M&A – Main differences between Share Deal and Asset Deal in the Dominican Republic

Practical Guide

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Dominican Rep

What are the main features of a share transfer agreement in the Dominican Republic?

  • The transfer of shares must be approved in a shareholders meeting. The requirements may vary depending on the type of company and its bylaws.
  • The law provides a right of first refusal over third-party buyers. 
  • In Limited Liability Companies (SRL) and Corporations (SA) the shareholders’ or partners’ liability is limited to their contributions only.
  • In other types of companies, the shareholders and partners are jointly and severally liable.

What are the main features of an asset transfer agreement in the Dominican Republic?

  • Assets can be transferred in the Dominican Republic either by a person or a company.
  • If the assets are owned or will be purchased by a company, it shall be approved by its shareholders or board of directors, depending on the type of company and its bylaws. 
  • All corporate documents shall be registered at the Mercantile Registry Department where the company is domiciled.
  • The licenses and authorizations for the acquisition of certain types of assets (investments, shares in the stock market, the environment, etc.) are not extended to the purchaser. 
  • All annotations, liens and encumbrances recorded on a real estate property or a movable asset (vehicle or vessel), will remain even after the transfer of the asset.

What is the process to transfer the shares of a company in the Dominican Republic?

  • For all types of companies, share transfer agreements must be registered with the competent Mercantile Registry Department and the Tax Administration in order to be enforceable on third parties. 
  • To formalize a share deal, it shall be approved by the shareholders, the list of shareholders must be modified, and the documents shall be registered with the competent Mercantile Registry Department and the Tax Administration, as above-mentioned.
  • The buyer is responsible for the shares acquired after the transaction. 
  • The law allows cash payments up to the amount of DOP 250,000 (approx. USD 4,300) to comply with the anti-money laundering laws and regulations.

What is the process to transfer the assets/business of a company in the Dominican Republic?

  • The transfer agreement shall be in writing and duly legalized before a public notary. If the agreement is signed out of the Dominican Republic, it shall be apostilled or legalized in the nearest Dominican Consulate. The parties can freely and reasonably agree to the price of the asset as long as it is not considered derisory.
  • The law allows cash payments up to the amount of DOP 1,000,000 (approx. USD 17,150) for real estate transactions and up to DOP 500,000 (approx. USD 8,500) for vehicles, to comply with the anti-money laundering laws and regulation.
  • For real estate transactions, the transfer agreement and other documentation shall be registered with the competent Title Registry of the Land Jurisdiction, for title deed issuance.
  • For vehicles transaction, the transfer agreement shall be registered with the Tax Administration, for license issuance.
  • Same with vessels with the Port Authority in the Navy and aircrafts with the National Institution of Civil Aviation (IDAC). The advertising and registration requirements for these types of assets on regulated entities may vary. 
  • The transfer of real property, without penalties, shall take place within six (6) months from the date of the sale; and within three (3) months for the transfer of vehicles.

What are the transfer taxes for a share deal in the Dominican Republic?

  • If the share deal generates capital gain, the collectable tax is set at 27%.

What are the transfer taxes for an asset deal in the Dominican Republic?

  • Real estate transfer tax is 3% of the value of the property, which is obtained from the higher value between the contract price and the value recorded by the Tax Administration 
  • Vehicle transfer tax is 2% of its value.
  • If the asset deal generates capital gain, the collectable tax is set at27%.
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