds to parties in other jurisdictions?

No restrictions or controls apply on the remittance of investment returns or loans repayments abroad. As for taxes, the general principle is that Dominican-source income (income derived from investments or interests located in the Dominican Republic) is subject to taxation. In that regard:

  • interest payable abroad to financial institutions or by a branch office domiciled in the Dominican Republic is subject to a 10 per cent withholding;
  • remittance of dividends is subject to a 10 per cent withholding tax; and
  • all other payments made abroad are subjected to a 27 per cent withholding tax, considered as a final and definitive payment of the taxes owed for the operation.

Regarding the restrictions of payments of principal, interest or premiums loans, the control and limitations established by the Dominican Internal Revenue Office are, among others, as follows:

  • interest rates must be in the range of the rates offered in the market to avoid transfer pricing regulations enforcement;
  • interest payments will only be considered deductible if the required retentions have been paid; and
  • the leverage ratio of the company must be 3:1 of the amount of its social capital.
Foreign earnings

Must project companies repatriate foreign earnings? If so, must they be converted to local currency and what further restrictions exist over their use?

There are no restrictions in terms of repatriation of earnings or currency conversion.

May project companies establish and maintain foreign currency accounts in other jurisdictions and locally?

Yes, they may establish and maintain foreign currency accounts in other jurisdictions as well as locally. Only US dollar and euro accounts are available at local financial institutions.

Foreign investment issues

Investment restrictions

What restrictions, fees and taxes exist on foreign investment in or ownership of a project and related companies? Do the restrictions also apply to foreign investors or creditors in the event of foreclosure on the project and related companies? Are there any bilateral investment treaties with key nation states or other international treaties that may afford relief from such restrictions? Would such activities require registration with any government authority?

There are no restrictions with respect to the ownership of project companies. The Dominican Constitution accords foreign and local investors equal treatment under the law, stating expressly that foreigners in the Dominican Republic are entitled to the same rights as Dominican nationals, except for participating in local political activities. At the same time, foreign investors are bound by the same rules and regulations applicable to local investors. Foreign investors can freely hold equity in local businesses and joint ventures, as well as buy real estate in their names.

Foreign Investment Law 16-95, enacted on 20 November 1995, and its enabling regulations, eliminated all barriers formerly imposed on international investments in the Dominican Republic. Investors contributing capital to companies operating in the Dominican Republic are granted unlimited access to all sectors of the Dominican economy, except to those related to national security and certain sensitive industries.

Insurance restrictions

What restrictions, fees and taxes exist on insurance policies over project assets provided or guaranteed by foreign insurance companies? May such policies be payable to foreign secured creditors?

Insurance in the Dominican Republic is regulated by Law 146-02. Pursuant to this law, insurance policies on assets and interests located in Dominican territory have to be issued by companies authorised to operate as insurance companies in the country. However, insurance policies issued by local companies may be reinsured by foreign insurers.

Insurance policies issued for assets located in the country may be paid, as instructed by the owner of the asset, into the hands of the secured creditors, local or foreign without restriction. Assignments of proceeds to both insurance and reinsurance policies are common practice locally.

Worker restrictions

What restrictions exist on bringing in foreign workers, technicians or executives to work on a project?

There are no restrictions on bringing foreign workers to work on a project in the Dominican Republic; however, article 135 of the Dominican Labour Code requires that at least 80 per cent of a company’s work force be Dominican. Likewise, no less than 80 per cent of the payroll, with the exception of salaries for technical or executive positions, must correspond to wages earned by Dominicans. These rules do not apply to employees carrying out executive or managerial duties, or occupying technical positions for which there is no available Dominican substitute.

Equipment restrictions

What restrictions exist on the importation of project equipment?

There are no restrictions applicable to the importation of project equipment to the Dominican Republic, provided that the applicable custom duties are paid. There are laws, such as the Competitiveness and Industrial Innovation Law 392-07, that grant classified and registered companies exemptions to import equipment and machinery necessary to carry out their industrial processes.

Nationalisation laws

What laws exist regarding the nationalisation or expropriation of project companies and assets? Are any forms of investment specially protected (from nationalisation or expropriation)?

Article 51 of the Constitution of the Dominican Republic states that no person can be deprived of property rights unless there is a public utility or social interest need, in which case, the owner will be entitled to receive payment for the property at a fair value determined by a competent court. Any expropriation process followed by the Dominican government must comply with this and other constitutional and legal provisions, including the guarantee of due process. There are no forms of investment specially protected from expropriation.

Fiscal treatment of foreign investment

Incentives

What tax incentives or other incentives are provided preferentially to foreign investors or creditors? What taxes apply to foreign investments, loans, mortgages or other security documents, either for the purposes of effectiveness or registration?

According to the equal treatment principle set by Law 16-95 on Foreign Investment and the Dominican Constitution, foreign investors are entitled to the same rights and obligations available to national investors. Generous tax incentives are granted in the Dominican Republic to projects in the following sectors: tourism, renewable energy, free zones and film production, among others.

Government authorities

Relevant authorities

What are the relevant government agencies or departments with authority over projects in the typical project sectors? What is the nature and extent of their authority? What is the history of state ownership in these sectors?

The relevant government agencies or departments with authority over projects in the typical project sectors are as follows.

The Ministry of Industry and Commerce regulates, supervises and controls the distribution, importation and commercialisation of oil and gas in the Dominican Republic; however, the Ministry of Energy and Mines regulates the exploration, extraction and policies concerning these natural resources.

The Ministry of Energy and Mines is the governing body in charge of overseeing mining activities in the country and granting exploration and extraction permits and concessions to private parties. The Ministry of the Environment and Natural Resources also grants environmental licences and permits to mining projects in the country.

Chemical refining is regulated by the Ministry of Public Health, the Ministry of Environment and Natural Resources, and the Ministry of Energy and Mines.

Water is regulated by the National Institute of Potable Water and Sewerage (INAPA), the General Directorate of Water Resources and each city’s local water and sewer system administrator.

Tourism and real estate development is regulated by the Ministry of Tourism, and the Ministry of Environmental and Natural Resources.

Free Zones are under the authority of the National Free Zones Council and Association of Free Zones.

The energy sector is regulated by the General Electricity Law 25-01. The government entities in charge of regulating the sector are the Superintendence of Electricity, the National Energy Commission and the Dominican National Electrical Corporation (CDEEE). The Ministry of the Environment and Natural Resources and the Ministry of Energy and Mines are also involved in granting licences and permits to energy projects in the country.

The transportation sector is divided into three subsectors: ground transportation, regulated by the National Institute of Transit and Ground Transportation, air transportation, regulated by the National Institution of Civil Aviation and maritime transportation, regulated by the Dominican Navy and the National Authority for Maritime Affairs.

Ports and public construction projects are under the authority of the Ministry of Public Works, the Dominican Port Authority and the Dominican Navy. The Ministry of the Environment and Natural Resources also grants environmental licences and permits in this sector.

The Dominican Telecommunications Institute is in charge of telecommunication projects.

Regulation of natural resources

Titles

Who has title to natural resources? What rights may private parties acquire to these resources and what obligations does the holder have? May foreign parties acquire such rights?

The Dominican government has ownership over all natural resources and may grant concession to private parties, local or foreign, to exploit, extract or use such resources as regulated in the appropriate concession agreement. The obligations of the holder are stipulated in the concession agreement.

Royalties and taxes

What royalties and taxes are payable on the extraction of natural resources, and are they revenue- or profit-based?

Royalties and taxes vary according to the industry. Most are revenue-based.

Export restrictions

What restrictions, fees or taxes exist on the export of natural resources?

Concession agreements provide general guidelines for the export of natural resources. At the present time, taxes or fees applicable for such exports are negotiated on a case-by-case basis.

Legal issues of general application

Government permission

What government approvals are required for typical project finance transactions? What fees and other charges apply?

Government approval of project finance transactions is only required in certain sectors, such as in free zones, telecommunications, energy, mining and port concessions.

Registration of financing

Must any of the financing or project documents be registered or filed with any government authority or otherwise comply with legal formalities to be valid or enforceable?

All security agreements must be executed or translated into Spanish, notarised, and registered as described above. If executed abroad, agreements must be apostilled.

The financing agreement only needs to be translated if it will be enforced pursuant to local laws.

Arbitration awards

How are international arbitration contractual provisions and awards recognised by local courts? Is the jurisdiction a member of the ICSID Convention or other prominent dispute resolution conventions? Are any types of disputes not arbitrable? Are any types of disputes subject to automatic domestic arbitration?

The Dominican Republic has been a member of the 1958 New York Convention on the Recognition and Enforcement of Arbitral Awards since 2001. Also, the country has been a signatory since 2008 to the Inter-American Convention for International Commercial Arbitration. Local courts are bound to recognise arbitration agreements as well as the mandatory referral of disputes relating to these agreements to arbitration.

According to arbitration law, Law 489-08, matters of public order cannot be judged in arbitration, and matters that cannot be part of a private settlement cannot be entered into arbitration. In this sense, we include cases about family law (eg, divorce, child support, alimony), foreclosure procedures, land litigation (related to the matters of the Land Law), criminal cases, etc.

According to Law 489-08, judicial enforcement of foreign arbitral awards is subject to a court order (an exequatur), issued by local courts. The main requirements for the Dominican courts to grant an exequatur are that the legal requirements in the country of origin have been correctly applied and that the ruling has been authenticated, apostilled and has complied with the formalities required by the law of origin.

Law governing agreements

Which jurisdiction’s law typically governs project agreements? Which jurisdiction’s law typically governs financing agreements? Which matters are governed by domestic law?

As a result of the principle of contractual freedom, and according to Law 544-14, foreign law may be chosen as the applicable law to an agreement to the extent that such a choice of law is not contrary to public policy. New York law and the laws of England and Wales are frequently chosen for finance agreements. As for matters governed by domestic law, securities involving real estate assets and movable assets (chattel mortgages) located in the Dominican Republic are subject to Dominican law as a matter of public policy order, although overlying credits agreements can be subject to foreign law.

Submission to foreign jurisdiction

Is a submission to a foreign jurisdiction and a waiver of immunity effective and enforceable?

Yes. However, judgments from foreign jurisdictions are not enforceable in the country until the Civil and Commercial Chamber of the National District’s Court of First Instance authorises their validity and enforceability in the Dominican Republic via the exequatur. See question 22.

Environmental, health and safety laws

Applicable regulations

What laws or regulations apply to typical project sectors? What regulatory bodies administer those laws?

Project sector

Law

Regulatory body

Banking

Law 183-02, the Monetary and Financial Law.

Superintendency of Banks.

Monetary Board.

Central Bank.

Trusts/Fiduciaries

Stock exchange

Law 189-11, related to the development of the mortgage market and trust.

Law 249-17 of Stock Market of the Dominican Republic.

Bureau of Internal Revenue.

Superintendency of Stock Exchange.

Superintendency of Banks.

Mineral extraction, oil and gas

Law 64-00 on the Environment and Natural Resources.

Law No. 146-71, related to the regulation of mining activities.

Law No. 100-13, which creates the Ministry of Energy and Mines.

Ministry of Energy and Mines.

Water

Law No. 5994-62 and the Regulation for its application.

Law No. 5852.

Law No. 238-62.

Law No. 5994-62, which creates INAPA.

Ministry of Environment and Natural Resources.

Ministry of Public Health.

National Institute of Potable Water.

National Institute of Water Resources.

Electricity (generation, distribution and transmission)

Law 125-01 and the Regulation for its application.

Ministry of Energy and Mines.

Superintendency of Electricity.

National Energy Commission.

CDEEE.

Ports

Law No. 70, dated

16 December 1970.

Regulation No. 1673-80 related to Port Services.

Regulation No. 309-98 related to Port Concessions.

Port Authority.

National Civil Aviation Institute.

Dominican Navy.

Dominican Customs.

Telecommunications

General Telecommunications Law 153-98 and the Regulation for its application.

National Institute of Telecommunications.

Tourism (hospitality)

Law 84-79, that creates the Ministry of Tourism (SECTUR).

General Tourism Law No. 541-69.

Law 158-01 on Promotion of Tourism Development.

Law 64-00 on the Environment and Natural Resources.

Ministry of Environment and Natural Resources.

Insurance

Law 146-02, the Insurance Law.

Insurance Superintendency.

Project companies

Principal business structures

What are the principal business structures of project companies? What are the principal sources of financing available to project companies?

Under certain regulated sectors, such as telecommunications and insurance, the project company needs to be organised under the laws of the Dominican Republic, even though in most cases there are no limits or restrictions as to its shareholders’ nationality.

Subject to certain limitations, the same applies when the project is state-owned. Pursuant to local law, a percentage of the company’s equity must be held by a local investor in state-owned projects. The typical form of a project company is a sociedad anónima (joint-stock corporation), which is, among other corporate vehicles, the entity that requires a more strict corporate governance, and which brings a perception of safety to both the lenders and the sponsors.

Local and foreign financial institutions are the principal sources of financing available to project companies.

Public-private partnership legislation

Applicable legislation

Has PPP-enabling legislation been enacted and, if so, at what level of government and is the legislation industry-specific?

No, the Public Private Partnership bill is still in Congress pending approval.

PPP - limitations

Legal limitations

What, if any, are the practical and legal limitations on PPP transactions?

Most of the limitations derive from the state’s ability to fulfil its obligations or delegate functions, which, under the Dominican Constitution, are subject to congressional approval.

PPP - transactions

Significant transactions

What have been the most significant PPP transactions completed to date in your jurisdiction?

The Dominican Republic does not have a law to regulate PPP. There is a project in Congress currently pending approval. In this sense, what the Dominican Republic has developed are concessions and public-private companies in some sectors.

One relevant example is the oil refinery, which is a 51 per cent state-owned corporation. Other state-owned corporations in the energy sector involve energy generation, road construction and management, maritime port and airports. Also, Ciudad Juan Bosch, a real estate development of more than 12,000 homes, in which the government has contributed land and infrastructure and the private sector is developing low-cost homes for the low-income families in the Santo Domingo area.

UPDATE & TRENDS

Recent developments

In addition to the above, are there any emerging trends or ‘hot topics’ in project finance in your jurisdiction?

Key developments of the past year30 In addition to the above, are there any emerging trends or ‘hot topics’ in project finance in your jurisdiction?

Since the enactment of Law 249-17 on securities and the stock market, many funds have been created to invest in real estate developments in the city of Santo Domingo and the Punta Cana area.