The Dominican Republic recently published a new secured transactions law on the 21st of February 2020: “Ley No. 45-20 de Garantías Mobiliarias”. The law is due come into force on the 18th of December 2020. It is a unified framework governing all security interests, and imposing a public online collateral registry (Sistema Electrónico de Garantías Mobiliarias). This register is not yet operational, but the law states that this register will be exhaustive, accessible by anyone, and updated in real-time.
The current registration system is unsatisfactory, as there are multiple, inefficient registers for different types of interests, that are based on different laws. An objective of Law 45-20 is to make the register more accessible, and in so doing increase access to credit for smaller businesses and reduce unnecessarily complicated formalities that compromise it. The new law is a change from the previous framework because it is set to increase the scope of what can be the subject of a security interest (movables; tangible and intangible assets; and present or future assets). The new law is flexible and does not offer a strict definition restricting what assets may potentially be used as security interests. It states in Paragraph 1 of Article 7 that a security interest may be created over any asset or right to which pecuniary value may be attributed. The new law also facilitates out-of-court enforcement of security interests in cases of default, such as alternative dispute resolution, and calls for a flexible and quick resolution in cases where court intervention is necessary. This is an improvement from the current framework, where there is much confusion regarding the creditor’s relationship to the asset, and enforcement rules are unclear.
Once it is in force, this law will not cover immovables. In Article 2, the law states that aircrafts, ships and other immovables such as land will still be governed by the law on mortgages.
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- Further Reading (in Spanish)
Last Checked October 2020
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