do business in the Dominican Republic - Pellerano & Herrera

Pellerano & HerreraAttorneys at law25tion.This principle is first expressed in the elimination, for the purposes of thelaw, of all prohibitions and restrictions established before to foreign investmentin many economic sectors, such as public service enterprises, mining, banking,insurance, transport, etc.In line with this principle, Law 16-95 abolished Article 12 of Law 173 of 1966 onthe Protection of Agents and Licensees, thus allowing foreign persons and companiesto register under such law as agents or representatives of foreign firms,and benefit from the protection granted to the local agent in the event of unjusttermination of its agreement by the foreign company. Before only persons orcompanies that complied with certain nationality or residence requirements hadthe right to receive the protection granted by Law 173.This concept has guided legal amendments already approved or in process, suchas the elimination of the requirements for the purchase of real property by foreigners,and the opening up of the banking sector to foreign capital establishedin the Monetary and Financial Law.The only restrictions result from the establishment of certain areas where foreigninvestment is prohibited:(i) disposal of toxic or radioactive waste non generated in the country,(ii) activities affecting public health and the environment, and(iii) production of equipment and materials directly related to national defense,unless the approval of the President of the Republic has been obtained.b) Definition of Foreign InvestmentThe foreign investment that can benefit from the provisions of Law 16-95 is largelydefined as “any contribution coming from abroad,belonging to foreign personsor companies, or to Dominican persons residing abroad, to the capital of a companyoperating locally”.According to Article 2 foreign investment can take the form of:1. Capital contributions;2. In-kind contributions;3. Intangible technological contributions, such as trademarks, product models,industrial procedures, technical assistance and others, and;4. Financial instruments issued and traded abroad that have been authorized bythe Monetary Board. Under the previous law only capital and in-kind contributionswere allowed.Pursuant to Article 3, foreign investment can be destined to:1. The capital of any type of business association, including branches of foreigncompanies;2. The purchase of real property, and;3. The acquisition of shares or other financial instruments authorized by theMonetary Board. The previous law allowed only limited liability companiesincorporated in the Dominican Republic to be the target of foreign investment.Finally, as to the sector where the investment is made, all previous restrictions,which prohibited foreign investment in certain areas and limited it in others,