Economy September 4, 2021 | 11:02 am

Companies can now initiate public offering of their shares in Dominican Republic

Gabriel Castro, Superintendent of The Stock Market. (FILE PHOTO)

  • Law 163-21 solves all the obstacles that the sector had for companies to issue shares.

“I can announce that already in this month, perhaps, next week, the first company with the first prospectus for the Superintendence will study and approve the first public offer of shares in the country,” said the official.

Informed the general public and corporations that, potentially, wish to venture into the Dominican stock market through the public offering of their shares as established in Law number 163-21 on the Promotion of the Placement and Commercialization of Public Offering Securities in the Securities Market of the Dominican Republic that was promulgated on August 6, 2021, that everything is ready.

“We announce to all interested parties that the Superintendence has everything ready through its public offering regulations, but in addition to that, the Superintendence is willing to guide and accompany all those companies that want to participate, that want to go to the market with shares, which is a novel element in the country and that puts the capital market of our country in another dimension, ” Castro said.

The SIMV explains that Law 163-21 aims to promote the placement and commercialization of public offering securities in the securities market through the creation of different incentives for the issuer and the investment public; which consist of temporary exemption for three years, counted from the entry into force of the law, of taxes on the capital increase made by listed companies through a public offer of shares.

In addition, temporary reduction for three years, counted from the entry into force of the law, of the capital gains tax rate to the seller of the shares registered in the Securities Market Registry that are subscribed or traded in the stock market and are part of a public offering, which will be 15%.

Likewise, the establishment of a special liability regime for the acquirers of the shares registered in the Securities Market Registry that are subscribed or traded on the securities market and are part of a public offer; and competence granted to the National Securities Market Council to grant temporary differentiated regulatory treatments for three years, counted from the entry into force of the law, for compliance with the provisions contained in paragraph 7) of Article 216; article 217; Article 219(3); Articles 224 and 225 and article 226, paragraph, of Law No. 249-17 on the Securities Market of the Dominican Republic.

The executive director of the Association of Stock Exchanges of the Dominican Republic (APB), Mario A. Franco, told Diario Libre that Law 163-21 solves all the sector’s obstacles for companies to issue shares.

He added that he has been meeting with representatives of the business sector, such as the National Council of Private Enterprise (Conep), to whom he has presented the issues resolved by the law.

“Informing them that there is nothing pending, that what we want is that they start broadcasting,” said the executive.

The Securities Market Council approved the Public Offering Regulation on October 29, 2019. At the time, the APB considered that the Public Offering Regulation is a fundamental piece for access to the stock market and taking advantage of its financing opportunities. Moreover, this regulation is part of the 16 established for applying Law 249-17, which regulates the stock market of the Dominican Republic. Of that set of regulations, 11 are now ready.

“There are five missing, but with the 11 we already have we can perfectly pull forward. What this new law says, basically, is that in what is prepared a new regulation, the old regulation is still in application, that is, it is not that there is no clear regime, there is already,” said Franco.

Among those approved are Corporate Governance Regulations; Public Offer Regulations; Internal Regulations of the National Securities Market Council; Regulation of tariffs for regulation and the services of the Superintendence; Regulation that regulates the prevention of money laundering, financing of terrorism, and the proliferation of weapons of mass construction in the Dominican stock market.

In addition, Regulations for establishing and operating the OTC Market and Securities Trading Registration Systems; Regulations on Management Companies and Investment Funds; Regulations for establishing and operating Centralized Negotiation Mechanisms.

Also, Regulation for Centralized Securities Deposits and Securities Clearing and Settlement Systems and the Regulation for Securities Intermediaries.

The superintendent of the Securities Market also explained that in the Dominican Republic, there is a law (249-17) that was made based on the principles of the International Organization of Securities Commissions (IOSCO), which is the body that brings together the world’s regulators.

“IOSCO has about 34 principles, that law is adjusted to those canons,” he stressed.

The official said that as authorities, they have been building a capital market that has excellent potential to finance companies and the Dominican State.

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