Law No. 163-21 on the Promotion of Placement and Commercialization of Public Offering Securities in the Securities Market of the Dominican Republic

_________________________________________________________________________ Law No. 163-21 on the Promotion of Placement and Commercialization of Public Offering Securities in the Securities Market of the Dominican Republic. Official Gazette No. 11029 of August 10, 2021.

THE NATIONAL CONGRESS
In the Name of the Republic

Law No. 163-21

Considering first: That as a result of the health crisis and the new global economic landscape generated by the COVID-19 pandemic, it is necessary to implement and promote instruments and tools that foster and incentivize greater participation of the private sector in economic recovery, diversify access to the capital market, and promote greater democratization of the opportunities generated by the securities market.

Considering second: That countries with large capital markets initially had direct incentives, both for companies issuing shares and for investors investing in shares, many of which are still maintained in solid, mature, and developed economies.

Considering third: That the promotion of capital markets allows companies to access new sources of income, generate a culture of transparency, and at the same time democratize the distribution of income of large commercial companies, by allowing small investors to be part of their growth.

Considering fourth: That to achieve this growth, the collection and investment of resources must be promoted through the placement and commercialization of public offering equity securities through stock exchanges, for which it is necessary to incentivize and promote the participation of a greater number of companies and investors in this type of transaction, which contributes to the strengthening and growth of the country's economy.

Considering fifth: That Law No. 249-17, of December 19, 2017, of the Securities Market of the Dominican Republic, was approved with the purpose of developing and promoting the organization, efficiency, and transparency in the securities market, with a view to consolidating the protection of the rights of the investing public, reducing systemic risk, promoting fair competition, and safeguarding confidence in the securities market of the Dominican Republic.

Considering sixth: That it is in the interest of the Dominican State that the resources channeled through the securities market of the Dominican Republic expand their reach exponentially in the financing of productive and development activities in various sectors of the country.

_________________________________________________________________________ Considering seventh: That to achieve these objectives, it is necessary to create mechanisms that allow the tax regime applicable to the issuance of shares commercialized in the public offering securities market to be consistent with the characteristics of said market and its functioning.

Considering eighth: That corporate governance provides the structure through which the relationship between the company's management, its board of directors, its shareholders, and other stakeholders is established.

Considering ninth: That issuers of public offering securities, being entities that seek their growth and financing through this market with the issuance of securities, do not constitute exclusive societies of the securities market; therefore, it is necessary to grant a differentiated regulatory treatment temporarily, which allows their adaptation to the current corporate governance regime for participants in the securities market.

Considering tenth: That it is convenient to grant the aforementioned regulatory treatment, which allows the adaptation of potential share issuers to the corporate governance regime and orients the company's culture towards the development of regulated and supervised sectoral activities, to achieve greater promotion of the securities market.

Considering eleventh: That the National Congress has the competence to create or suppress taxes, as well as establish special tax regimes in order to attract investment of new capitals for the promotion of the national economy.

Considering twelfth: That the securities market of the Dominican Republic has experienced significant progress in recent years, mostly in debt instruments, without negotiating capital-representative instruments, due, above all, to the scarce stock market culture, the family share concentration, and the short-term culture of savers; therefore, it is necessary to identify actions aimed at incentivizing companies to use the stock market as a mechanism for financing investment projects that contribute to their growth.

Considering thirteenth: That at the time of the approval by the legislative chambers of Law No. 249-17, of November 19, 2017, it was improperly named as “Law Modifying Law No. 19-00, of the Securities Market of the Dominican Republic, of May 8, 2000”.

Considering fourteenth: That the title attributed to the new law leaves the erroneous impression that the law approved in the year 2000 is partially in force; however, the new law, Law No. 249-17, of November 19, 2017, provided for the express substitution and repeal of Law No. 19-00, of May 8, 2000, of the Securities Market of the Dominican Republic; consequently, it is necessary to provide for the correction of the title of Law No. 249-17, of November 19, 2017, and thus provide greater certainty and legal security to the operators and recipients of the norm.

_________________________________________________________________________ Viewing: The Constitution of the Republic.
Viewing: Law No. 11-92, of May 16, 1992, which approves the Tax Code of the Dominican Republic, and its modifications.
Viewing: Monetary and Financial Law No. 183-02, of November 21, 2002.
Viewing: Law No. 288-04, of September 28, 2004, on Fiscal Reform.
Viewing: General Law of Commercial Companies and Individual Limited Liability Enterprises No. 479-08, of December 11, 2008.
Viewing: Law No. 1-12, of January 25, 2012, which establishes the National Development Strategy 2030.
Viewing: Law No. 253-12, of November 9, 2012, on Strengthening the State's Revenue Capacity for Fiscal Sustainability and Sustainable Development.
Viewing: Law No. 249-17, of December 19, 2017, which modifies Law No. 19-00, of the Securities Market of the Dominican Republic, of May 8, 2000.
Viewing: Decree No. 664-12, of December 7, 2012, which approves the Implementation Regulation of the Securities Market Law.
Viewing: Single Resolution No. R-CNMV-2019-24-MV, of October 15, 2019, of the National Securities Council, which approves the Public Offering Regulation.
Viewing: The Certification of the First Resolution No. R-CNMV-2021-11-MV adopted by the National Securities Council on May 4, 2021, through which it takes note of the draft Law on the Promotion of Placement and Commercialization of Public Offering Securities in the Securities Market of the Dominican Republic, presented by the Superintendent of the Securities Market. Viewing: The First Resolution, of June 7, 2021, adopted by the Monetary Board, which approves the draft Law on the Promotion of Placement and Commercialization of Public Offering Securities in the Securities Market of the Dominican Republic. Viewing: General Norm No. 07-2011, of July 8, 2011, issued by the General Directorate of Internal Taxes (DGII), which designates as withholding agents the legal persons, societies, or companies that acquire shares or social quotas. Viewing: General Norm No. 01-2021, of February 2, 2021, issued by the General Directorate of Internal Taxes (DGII), for the promotion and tax optimization of the securities market.

_________________________________________________________________________ HAS ENACTED THE FOLLOWING LAW:

CHAPTER I
ON THE OBJECT, SCOPE OF APPLICATION, GENERAL INTEREST AND DEFINITIONS

Article 1.- Object. This law aims to promote the placement and commercialization of public offering securities in the Securities Market of the Dominican Republic.

Article 2.- Scope of application. This law applies throughout the national territory.

Article 3.- Declaration of national interest. The promotion and development of public offering of securities is declared of national interest, as a mechanism for financing investment projects, startups, and commercial companies to contribute to the dynamization of various sectors of the national economy.

Article 4.- Definitions. For the application of this law, the definitions contained in Article 3 of Law No. 249-17, of November 19, 2017, of the Securities Market of the Dominican Republic, and those established in Law No. 11-92, of May 16, 1992, which approves the Tax Code of the Dominican Republic, shall govern.

CHAPTER II
ON THE EXEMPTION FROM TAXES ON CAPITAL INCREASE, TAX WITHHOLDING, CAPITAL GAINS AND NEUTRAL EFFECT

Article 5.- Exemption from taxes on capital increase. The capital increase carried out by listed companies, through a public offering of shares, during the three years counted from the entry into force of this law, shall be exempt from tax.

Article 6.- Tax withholding. The amounts received or accrued by a seller of shares registered in the Securities Market Registry, which are subscribed or traded in the securities market and are part of a public offering, shall not be subject to any withholding for the concept of capital gains tax in such operations, and any capital gains that occur must be reported by the seller in their annual sworn tax return.

Paragraph.- For the purposes of facilitating the eventual audit of the operations established in this article, stock exchanges, stock markets, and centralized securities depositories shall be obligated to remit to the General Directorate of Internal Taxes (DGII) the information concerning operations involving the purchase and sale of shares, with the frequency and in the formats that it establishes.

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Article 7.- Capital gains tax rate. The rate of tax on capital gains for the seller of shares registered in the Securities Market Registry, which are subscribed or traded in the securities market and are part of a public offering, shall be fifteen percent (15%) exclusively for a period of three years, counted from the entry into force of this law.

Paragraph.- Once this period has elapsed, capital gains shall be taxed at the tax rate established by the current Tax Code.

Article 8.- Fiscal neutral effect. The income tax for the concept of capital gains shall be generated at the time of the sale of the shares, never while the shares remain in the hands of the same holder, regardless of the variations that may occur in their market value.

Paragraph.- This fiscal neutral effect shall apply to both shares registered and not registered in the Securities Market Registry.

CHAPTER III
ON THE SPECIAL LIABILITY REGIME

Article 9.- Special liability regime. Buyers of shares registered in the Securities Market Registry, which are subscribed or traded in the Securities Market and are part of a public offering, shall not be considered jointly and severally liable for the tax obligations of the seller nor of the listed issuing company.

Paragraph.- The special liability regime established in this article shall not apply to those shareholders who, directly or indirectly, participate in the administration of the commercial company subject to investment or exercise, directly or indirectly, control over the administration and management thereof as provided by Law No. 249-17, of December 19, 2017, of the Securities Market of the Dominican Republic, and its implementing regulations.

Article 10.- Corporate Governance. The National Securities Council shall have the competence to grant temporary differentiated regulatory treatments for compliance with the provisions contained in numeral 7) of Article 216; Article 217; numeral 3) of Article 219; Articles 224 and 225, and the paragraph of Article 226 of Law No. 249-17, of December 19, 2017, of the Securities Market of the Dominican Republic, by companies that request authorization and registration in the Securities Market Registry of a public offering of shares.

Paragraph.- The competencies granted to the National Securities Council may be exercised within a period of three years, counted from the entry into force of this law.

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Article 11.- Exercise of competencies. The National Securities Council may exercise ex officio, with general scope, the competence referred to in Article 10, or in a particular manner, when companies interested in obtaining said differentiated regulatory treatment submit their requests in writing, exposing the reasons motivating their request.

Paragraph I.- The Council shall issue the decision referred to in this article taking into consideration the effects or possible effects on the following aspects:
1) Protect the rights and interests of the investing public.
2) Minimize systemic risk.
3) Foster fair competition.
4) Preserve confidence in the securities market.
5) Ensure that the treatment granted is applied to companies that meet similar characteristics and conditions.

Paragraph II.- The differentiated regulatory treatment, which is granted in a particular manner, shall be requested prior to the registration of the shares in the Securities Market Registry and, if the request is accepted, the listed company shall disclose this information in the issuance prospectus.

Paragraph III.- The temporary differentiated regulatory treatment granted by the National Securities Council shall prescribe upon the expiration of a period of three years, counted from the entry into force of this law.

Paragraph IV.- Companies that have benefited from the differentiated regulatory treatment shall adapt to the Corporate Governance Regime contemplated in Law No. 249-17, of December 19, 2017, of the Securities Market of the Dominican Republic, within a maximum period of three years, counted from the entry into force of this law.

CHAPTER IV
ON FINAL PROVISIONS

Article 12.- Modification of Law No. 249-17, of the Securities Market of the Dominican Republic. Articles 330, in its Paragraph I, and Article 331 of Law No. 249-17, of December 19, 2017, are modified so that henceforth they shall read as follows:

_________________________________________________________________________ “Article 330.- Taxation of autonomous estates. The transfer of goods or assets for the formation of an autonomous estate shall not be subject to the Tax on Industrialized Goods and Services (ITBIS), nor to the real estate transfer tax.

Paragraph I: For the application of the exemption from the taxes indicated in the main part of this article, in the case of investment funds, it shall be considered that the formation of the estate comprises a period of three (3) years, counted from the first issuance of fund quotas in the Securities Market Registry for purposes of the Tax on Industrialized Goods and Services (ITBIS); likewise, a period of six (6) years, counted from the first issuance of fund quotas in the Securities Market Registry for purposes of the real estate transfer tax.

Paragraph II: The income obtained by the autonomous estate is not subject to the payment of income tax. However, the company that administers the autonomous estate or that which the Tax Administration establishes by general norm, shall withhold the income tax applied to the yields obtained by investors in said autonomous estate, according to the taxation rate provided by the Tax Code for capital incomes.

Paragraph III: The restitution or return of goods or assets that make up the autonomous estate, at the time of its extinction, shall not be subject, depending on the nature of the good or asset, to the capital gains tax, Tax on Industrialized Goods and Services (ITBIS), real estate transfer tax, tax on the issuance of checks and bank transfers, provided they are transferred to the beneficiaries of the autonomous estate.

Paragraph IV: The special tax regime established in this article only reaches the autonomous estate and not third parties who contract with the estate.”

“Article 331.- Tax on the issuance of checks and electronic transfers. The transfers of securities carried out by investors through checks or electronic transfers to subscribe or acquire securities registered in the Securities Market Registry, both for investments through collective investment vehicles and those made from or to bank or brokerage accounts of the same holder, are not subject to the payment of the tax on the issuance of checks and electronic transfers, by virtue of Article 382 of the Tax Code.”

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Article 13.- Modification of the title of Law No. 249-17, of December 19, 2017. The modification of the title of Law No. 249-17, of December 19, 2017, of Modification of Law No. 19-00, of the Securities Market of the Dominican Republic, of May 8, 2000, is provided so that it shall be read, understood, and cited henceforth as follows:
“Law No. 249-17, of December 19, 2017, of the Securities Market of the Dominican Republic, which repeals and substitutes Law No. 19-00, of May 8, 2000”.

Article 14.- Transitional. Period for the enjoyment of exemptions. Listed companies that adhere to the provisions of Articles 5 and 7 of this law shall enjoy the exemption regime for the period of time that remains in force until the end of the validity of the corresponding exemption.

Article 15.- Entry into force. This law enters into force after its promulgation and publication as established in the Constitution of the Republic and after the periods fixed in the Civil Code of the Dominican Republic have elapsed.

Given in the Session Room of the Chamber of Deputies, National Congress Palace, in Santo Domingo de Guzmán, National District, capital of the Dominican Republic, on the twenty-nine (29) days of the month of July of the year two thousand twenty-one (2021); years 178 of the Independence and 158 of the Restoration.

Alfredo Pacheco Osoria
President
Nelsa Shoraya Suárez Ariza Agustín Burgos Tejada Secretary Secretary

Given in the Session Room of the Senate, National Congress Palace, in Santo Domingo de Guzmán, National District, capital of the Dominican Republic, on the three (03) days of the month of August of the year two thousand twenty-one (2021); years 178 of the Independence and 158 of the Restoration.

Eduardo Estrella
President
Ginette Bournigal de Jiménez Lía Ynocencia Díaz Santana Secretary Secretary

_________________________________________________________________________ LUIS ABINADER President of the Dominican Republic

In exercise of the attributes conferred upon me by Article 128 of the Constitution of the Republic.

I PROMULGATE this Law and order that it be published in the Official Gazette, for its knowledge and execution.

GIVEN in Santo Domingo de Guzmán, National District, capital of the Dominican Republic, on the six (6) day of the month of August of the year two thousand twenty-one (2021); years 178 of the Independence and 158 of the Restoration.

LUIS ABINADER

Law No. 164-21 Law that designates with the name Pastor Abad Carpio Sosa, the street B of the Urbanization Ensanche La Hoz, section comprised between the Santa Rosa avenue and street A of the Villa Nazaret sector, La Romana. Official Gazette No. 11029 of August 10, 2021.

THE NATIONAL CONGRESS
In the Name of the Republic

Law No. 164-21

Considering first: That it is part of the attributes of the National Congress, established in Article 93, numeral 1), literal n) of the Constitution of the Republic, the conceding honors to distinguished citizens who have rendered recognized services to the homeland or to humanity.

Considering second: That Pastor Abad Carpio Sosa was born in 1933 in Hato Mayor del Rey, began his religious educational trajectory at the age of twenty at the Bible Institute of the Assemblies of God, in the municipality of Miches, where he had his first experience as a pastor in the year 1957, ten years later he is transferred to the municipality of La Romana, to the Central Assemblies of God Church, where he stood out as a religious figure, teacher, master builder and spiritual guide; here he implemented his work plan, forming human teams, trained to carry out evangelization services to homes, and created the ministries of women, youth, and gentlemen.