DOMINICAN REPUBLIC Law and Practice Contributed by: Marielle Garrigó, Urania Paulino, Eduardo Pellerano and Ricardo Pellerano Nadal, Pellerano Nadal Law & Consulting
ments. Foreign banks can also be seen in the corporate loan market, but on a less common basis and for large-cap corporations. These foreign lenders typically use US or UK law- governed documents and may also include Dominican law-governed promissory notes ( pagarés ) and security agreements, as part of the financing documents. • Acquisition finance/LBOs – these would typi- cally be international banks or debt funds, mostly using US or UK law-governed docu- ments with some cases involving Dominican law-governed promissory notes ( pagarés ) and security agreements. A mix of debt and equity can also be used for acquisition finance, par- ticularly with the issuance of preferred shares. 2.2 Use of Loan Market Association (LMA) Agreements or Other Standard Loans In terms of Dominican law-governed operations, local financial institutions have developed their own loan agreement templates, depending on the type of transaction being structured. Some of these templates, particularly for retail and more customary operations, are registered with the Office for the Protection of User Financial Servic- es ( Prousuario ) and must meet certain require- ments from the Superintendency of Banks. However, for more sophisticated transactions, such as acquisition finance, the agreements may vary according to their particularity, the industry and negotiation with counterparties, among oth- er matters. Over time, local banks have adapted their agreements for these types of transactions, becoming more robust and basing them on their experience in observing and participating in for- eign law-governed documents. Regarding international players using foreign law-governed documents, different models have been used, but many cases are based, or loosely
based, on the common types of standard agree- ments used internationally, such as those from the Loan Syndications and Trading Associations and Loan Market Association (LMA). 2.3 Language Documentation in the Dominican Republic may be drafted in any language, in accordance with the principle that the parties to any agreement are free to stipulate the provisions that will regu- late it, which includes choosing the language. This is common in operations with foreign lend- ers and foreign law-governed documents, which are usually in English. However, the official language of the Dominican Republic is Spanish, as stated in the Domini- can Constitution and, therefore, all documents to be registered in any local public authority or institution, including courts, should be in Span- ish or translated into Spanish by an authorised Dominican legal translator. Thus, in the case of a legal proceeding before a Dominican court, foreign law-governed agree- ments and documents would need to be trans- lated into Spanish by an authorised legal transla- tor in the Dominican Republic. Local security agreements (for local collateral), which are governed by Dominican law, are draft- ed in Spanish since their registration before the corresponding public authority is required. In some cases, at the request of foreign lenders, the security agreements and promissory notes are drafted in Spanish and a translation is pro- vided to the foreign lenders for their review. 2.4 Opinions The content of legal opinions in acquisition finance transactions vary depending on the par-
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