On April 24th, 2013, was enacted Law No. 67-13 amending various articles of Law No. 491-06 of Civil Aviation of the Dominican Republic. Since the beginning, the law has aroused various reactions and debates in the aviation industry, so we have taken the liberty to analyze the impact generated by this modification, specifically Articles 237 and 238.
Law No. 491-06 states that for the commercial use of air services in international operations, national companies are considered those who meet the following requirements: that its share capital belongs to Dominican in at least 35%, and that its Board of Directors is composed of Dominicans in equal portion; half plus one of the management directors of the company are Dominican (excluding members of the Board); and, that the principal office and commercial business of the company is based within national territory.
Law No. 67-13 introduces section d) which states that national companies will be considered those incorporated with a share capital of up to 100% owned by foreign investors where said investment belongs to an internationally recognized foreign airline, or a subsidiary controlled by it, authorized by the Executive Branch.
It could be understood that the before mentioned literal d) contradicts the provisions of subparagraphs a), b) and c) of Article 214, specifically Article 220 of Law No. 491-06 which states that international public air transport are reserved to Dominican operators.
However, Law No. 479-08, and its amendments, of “Commercial Corporations and Sole Ownership Companies with Limited Liability” states that commercial companies established in the Dominican Republic pursuant to Dominican laws will have Dominican nationality, without distinction over the source of the capital or nationality of the shareholders, which is consistent with most international doctrine on the matter, stating that the nationality of a company is given by the country of its incorporation.
Nevertheless, we recognize that, given that currently the Dominican Republic does not have a national airline with the ability to perform international public air transport services due to the high costs involved, the Dominican Government has been in the need to grant concessions to foreign companies, pursuant to the requirements set forth in current regulations on the matter, in order to contribute to the development of both the country´s aviation industry as well as the tourism sector. Though, these concessions should not be taken as or constitute barriers to eliminate the chances of setting up a national flag airline, capable of competing in the market of international public air transport services, funded with capital of the Dominican Government and the private sector, domestic and foreign and through the establishment of an Incentives System by the State, such as exists in Panama and Argentina.
This interest was expressed by President Danilo Medina on October 12th, 2012 when he said that it was time to resume the project of setting up a national flag airline with a combination of effort and capital of the Dominican State and the private sector, as the cases of Japan’s All Nippon Airways and Japan Airlines, Venezuela´s Conviasa and Aeropostal or Argentina´s Aerolíneas Argentinas, to mention just a few.
Strategic Transactions 