When you decide to formalize a business in the Dominican Republic, one of the first and most important decisions is choosing the type of commercial company.This choice not only defines how your business will be managed, but also determines tax obligations, shareholders’ liability, and growth flexibility.
The Dominican Republic offers several legally recognized business structures, each designed to meet different needs. Below, we outline the main types of commercial companies in the Dominican Republic, along with their advantages and disadvantages, to help you make the best decision.
Limited Liability Company (SRL)
The SRL is the most common business structure for small and medium-sized enterprises.
- Key Characteristics:
- Capital is divided into ownership quotas, not shares.
- Requires a minimum of 2 partners and a maximum of 50.
- Partners’ liability is limited to the amount of their contributions.
- Advantages:
- Administrative flexibility.
- Does not require a large initial capital investment.
- Ideal for family businesses and growing ventures.
- Disadvantages:
- Less attractive to large investors.
- Cannot be publicly traded.
Corporation (SA and Simplified SA)
The Corporations are typically used by larger companies seeking expansion.
- Traditional Corporation (SA):
- Capital divided into shares.
- Requires at least 2 shareholders (no maximum limit).
- Formal governance bodies: shareholders’ meeting, board of directors, and statutory auditor.
- Allows capital raising from third parties.
- Simplified Corporation (SAS):
- Created to offer more flexibility to entrepreneurs.
- Requires a minimum of 2 partners.
- Fewer formalities than a traditional SA, while still allowing share issuance.
- Advantages:
- Facilitates attracting investors and business expansion.
- Allows a higher level of professional management.
- Disadvantages:
- Higher incorporation and operating costs.
- Greater legal and accounting formalities.
Individual Limited Liability Company (EIRL)
The EIRL is ideal for entrepreneurs who want to operate formally without partners.
- Key Characteristics:
- Formed by one individual.
- Separate legal and financial assets from the owner’s personal assets.
- Liability limited to the contributed capital.
- Advantages:
- Ideal for freelancers, independent professionals, and small business owners.
- Protects the entrepreneur’s personal assets.
- Disadvantages:
- Limited growth potential if attracting investors is a goal.
- Does not promote strategic partnerships.
Comparison: Advantages and Disadvantages
| Type of Company | Required Partners | Minimum Capital | Advantages | Disadvantages |
| SRL | 2 to 50 | Low | Flexible, ideal for SMEs | Not attractive to large investors |
| SA | 2 or more | High | Ideal for large companies, investor-friendly | Costly and highly formal |
| SAS | 2 or more | Medium | Flexibility + share issuance | Higher legal oversight |
| EIRL | 1 | Low | Ideal for individuals | Limited growth potential |
Recommendations by Business Type
- SMEs and family businesses: SRL, due to its simplicity and flexibility.
- Startups seeking investors: SAS, thanks to share issuance and reduced formalities.
- Large corporations or business groups: SA, for its solid structure and scalability.
- Individual entrepreneurs: EIRL, to separate personal and business assets.
Frequently asked questions
What is the most common type of company in the Dominican Republic?
The SRL is the most widely used, especially among SMEs and family-owned businesses.
Which structure is best for SMEs?
The SRL is the most suitable, as it requires low capital and offers flexibility.
Can a company change its legal structure later?
Can a company change its legal structure later?
Yes. A company may be transformed into another legal structure by following the required legal procedures.
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