In the Dominican Republic, to legally dissolve and liquidate a commercial company, a process must be carried out to formally close the company. This process must be conducted before all the governmental institutions where the company is registered, primarily the General Directorate of Internal Taxes (DGII) and the Chamber of Commerce to which it belongs.
One of the objectives of this procedure is to distribute the company’s assets equitably among the partners and shareholders. This process also allows for notifying all interested parties about the definitive closure of the company’s activities.
In this article, we will outline the main causes for dissolving a commercial company in the Dominican Republic.
How is a Company Dissolved?
To dissolve a commercial company in the Dominican Republic, an Extraordinary General Assembly must be held to indicate the definitive closure of the company.
The first phase to definitively close a company is to dissolve its Mercantile Registry, a procedure that must be carried out before the corresponding Chamber of Commerce and Production.
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How to Liquidate a Company?
The Chamber of Commerce and Production certifies the dissolution of the company and proceeds to issue it to the General Directorate of Internal Taxes (DGII) to request the liquidation of the company.
Liquidation must be carried out following the dissolution. When a company is liquidated, it is freed from all tax obligations; however, fiscal responsibilities must be fulfilled.
The process of liquidation and dissolution of a company can take between two to three months, during which no commercial activity can be conducted.
What are the Causes for the Dissolution of a Company?
In addition to the termination of a project, Dominican legislation provides for the main causes of company liquidation, as established by the General Law on Commercial Companies and Limited Liability Individual Enterprises No. 479-08.
Limited Liability Company (LLC):
- Fulfillment of the term fixed in the bylaws.
- By resolution of the extraordinary general assembly.
- Due to inactivity for 3 consecutive years.
- Due to losses that reduce the net worth to less than half of the share capital.
- For any other cause stated in the bylaws.
Corporation (S.A):
- By decision of the extraordinary general assembly.
- Fulfillment of the term fixed in the bylaws.
- Manifest impossibility of the company to achieve its corporate purpose, making its operation impossible.
- Due to losses that reduce the net worth to less than half of the subscribed share capital.
- Due to a reduction of the share capital below the legal minimum.
- Due to total merger or demerger of the company.
- Due to a reduction in the number of shareholders to less than 2 for a period of one year.
- For any other cause stated in the bylaws.
Consequences of Dissolving a Commercial Company:
When a company is dissolved, it ceases to exist and its social activities come to an end.
Additionally, all its obligations cease, except those related to the total liquidation of the company.
When dissolving and liquidating a commercial company, it is important to know the causes and the correct procedure to carry out this process before the relevant institutions.
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