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Banking Regulations in the Dominican Republic

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General Information

The banking regulations in the Dominican Republic have certain key features that are worth noting. Here are some general information about the regulations:

  • No Reorganization or Automatic Stay: The Dominican Republic’s bankruptcy law does not provide for reorganization or an automatic stay on collection or foreclosure efforts by secured creditors.
  • Financial Institution Intervention: Financial institutions can be subject to intervention, dissolution, or liquidation by the Superintendency of Banks (SIB).

Ownership Restrictions and Implications

There are certain restrictions on ownership and implications that foreign investors should be aware of:

  • 30% Shareholding Interest: A 30% shareholding interest is considered a “relevant participation” and requires scrutiny from the SIB and the Monetary Board.
  • Foreign Direct Investment Restriction: Foreign direct investment in the banking system is restricted: a foreign investor cannot acquire more than 30% of a Dominican financial institution’s outstanding shares without prior approval from the Monetary Board.

Changes in Control

If there are changes in control, certain procedures must be followed:

  • Transfer of Controlling Interest: The transfer of a controlling interest in a bank requires approval from the Monetary Board.
  • Holding of Financial Institution: The holding of a financial institution is subject to the provisions of the Law on Corporations of the Dominican Republic.
  • Tax Treatment: Controlling entities or individuals are subject to tax treatment similar to other individuals not related to financial institutions.

Acquisition of Control

If an investor wants to acquire control, they must follow these procedures:

  • Significant Participation (30% or more): A significant participation (30% or more) requires approval from the Monetary Board.
  • Regulatory Process: The regulatory process may take longer for foreign acquirers, requiring translations, certifications of good conduct, and documentation evidencing the origin of capital.