DOMINICAN REPUBLIC

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Content last updated: 25-02-2021

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  • Merger Control Regime
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  • Merger Filing

1. Supranationality

1.1 Membership of Supranational Organization

1.1.1 Is the jurisdiction a member of/party to a supranational jurisdiction?

No.

1.1.2 Is the jurisdiction itself a supranational jurisdiction?

No.

1.1.3 If the answer to Section 1.1.1 and/or 1.1.2 above is in the affirmative, what are the implications hereof?

Not applicable.

2. Nature of merger control regime

2.1 Mandatory or voluntary

2.1.1 Is filing mandatory or voluntary?

Filing is mandatory.

2.2 Suspensory effect

2.2.1 Must completion of the transaction await clearance by the relevant authorities?

There is no general merger control regime in the Dominican Republic that refers to the possibility of the government influencing or restricting the completion of business combinations or acquisitions other than for reasons of national security.

However, there are some sector-specific rules:

- The authorization of the monetary board is required in cases of mergers and acquisitions involving financial entities whenever the acquisition represents a percentage equal or greater than 30% of the paid-up capital. Authorization is required as well as in the event of transfer of all or a substantial part of the assets and liabilities of financial intermediation entities.

- Prior approval from the Dominican institute of telecommunications (INDOTEL) is required for all mergers or acquisitions involving telecommunications companies regardless of the amounts or equity share involved; no specific thresholds apply.

- Mergers and acquisitions of energy generation companies are controlled and supervised by the Electricity superintendence, who must approve such mergers and acquisitions.

-  Insurers and reinsurers may merge with prior authorization from the Superintendence of Insurance. Likewise, authorization from the Superintendence of Insurance is required for the acquisition of all or part of an insurer or reinsurer client portfolio.

1. What type of transactions are caught by the merger control regime?

1.1 Concentrations

1.1.1 Type of transactions that are caught by the merger control rules?

There is no general merger control regime in the Dominican Republic that refers to the possibility of the government influencing or restricting the completion of business combinations or acquisitions other than for reasons of national security.

However, there are some sector-specific rules. For more information, please see Section 2.4.1 below.

Generally, transactions in regulated industries are caught by the merger control rules if they result in the merger of two or more previously independent undertakings or parts of undertakings; or the acquisition by one undertaking of all the assets of another undertaking.

Likewise, authorization from the competent authorities in the case of regulated sectors such as telecommunications, energy and insurance is required for share acquisitions. 

In the insurance sector, all share acquisitions require the approval of the regulator.

On the other hand, In the energy and telecommunications sector, authorization for share acquisitions is only required when such acquisition implies the transfer of the control of the company.

1.2 Joint ventures

1.2.1 What types of joint ventures are caught by the merger control rules?

Joint ventures are not subject to merger control in the Dominican Republic. 

1.3 Definition of "control"

1.3.1 How are the concepts of "control" and "change of control" defined?

The information in this Section applies only to regulated sectors. Please see Section 2.4.1 below for more information.

Control is defined as the possibility of exercising decisive influence on an undertaking by rights, contracts or any other means, either separately or in combination, and having regard to the considerations of fact or law involved.

It has to be decided on the facts in each case, whether there is a possibility of exercising decisive influence over an undertaking. Decisive influence can be de jure in the form of acquisition of the majority of the voting rights or through special rights or contracts or any other means that grants direct or indirect control over an undertaking or its assets.

Only transactions that bring a lasting "change of control" to the undertakings concerned and in the structure of the market are covered by the sector-specific merger control rules.

1.4 Minority shareholdings

1.4.1 Are minority and other interests less than control caught by the merger control rules?

Acquisitions of minority or other interests usually do not fall within the Dominican merger control rules, however, in the insurance sector, all share acquisitions require the approval of the regulator.

2. Establishing jurisdiction for notification of mergers

2.1 Merging parties/undertakings concerned

2.1.1 Which undertakings are considered parties to the merger ("undertakings concerned") in the various types of transactions identified under Section 1.1.1 and 1.2.1.

Each of the merging entities are considered parties to the merger.

In the case of an acquisition, each of the parties involved (the seller, the acquirer, and the target) are considered part of the transaction. 

2.2 Date for establishing jurisdiction

2.2.1 Which date is relevant for concluding whether the transaction is notifiable?

Not applicable.

2.3 General thresholds

2.3.1 Threshold(s) for when a concentration must be notified under the general merger control regime?

There is no general merger control regime in the Dominican Republic that refers to the possibility of the government influencing or restricting the completion of business combinations or acquisitions other than for reasons of national security.

2.3.2 For each threshold, can the threshold be triggered by only one undertaking having local turnover?

Not applicable.

2.3.3 For each threshold, can the threshold be triggered without any undertaking having local turnover?

Not applicable.

2.3.4 Are there any circumstances where transactions falling below these thresholds may be still investigated?

Not applicable.

2.4 Other national thresholds for ex ante merger control (e.g. sector-specific rules)

2.4.1 Relevant thresholds for sector-specific or other ex ante merger control rules?

The authorization of the monetary board is required in cases of mergers and acquisitions involving financial entities whenever the acquisition represents a percentage equal or greater than 30% of the paid-up capital. Authorization is required as well as in the event of transfer of all or a substantial part of the assets and liabilities of financial intermediation entities.

Prior approval from the Dominican institute of telecommunications (INDOTEL) is required for all mergers or acquisitions involving telecommunications companies regardless of the amounts or equity share involved; no specific thresholds apply.

Mergers and acquisitions of energy generation companies are controlled and supervised by the Electricity superintendence, who must approve said mergers and acquisitions.

Insurers and reinsurers may merge with prior authorization from the Superintendence of Insurance. Likewise, authorization from the Superintendence of Insurance is required for the acquisition of all or part of an insurer or reinsurer client portfolio.

All contracts regarding mining transactions, including the transfer of mining rights, must be registered at the Public Registry of Mining Rights.

2.4.2 Are any such schemes mandatory or voluntary?

Mandatory.

2.5 Foreign-to-foreign mergers

2.5.1 Do any exemptions, special thresholds etc. apply to foreign-to-foreign mergers, i.e. where none of the undertakings concerned is domiciled in the jurisdiction?

Not applicable.

3. Calculation and allocation of turnover, asset value, transaction value etc.

3.1 Relevant turnover

3.1.1 How is turnover defined (e.g. is income from other sources than "ordinary activities to be included, and how are rebates, taxes, internal turnover etc. treated)?

Not applicable.

3.1.2 Identification and link to any official rules, guidance etc. on how to calculate turnover?

Article 268 of the Dominican tax code can be found on:

https://dgii.gov.do/legislacion/leyesTributarias/Documents/Codigo%20Tributario%20y%20Leyes%20que%20lo%20modifican%20y%20complementan/11-92.pdf

3.2 Relevant period for calculation of turnover

3.2.1 Which financial year(s) is relevant for the calculation of turnover?

Not applicable.

3.2.2 Should adjustments be made for e.g. divestitures, acquisitions, closings and other changes of the economic reality of the undertaking concerned made after or during the relevant financial year?

The law does not refer to adjustments in any way.

3.3 Relevant undertakings for the calculation of turnover

3.3.1 The undertakings whose turnover is taken into account?

Not applicable.

3.3.2 Shall the turnover of the existing seller be included in the target's group turnover?

Not applicable.

3.4 Geographical allocation of turnover

3.4.1 The principles for the geographical allocation of turnover?

Not applicable.

3.5 Valuation and allocation of assets

3.5.1 The principles for valuation and allocation of assets?

Not applicable.

3.6 Calculation of other thresholds

3.6.1 The principles for calculation of metrics for other thresholds (e.g. transaction value, market share, share of supply etc.)?

Not applicable.

3.7 Special rules

3.7.1 Do any special rules or principles apply to the calculation, allocation etc. of turnover, assets etc. for specific undertakings (e.g. State-owned undertakings, investment funds, credit and financial institutions, insurance companies, financial holding companies, others)?

Not applicable.

3.7.2 Does any exemptions apply?

Not applicable.

3.8 Currency conversion

3.8.1 The exchange rate applied and applicable exchange rate date for conversion of the value of turnover and assets of undertakings in other jurisdictions?

Not applicable.

1. Practical information

1.1 Responsibility for filing

1.1.1 The parties responsible for filing?

In case of acquisition, the acquirer is responsible for filing.

In case of a merger creating a new undertaking, both entities are responsible for filing.

1.2 Deadlines for filing

1.2.1 Are there any mandatory deadlines for filing, and, if so, how these are calculated?

Within 30 days of signing an M&A agreement, the parties must file the agreement at the Mercantile Registry and publish an extract or summary of the agreement in a national newspaper. If the companies are public companies, the agreement must also be filed at the SEC, along with an affidavit signed by the representatives of the companies expressing that the content of the agreement abides by the law. Once the SEC has reviewed and approved the agreement, it will publish its resolution in a national newspaper.

1.2.2 Are there any sanctions for not filing within the deadlines?

There are no sanctions established in the law, however, the Mercantile Registry could reject the registration for this reason.

1.2.3 What are the sanctions for not filing a notifiable transaction?

The transaction will be considered void and with no legal effects.

1.3 Early filing

1.3.1 Is it possible to file before the signing of merger agreement?

It is not possible to file before signing the merger agreement or project. 

1.4 Filing fees

1.4.1 Are there any fees for filing, and, if so, please describe how such fees are calculated?

Filings at the Mercantile Registry, Dominican Tax Authority and the SEC are required. There are fees to be paid at the Mercantile Registry which are calculated based on the capital of the company resulting of the transaction. Moreover, stock, assets and real property transfer taxes will apply, which must be paid to the Internal Revenue Department. Withholding taxes may also be imposed, depending on the nationality of the seller.

1.4.2 When must the filing fee must be paid?

Filing fee must be paid upon filing. 

1.5 Publicity

1.5.1 When and in which format will the authority publish receiving a notification?

The authorities do not publish a receipt of notification. However, in the case of a merger involving a telecommunication company, if the request is preliminarily accepted by the INDOTEL, the applicant must publish an extract of the request drafted by INDOTEL in a national newspaper within 7 days following INDOTEL notification of the preliminary approval.

1.5.2 How will the authority in general handle the case publicly, e.g. will it usually comment in the media, send out press releases etc.?

In the case of public listed companies, the SEC publishes its resolution in a national newspaper and its webpage once it has reviewed and approved the merger agreement.

In the case of insurance or reinsurance companies merging between them, the Superintendence of Insurance will publish the approval of the merger in a national newspaper.

1.5.3 Will third parties be able to review the notification?

Only if the merger involves a public listed company or an insurance company.

2. Procedure and timing

2.1 Normal and simplified procedures

2.1.1. Does the regime allow for a simplified (fast track) procedure, and, if so, what are the criteria for using the simplified procedure?

No.

2.2 Procedural stages (cf. timetable below)

2.2.1 The various stages of (i) a simplified procedure and (ii) a normal procedure?

The procedure varies within each regulated sector, as follows:

Insurance companies:

For share acquisitions the parties must file an authorization request before the Superintendence of Insurance, which must render a decision within 45 days. After this term, if the parties have not received a response it will be considered as a non-objection and the parties will be able to proceed with the acquisition.

For mergers between insurance or reinsurance companies, the Superintendence of Insurance will render a decision between 30 days. If there is an approval, a publication in a national newspaper will follow. If there is not an approval, observations will be made and after 10 days the Superintendence will definitely rule on the cession of the client portfolio and then within 30 days on the cession of assets and liabilities, after verifying that all observations were accepted and performed by the applicants.

Telecommunications:

Within 20 calendar days after submitting an authorization request, the INDOTEL will notify the applicant that either a) the request is inadmissible; b) the information in the request is incomplete, incorrect or deficient; or c) that the request is admissible.

In the event that the authorization request is incomplete or incorrect, the parties will have 15 calendar days to present their amendments or corrections. Within 15 days after such amendments or corrections being filed, the INDOTEL will render and notify its decision. If the request is approved, the application will publish an extract of the request drafter by the INDOTEL in a national newspaper within 7 days following the INDOTEL notification. Any interested parties could file their observations or objections within 15 days of the publication. The applicant should reply to such observations or objections within 10 days after the INDOTEL notifies them. After this term, the INDOTEL will render a decision within 45 calendar days. If the authorization its granted, the parties will have 90 calendar days after the notification of the resolution to complete the operation and then 10 calendar days to notify the completion of the authorized operation. If such notification is not made, the authorization will be revoked, unless there is a justified cause.

Energy sector:

The authorization request should be filed with the Superintendence of Electricity, which must approve or reject the petition within 30 business days.

2.2.2 Is pre-notification contact with the relevant authorities customary/obligatory/encouraged/etc.?

Pre-notification contact is not required, nor is it customary.

2.2.3 Are there any sanctions for not complying with the deadlines for each Phase or as set by the local authorities?

Not applicable.

2.3 Timetable (cf. timetable below)

2.3.1 The statutory timetable/deadlines for review of a notification?

Not applicable for sector specific schemes, please see Section 2.2.1 above.

2.3.2 Can the statutory timetable/deadlines be suspended ("stop-the-clock"), and if so under which conditions?

No.

2.3.3 If pre-notification with the relevant authorities contact is possible/customary, how long will the duration of such contact usually be?

Not applicable. 

3. Format and content of notification

3.1 Notification forms

3.1.1 Must the notifying parties use any mandatory notification forms, e.g. for simplified and normal procedures, and, if relevant, add a link to the relevant forms?

No.

3.2 Supporting documentation

3.2.1 List of the supporting documentation which must as a minimum be submitted along with the notification?

Not applicable. Depends on each sector.

3.3 Originals, legalization and apostillation (cf. checklist below)

3.3.1 List of all documents which must be submitted in original/legalized versions and whether any documents must be apostilled?

The original transaction agreement must be filed legalized by a notary.

The minutes of the general meeting’s approval of the transaction must be filed in original along with the original newspaper publication containing the notification made to the shareholders to participate in the general meeting, whenever it is not evidenced in the documents the participation of all the shareholders.

Original of the merger commissioner report.

Only in the case that one or more of the merger participants are foreign undertakings, corporate documents (articles of incorporation, certificate of incorporation, certificate of good standing, and certification of incumbency or equivalent whenever applicable depending on the jurisdiction of the undertaking) must be filed in original and apostilled.

3.3.2 If the merger regime has a mandatory filing deadline, must all the documents identified under Section 3.3.1 be submitted within this deadline?

Yes.

3.4 Language

3.4.1 Which languages may be used for drafting and filing a notification?

Spanish.

3.4.2 Does translations have to be certified/legalized and apostilled?

Yes. 

This content was delivered
and last updated 25-02-2021 by
Fabio J. Guzmán Saladín, Partner and co-chair corporate and insolvency practices
CONTACT DETAILS:
Alfredo A. Guzmán Saladín, Partner and co-chair corporate and real estate practices
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Guzmán Ariza has provided all input about merger control in the Dominican Republic.

Guzmán Ariza is one of the leading law firms in the Dominican Republic, recognized as a top-tier firm by Chambers and Partners, The Legal 500, and IFLR. The firm's M&A and regulatory departments are well known for assisting clients with their transactions in the Dominican Republic market, the largest in the Caribbean and Central America. 

Our firm is full-service. With eight offices strategically located, we provide legal advice and support in areas such as mergers and acquisitions, capital markets, real estate, project finance, including litigation, arbitration, and a country-pioneering practice in insolvency and bankruptcy proceedings.   

Our attorneys provide in-depth M&A deal coverage, from initial structuring through due diligence and documentation to closing and post-closing integration, across numerous industries. 

We provide our clients with privileged access to top-tier law firms in most countries, allowing us to be at the forefront of best practices and global trends in legal services.   

Guzmán Ariza’s multilingual antitrust and competition team jointly with our regulatory department helps navigate the merger control and assessment process, highlighting the risks and opportunities to our clients, especially in regulated industries.  

For more information about Guzmán Ariza and merger control in the Dominican Republic, please contact our Partners directly.