DOMINICAN REPUBLIC Law and Practice Contributed by: Sarah de León Perelló, Elizabeth Silfa Micheli and Naomi Rodríguez Manzueta, Headrick Rizik Álvarez & Fernández
In addition to civil liability, the law also provides for directors’ criminal liability. Provisions on lia - bility vary depending on the company type in question. Relieving Directors from Liability: Statute of Limitations The statute of limitations for the civil claims in damages provided in the law is two years from the date of the default or breach of duty. Piercing the Corporate Veil The general principle is that companies have separate legal personality, independent from that of their shareholders. However, in limited cases, the legal personality of the company may be pierced, thus making its shareholders and/or its directors and/or officers liable. According to Law No 479-08, the corporate veil can be pierced when there is reason to believe that the company is used to commit fraud against the law, violate public order or to commit fraud to the detriment of the rights of sharehold - ers or third parties. The Tax Code abides by the “substance over form” concept, and thus, under said principle the corporate veil may be pierced. Additionally, Section 11 of the Tax Code, as amended by recently enacted Law No 25-24 amending Section 11 of the Dominican Tax Code (“Law No 25-24”), establishes joint and several tax liability for directors and sharehold - ers of a company in connection with the com - pany’s tax obligations. Law No 25-24 provides that presidents, vice-presidents, directors and managers of a company and representatives of entities without legal personality will be joint - ly and severally liable if they have evaded or neglected their responsibilities or permitted tax
non-compliance, whether intentionally or neg - ligently. Shareholders of a legal entity, as well as the ultimate beneficial owners, will also be jointly and severally liable for the entity’s tax debts, in cases of negligence, up to the limit of their investment (equity). Moreover, Law No 24-25 introduces joint and several tax liability for companies within the same economic group when the group is deemed to have been created solely for the purpose of evading tax obligations. The Labour Code also includes a provision for piercing the corporate veil in the case of com - panies that constitute an economic group and there is fraud involved. When there are one or more companies that are under the direction, control or administration of other companies or that constitute an economic group, then all companies will be jointly and severally liable with respect to the labour obligations of its employ - ees in the event of fraud. 4. Employment Law 4.1 Nature of Applicable Regulations The Labour Law Regime Since the Dominican Republic is a civil law juris - diction, the nature of legal rules governing the employment relationship are mainly statutory. The Dominican labour law regime is governed essentially by the Labour Code and resolutions issued by administrative labour authorities. Case law is used to interpret and further clarify labour law provisions but are subordinate to the same. The provisions of the Dominican Labour Code are public policy, and therefore any contractual clauses and legal provisions contrary to the same are considered to be void and without effect. Hence, internal labour handbooks and employ - ment agreements are valid, provided they do not
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