do business in the Dominican Republic - Pellerano & Herrera

DOING BUSINESS INTHE DOMINICAN REPUBLICSavings and Loans Associations. Which are mutual entities without corporatestructure.Savings and Credit Cooperatives. Which do not have either a corporate structureand shall be subject to regulation and supervision in accordance with therelevant regulations of the Monetary Board.Law 183-02 describes in detail in Articles 40, 42 and 43 the transactions and servicesthat Multiple Banks, Savings and Credit Banks and Credit Corporations mayrespectively carry out.c) Foreign Banks. Law 183-02 liberalizes banking services by granting equaltreatment to foreign financial entities. It provides the guidelines to regulate theadmission of such entities, setting forth the types of foreign investment participationin national financial activities, which may take the form of (i) purchase ofstock in existing Multiple Banks and Credit Entities, (ii) incorporation of financialentities of a corporate nature, (iii) subsidiaries, or (iv) establishments of branches(Article 39).Furthermore, foreign banks not having a legal seat in the country may still createrepresentative offices within the national territory according to the regulations,although these may not undertake activities of financial intermediation.80d) Regulatory Norms.The legal regime grants particular attention to the descriptionof minimum requirements of establishment and operation that enable toensure a proper management of deposits and the adequacy of capital. Some ofthe rules provided for such purposes are the following.The establishment of financial entities shall be subject to the approval of theMonetary Board, prior opinion of the Superintendence of Banks. Multiple Banksand Credit Entities shall be formed as limited liability companies, and must havea minimum paid-up capital of 90 million pesos for Multiple Banks, 18 millionpesos for Savings and Credit Banks and five million pesos for CreditCorporations.The paid-up capital must be entirely paid in cash.Regarding equity exposure of Multiple Banks,these may invest up to (i) 20% of theirpaid-up capital in entities providing supporting or related services, as statutorilydefined, including those undertaking operations of debt-collection, factoring, leasing,creditcards,foreign exchange,stock exchange,etc.,(ii) 10% of their paid-up capitalin non-financial entities,but these investment may not amount to more than 10%of the paid-up capital of the receiving company, and (iii) 20% of their paid-up capitalin opening branches or agencies abroad, as well as foreign financial entities.In addition, the law lists the operations that for preventive reasons are subject toprior authorization (Article 44) or prohibited (Article 45), whether for not beingrelated to banking business or for being a threat to the interest of depositors.Among prohibited operations we find the following:To finance the purchase of stock or titles issued by related companies.To purchase their own stock or accept it as collateral.To purchase real estate that is not necessary for their operations.