Joint-Stock Societies and the New Company Law

Joint-Stock Societies.

The article 154 of the  law defines the Joint-Stock Society as the one existing between  two or more people under a social denomination and is composed exclusively of partners whose responsibilities for the losses are limited by their contributions. Its capital will be represented by essentially negotiable titles denominated Stocks, which will have to be completely subscribed and paid before the issuance.

In accordance with the Law, the Joint-Stock Societies could be:

-          of Public Subscription: the ones that resort to the public savings for the formation and increase of the  authorized social capital, or quote  their stocks in the stock market, or contract loans by the public emission of negotiable obligations, or use mass media or advertising to position and negotiate any type of instrument in the stock market; or

-          Private Subscription: those Joint-Stock Societies not included in the enunciations of the article 156.

Particular Characteristics

• Number of shareholders: Minimum of two (2)

• Social Denomination: will be formed freely by a fantasy name, necessarily followed by the words “Joint-Stock Company” or its Abbreviation “S. A.” (for spanish "sociedad anonima")

• Minimum Capital: of Thirty Million Dominican Pesos (RD$30,000.00),  of which a minimum of ten percent (10%) will have to be subscribed  and paid. The minimum amount could be fit by the Industrial and Commercial State Secretariat each three (3) years in accordance with the consumer’s price index published by the Central Bank of the Dominican Republic.

• Increases in Capital. In the increases of capital the shareholders Hill have the right of proportional preferential subscription to the quantity of their stocks in the capital subscribed and paid. This right of preferential subscription could be renounce to or transferable.

• Accounts Commissioner. Each Joint-Stock Company will be supervised by one or several accounts commissioners designated by general assembly of shareholders; they will be physical people. They should have the quality of certified public accountant with at least three (3) years of experience in Company Audits, and could be or not be shareholders. The accounts commissioners will have a permanent mission, with exclusion of all management interference, verify the values and accounting documents of the society and control the conformity with the accounting rules in effect. Will also verify the sincerity and concordance with the annual accounts of the Administration Counsel Report and the documents delivered to the shareholders about the financial situation and said annual accounts.

• The accounts commissioners are subject to a strict regime of incapacitation provided in the articles 211 and 243 to the 245, both inclusive.

• Administration of the Society. The joint-stock company will be administrated by an administration counsel made of at least three (3) members.  The physical persons that execute at the same time more than five (5) administrative mandates of any kind of commercial society cannot be administrators to a joint-stock company.

• The Administrative Counsel will chose amongst its members a president, who will be a physical person, under penalty of nullity of the designation.

• When a moral person is designated as administrator it will by obliged to name a permanent representative, who will be subject to the same conditions and obligations and will bear the same civil and penal responsibilities that would have if he was administrators in his own behalf, notwithstanding the share responsibility of the moral person he represents.

• The articles 28, 29, 227 and 228 of the Law establish a regime of fiduciary obligations of the social management.

• The shareholders Assemblies: in the Joint-Stock Companies of Private Subscription, the resolutions of the assemblies can be adopted in minutes subscribed by all shareholders without the need of an actual meeting.  Also the vote can be manifested by means of any electronic or digital resource. Both circumstances will have to be expressly indicated in the minutes issued to the effect.

Of Public Subscription.

Article 515 of the law establishes that those joint-stock companies constituted before the promulgation of the same and that have made public biddings of assets, primary or secondary, or negotiated financial instruments through the Assets Stock-Market of the Dominican Republic, will have to make the adaptation of the  accounting and operation of the company  in accordance to the requisites established by said law.

Of Private Subscription.

Private Subscription is those Joint-Stock Societies not included in the enunciations of the provided in the article 157 of the law.

Until next week, when will examine another company type. Please feel free to send us your comments and questions.