New Rules for Dominican AGMs: What You Need to Do for Compliance and Results

In the Dominican Republic, holding an Annual General Meeting (AGM) is a legal obligation for companies, ensuring compliance with corporate governance rules and financial transparency. Understanding the requirements and procedures for AGMs is essential for companies operating in the jurisdiction, whether structured as Sociedades de Responsabilidad Limitada (SRL) or Sociedades Anónimas (SA).

When Should an AGM Be Held?

The General Law of Commercial Companies (Law No. 479-08) mandates that all  companies are required to hold an ordinary general assembly at least once a year, within 120 days following the close of the previous fiscal year. This deadline applies to both SRLs and SAs, ensuring that shareholders or partners review the company’s financial health and make necessary corporate decisions.

How Is an AGM Convened?

For SRLs:

The notice for the AGM must be sent at least 15 days in advance through either a physical or electronic communication with acknowledgment of receipt, or through a newspaper notice in a national publication. If all members are present or represented, the meeting can proceed without a formal call. The right to convene the AGM belongs to:

• The manager(s) of the company.

• The statutory auditor, if applicable.

• Partners holding at least one-half of the corporate quotas or those holding at least one-fourth of the quotas while representing one-fourth of the total members.

For SAs:

The bylaws establish specific rules for convening AGMs, but legally, the notice must be sent at least 15 days in advance via physical or electronic communication or through a national newspaper publication. The following parties may call the AGM:

• The Board of Directors.

• The statutory auditors, in urgent situations.

• A court-appointed agent, if a shareholder initiates legal action.

• Shareholders representing at least 10% of the subscribed and paid-up capital stock.

• The liquidators, in the case of company dissolution.

Who Chairs the AGM?

For SRLs:

The meeting is chaired by the manager or, if multiple managers exist, one of them. If none of the managers are also members, the member with the highest number of shares presides. In cases where multiple members hold an equal number of shares, the oldest member takes precedence.

For SAs:

The chairman of the Board of Directors presides over the AGM. If the chairman is absent, the bylaws dictate the next in line, and if no such provision exists, the assembly elects its chairman.

Can AGMs Be Held Remotely?

For SRLs:

AGMs must take place in person unless specific provisions in the bylaws allow virtual participation. The minutes must be recorded in Spanish and kept in a special register at the registered office.

For SAs:

SAs offer more flexibility, allowing resolutions to be adopted in writing without an in-person meeting, provided all shareholders sign the minutes. Shareholders can also participate remotely through videoconferencing, telephone conferencing, or other digital communication tools, with electronic or digital votes recorded accordingly.

What Decisions Are Made at the AGM?

For SRLs:

The AGM must deliberate and vote on:

• Approval of financial statements and profit distribution.

• Appointment and removal of managers and statutory auditors, if applicable.

• Authorization of managers to engage in activities that may create conflicts of interest.

• Other matters established by law or the company’s bylaws.

For SAs:

The AGM must address:

• Approval of annual accounts after the statutory auditors’ report.

• Appointment and removal of board members and statutory auditors.

• Determination of directors’ and auditors’ remuneration, unless stipulated in the bylaws.

• Decisions on fiscal year results and dividend distribution.

• Recognition of shares subscribed and paid during the year.

• Appointment of external auditors.

Voting and Proxy Representation

Decisions at the AGM are generally made by a majority vote of members present or represented, unless otherwise specified in the bylaws. Each share carries one vote.

Shareholders may appoint proxies to represent them at the AGM. These powers of attorney must contain:

• Full identification details of the shareholder and the agent.

• Company registration numbers (if applicable).

• Domicile information.

For SRLs, powers of attorney must be filed with the company secretary, and they cannot be delegated unless explicitly allowed. For SAs, proxies must be deposited at the corporate domicile at least one business day before the AGM.

Registering AGM Decisions and Tax Compliance

Once the AGM concludes, the company must submit its meeting minutes and related documents to the Mercantile Registry at the Chamber of Commerce and Production of Santo Domingo within 10 days. This step ensures that resolutions, such as the appointment of new directors or financial approvals, are legally enforceable.

For SRLs, managerial appointments take effect upon acceptance but are only enforceable against third parties after registration in the Commercial Registry. If dividends are distributed, the company must also update its Tax Identification (RNC) and pay the corresponding tax.

Signing and Filing AGM Documents

In the Dominican Republic, companies have multiple methods for signing AGM-related documents:

• Handwritten Signatures: Traditional signatures in blue ink are required for official filings.

• E-Signatures: Digital signatures are permitted, but they must comply with national certification standards.

• Apostilled Documents: If documents are signed abroad, originals must be apostilled, translated into Spanish (if applicable), and deposited at the Chamber of Commerce.

How Can Companies Ensure Compliance?

To streamline AGM procedures and compliance, companies should:

• Ensure proper notification to shareholders.

• Prepare all necessary documents, including financial statements and resolutions.

• File meeting minutes within the required timeframe.

• Verify tax obligations related to dividend distribution.

Our local partners facilitate the AGM filing process, but they must be appointed in the AGM for that purpose. Upon completion, proof of filing documentation is provided. However, formal verification through the commercial register is currently unavailable within Klea’s capabilities.

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For more insights into processes in other jurisdictions, explore our article, How to Manage Director Changes and Triumph in South Korea: What You Need to Know for the Best Results.

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