In general terms, all M&A transactions regarding Dominican entities are governed by the General Law on Companies and Individual Enterprises with Limited Liability No. 479-08, as amended, enacted on 11 December 2008, with the main goal of modernising and updating the existing legislation on corporate matters. Naturally, if the company in question belongs to and operates in a regulated sector, such as telecommunications, banking, energy, for example, certain special laws and regulations will apply to the M&A in question.
As key laws, and not exclusively applicable to technology M&A transactions, it is important to mention first Law No. 172-13 on Protection of Personal Data (Law No. 172-13), which came into full force in the Dominican Republic to protect the personal data of individuals in the country, as well as to regulate the establishment, operation and termination of the Credit Information Companies (SIC), previously known as Credit Bureaus, and the provision of credit reference services and supplying information to the market. This law applies to personal data recorded in any database that is used for processing and any type of subsequent use of such in the public and private spheres. Law No. 172-13 updates and improves the former legal regime, while granting greater protection to personal data, and safeguarding the Right to Privacy and Personal Honour contained in article 44 of the Dominican Constitution.
The public or private archives, registers or databases, destined to provide credit reports are subject to the inspection and supervision of the Superintendency of Banks. The provision of services involving the collection, processing and exchange of information on the credit history of a natural or legal person, provided that such information comes from the financial entities regulated by the Monetary and Financial Law, and economic agents, as well as any other information deemed useful for the development of an efficient credit report, such as those of a public nature, will only be carried out by the SICs that obtain prior authorisation from the Monetary Board. The application to operate as an SIC will be filed before the Superintendency of Banks, which will process the application and attach its opinion to the Monetary Board. Law No. 172-13 on the Protection of Personal Data only regulates the International Data Movement with foreign governments, international organisations or supranational bodies, requiring the consent of the owner of the data.
In addition, Law No. 20-00 on Industrial Property, as amended, enacted on 8 May 2000, jointly with the Dominican Copyright Law No. 65-00, enacted on 26 July 2000, are legal instruments of utmost importance for technology M&A.
Law No. 20-00 on Industrial Property provides the legal framework for the registration of patents and industrial property rights. The government agency responsible for granting patents and registering industrial property rights is the National Office of Industrial Property (ONAPI), which is under the Ministry of Industry and Trade.
On the other hand, the main objective of the Dominican copyright law is to provide a legal and institutional framework in accordance with the provisions of the Aspects of Intellectual Property Rights Agreement related to Commerce (TRIPS), which allows for the effective protection of copyrights in the Dominican Republic, taking into account the national interest. The National Copyright Office (ONDA), ascribed to the Ministry of Industry and Commerce, is the national authority in charge of the registration and organisation of the applications-related copyright. For these purposes, the law has granted administrative, supervisory and arbitral powers. Its supervisory activities are enforced by the obligation of any importer or distributor of commercial goods, services, and equipment with author or related rights to register the same.
Banking regulations may apply to fintech entities depending on the type of activities and operations performed, which have a very high technology component. The current situation regarding fintech in the Dominican Republic is not very different from the rest of Latin America. As evidence of this imminent development, on May 2018 the Dominican Association of Fintech Companies was incorporated, initially with 19 member companies, with the aim of promoting the growth of fintech finance in the country. To date, 55 fintech companies are affiliated with the Association; with more than 60 fintech companies are currently operating. Although there is no specific regulation for fintech companies in our jurisdiction, the Dominican Central Bank has already publicly stated that fintechs are a fintech are a ‘worldwide trend’ and proposing a regulation is part of the 2019 agenda as part of the Institutional Strategic Plan 2018-2021. The first steps have been taken. A special commission from the Inter-American Development Bank recently visited the country to explore and analyse our market to determine our ‘financial ecosystem’ and propose the guidelines of the regulation that is going to be drafted and proposed by the authorities. In the meantime, the management of the data and, in general terms, the operations of these companies must be in accordance with regulations currently in place, such as data protection, mentioned above, among others. If the operations qualify as financial intermediation; the Monetary and Financial Law No. 183-02, enacted on 3 December 2012, will apply. This law contains provisions regulating the monetary system for purposes of maintaining price stability and manage systemic risks; and, provisions that regulate the financial system, with the objectives of ensuring compliance with the conditions of liquidity, financial stability and management applicable to financial institutions and to achieve proper functioning of the system in a competitive, efficient and free-trade environment.
There are no particular government approvals required to technology M&A transactions, unless the target entity operates in a regulated sector.
Back to top