Current State of the Market

The energy and infrastructure M&A market in the Dominican Republic remains dynamic and is undergoing a phase of consolidation, characterised by the restructuring of large-scale projects and the formation of strategic alliances across both renewable and conventional energy.

In 2025, the electricity sector captured approximately 25.7% of national foreign direct investment – roughly USD743.5 million in the first half of the year alone. Major conventional projects are advancing, including the Manzanillo Energy Complex (approximately 800 MW of combined-cycle natural gas), Energía 2000, SIBA Energy, and ENERGAS 4. The country also has more than 2,700 MW of installed renewable energy capacity following the commissioning of 13 new plants in 2025, with sustained growth in transmission lines (345 kV), substations, and battery energy storage systems (BESS).

Influence of the Economic and Geopolitical Environment

On the financing side, although new regulatory and technical requirements have increased capital needs – raising upfront investment levels – access to financing has remained relatively robust, supported by multilateral organisations and international financial institutions. At the same time, geopolitical tensions and disruptions in global energy markets have had a tangible impact on project costs and execution timelines, driving greater sophistication in contractual structuring. Power purchase agreements, in particular, have incorporated risk-mitigation mechanisms to address extraordinary international events, including potential supply chain disruptions and abrupt fluctuations in fuel markets.

Local Activity Compared to Global Pace

In comparative terms, activity in the Dominican Republic remains aligned with global trends in the sector, with clear signs of strength in attracting capital for energy infrastructure projects. The country's relative macroeconomic stability, together with a regulatory framework that has favoured the development of long-term energy projects, has enabled significant levels of foreign direct investment. This flow has driven consolidation processes in existing projects and the entry of institutional investors seeking to participate in the expansion of the country's energy infrastructure across both conventional and renewable segments.

Key Investment Trends

Private capital flows have driven new transactions and the entry of institutional investors into energy projects, reflecting sustained confidence in the Dominican market. Following the saturation of certain grid nodes, one of the dominant trends has been the development of battery energy storage systems (BESS). Multiple solar projects currently under development incorporate storage components, reshaping the structure of new investments and strategic alliances. An emerging trend is the growing link between data centres and renewable generation, as large-scale digital infrastructure projects typically require power purchase agreements (PPAs) from clean sources.

A Dual-Track Energy Strategy

A defining feature of the Dominican energy landscape is the tension between international climate commitments and the practical realities of ensuring reliable and affordable energy supply. As a non-oil-producing nation, the Dominican Republic has strong incentives to develop renewable energy sources. However, the intermittency limitations of solar and wind generation have led to decisions that may appear contradictory: the country is simultaneously advancing coal-fired capacity (notably the Punta Catalina complex) while promoting natural gas as a transitional fuel and investing heavily in renewables. This reflects a pragmatic approach that seeks to balance decarbonisation goals with energy security and grid stability.

ESG and the Paris Agreement

The approach of companies and investment funds has evolved towards criteria increasingly linked to environmental, social, and governance (ESG) factors, responding not only to reputational considerations but also to concrete requirements for accessing international financing. The country has begun to align with climate mechanisms arising from the Paris Agreement, opening opportunities for local projects to participate in international emissions-mitigation schemes.

Sustainable financing instruments, such as sustainability-linked bonds and green loans, have become more frequent, while due diligence processes now incorporate more rigorous environmental and social assessments. Investors are showing greater interest in long-term strategic alliances with the State, particularly under public-private partnership arrangements for transmission and logistics infrastructure.

Access to the Market

Investors are accessing the energy and infrastructure M&A market in the Dominican Republic primarily through platform strategies, strategic partnerships, and participation in projects already underway. A clear shift has occurred from isolated asset acquisitions towards the development of scalable portfolios that combine operating assets with projects under development. Joint ventures with local developers, as well as participation in competitive processes for ready-to-build projects, have become key mechanisms to mitigate risk and accelerate market entry, while public-private partnership schemes provide revenue visibility and regulatory support.

Investor Profile

The investor profile has become more diversified, incorporating local pension funds, commercial banks, strategic investors, infrastructure funds, and multilateral institutions. These investors typically structure joint investments combining equity and long-term financing. The market reflects a growing institutionalisation of capital, with emphasis on regulatory certainty, project bankability, and contractual stability

Energy Generation Projects

By 2026, the Dominican Republic is developing a pipeline of energy and infrastructure projects characterised by their scale and a strong focus on the energy transition. Projects have evolved into integrated complexes combining power generation and energy logistics. A key example is the Manzanillo Energy Complex, which includes two combined-cycle natural gas plants with a total capacity of approximately 800 MW, together with associated gas-import infrastructure. At the same time, renewable energy development continues to accelerate, with a growing pipeline of projects under both provisional and definitive concessions.

Generation Mix: Conventional and Renewables

As a result, the Dominican energy mix continues to diversify. Although conventional sources – primarily natural gas – still account for the majority of effective generation, renewable energy has progressively increased its share and is supported by a broad pipeline of projects under development, which is expected to expand its role in the electricity mix over the course of this decade.

Capital Requirements and Project Maturity

Establishing an early-stage energy or infrastructure company in the Dominican Republic requires operating within an environment characterised by high capital demands, extended development timelines, and intensive regulatory engagement. Energy projects necessitate sophisticated financial structuring, extensive permitting, and adherence to technical requirements that influence project velocity and financing sources.

Regulatory Milestones and Permitting

Energy projects must navigate continuous interaction with the National Energy Commission (Comisión Nacional de Energía – CNE) and the Superintendence of Electricity (Superintendencia de Electricidad – SIE). Securing a Provisional Concession represents a critical early milestone, demonstrating project viability and substantially increasing attractiveness to lenders and equity investors.

Incentive Framework for Renewable Energy

The Incentive Law for Renewable Energy Development (Law No 57-07) provides the foundation for structuring renewable energy projects. Key incentives include exemption from customs duties and the Tax on the Transfer of Industrialised Goods and Services (Impuesto sobre Transferencias de Bienes Industrializados y Servicios – ITBIS) on imported equipment, a tax credit against income tax liability based on equipment investment costs, and preferential withholding tax treatment on foreign financing interest.

Bankability through Power Purchase Agreements

Project-level financing depends critically on securing long-term revenue streams through PPAs with electricity distribution companies, isolated grids, or unregulated consumers such as industrial parks, hotels, and free zones.

Current Market Conditions

Growth is evident in energy-efficiency technologies, smart-grid development, and distributed generation. Local capital markets have enabled investment funds to participate in early-stage project development, expanding available capital sources.

Key Considerations for Liquidity Events

In the Dominican Republic's energy sector, the most common liquidity events for project companies and their investors are structured around a limited but well-defined set of mechanisms, given the early stage of the country's capital markets and the predominantly private nature of energy assets.

Regulatory and Institutional Requirements

Any entity seeking to access capital markets or attract institutional investors – including pension fund administrators (AFPs), which represent one of the principal pools of domestic institutional capital – must comply with stringent transparency and governance requirements established by the Superintendence of Securities Markets (Superintendencia del Mercado de Valores– SIMV) for capital market transactions and the Superintendency of Pensions for AFP participation. Companies must demonstrate solid guarantees, robust governance structures, and a secured revenue stream through firm PPAs or equivalent long-term off-take contracts.

Typical Liquidity Mechanisms

The most frequent exit or liquidity mechanism in the energy sector is the private sale of equity stakes in project companies, typically structured as share purchase agreements. Strategic sales to incoming investors – whether international utilities, infrastructure funds, or regional energy groups – have driven the most significant transactions in recent years. Structured finance instruments, such as securitisation trusts backed by PPA revenues, represent an emerging avenue, though still in early development. Public offerings remain rare; the securities market is not yet a customary channel for energy-sector capital raising or M&A activity.

Regulatory Prohibition on Vertical Integration

The General Electricity Law (Law No 125-01) prohibits vertical integration in the electricity sector. Article 11 establishes that electricity companies, self-producers, and co-generators may only engage in one of generation, transmission, or distribution. This prohibition is a foundational principle of Dominican electricity regulation.

Implications for Corporate Structuring

Because the law requires functional separation, voluntary spin-offs – as understood in jurisdictions where integrated utilities divest business lines – do not arise. The regulatory framework mandates structural separation from the outset, preventing dominant positions and ensuring cost transparency for regulatory oversight of each segment.

In practice, this mandatory separation facilitates independent financing and strategic sale of individual generation or distribution assets. For M&A purposes, the result is a market composed of single-activity project companies, simplifying due diligence and transaction structuring. The key driver is regulatory compliance rather than efficiency considerations that typically motivate spin-offs elsewhere.

Tax Treatment of Corporate Reorganisations

Under Dominican tax law, corporate reorganisations – including spin-offs, mergers, and other forms of restructuring – may, under certain conditions, be carried out without triggering tax liability at either the corporate or shareholder level. The applicable framework is found in Title II of the Tax Code (Law No 11-92, as amended).

Conditions for Tax-Neutral Treatment

For a reorganisation to qualify for tax-neutral treatment, it must meet the conditions established by the General Directorate of Internal Taxes (Dirección General de Impuestos Internos – DGII), which typically require that the transaction constitute a genuine business reorganisation rather than a mechanism for disguised asset transfers or profit distribution. The specific requirements include proper documentation, continuity of the business activity, and compliance with reporting obligations to the tax authority.

Limited Practical Relevance in the Electricity Sector

In the Dominican electricity sector, the spin-off mechanism has limited practical application from a tax perspective. The General Electricity Law (Law No 125-01) has prohibited vertical integration since its enactment, requiring that generation, transmission, and distribution activities be conducted through separate legal entities. Because the sector was structured around this mandatory separation from its inception, the typical scenario in which a spin-off generates taxable events does not commonly arise in practice.

Corporate and Regulatory Framework

Spin-offs in the Dominican Republic are governed by Law No 479-08, which establishes the procedures for corporate reorganisations, including demergers, mergers, and related transactions.

A company may transfer part of its assets to a newly formed or existing entity and subsequently undertake a business combination with a third party, provided all applicable corporate and regulatory procedures are observed.

Mandatory Requirements for Execution

The following requirements must be satisfied:

• shareholder approval;
• preparation and registration of a demerger or reorganisation plan with the Commercial Registry;
• compliance with tax obligations and advance approval from the DGII where required; and, where applicable,
• sector-specific regulatory authorisations from the CNE and SIE for activities involving electricity assets or concessions.

Strategic Applications

This structure is commonly employed to isolate risks, segregate non-core assets, or facilitate the entry of new investors while preserving operational continuity. For example, a developer may spin off a completed generation asset into a separate holding company, retain operational control through an asset-management agreement, and simultaneously sell equity stakes to institutional investors – achieving part-liquidity while maintaining management control.

Typical Timing

A spin-off or corporate reorganisation in the Dominican Republic typically requires no fewer than six months to complete, accounting for the various corporate, regulatory, and registration steps involved. This timeline encompasses shareholder approvals, the preparation and filing of all required corporate documentation, registration with the Commercial Registry, and any sector-specific regulatory clearances that may apply.

Tax Authority Ruling

To ensure that the reorganisation qualifies for tax-neutral treatment and to avoid the imposition of taxes on the transaction, the parties will generally need to obtain a ruling or advance determination from the General Directorate of Internal Revenue (DGII). The process of securing such a ruling typically takes no fewer than three months, depending on the complexity of the transaction and the volume of documentation required by the tax authority. Given these timelines, parties are advised to initiate engagement with the DGII early in the process to avoid delays in the overall transaction schedule.

Market Overview

The Dominican Republic’s capital market remains at an early stage of equity development, with only two public offering experiences to date: the Cesar Iglesias equity offering (2023) and the Leche Rica public-offering trust (2019). The securities market is not a customary avenue for Initial Public Offerings (IPOs) or public M&A, and control transactions are typically negotiated through private block trades. This limited equity activity contrasts with a much more active use of the capital markets for financing purposes, particularly in the energy sector, where large‑scale projects – including natural gas‑fired generation facilities, renewable energy plants with battery energy storage systems (BESS), and electricity transmission infrastructure – have increasingly relied on publicly placed debt instruments, investment funds, and public‑offering trust structures to secure long‑term financing.

Disclosure Obligations in a Hypothetical Public Acquisition

In the hypothetical scenario of a public acquisition, the Securities Market Law (Law No 249-17) and SIMV regulations would apply. Any person or group that acquires a significant participation in a publicly offered issuer must disclose that acquisition to the SIMV and the market. Reportable thresholds are triggered at 5%, 10%, 25%, and 50% of voting capital, with disclosure required within two business days.

Statement of Purpose

Disclosure filings must state the purpose of the acquisition and whether the acquirer intends to seek control, influence management, or pursue a business combination. Any material change in disclosed intention triggers a new filing.

"Put Up or Shut Up" Requirement

Dominican law does not include a formal “put up or shut up” rule. The SIMV has broad supervisory powers to request additional information and may set timelines for clarification when market integrity concerns arise.

Mandatory Offer Threshold

The Securities Market Law (Law No 249-17 of 2017) and its implementing regulations establish a mandatory tender offer obligation. Any person or group that, through one or more transactions, reaches or exceeds 30% of the voting capital of an issuer whose shares are registered with the Superintendency of the Securities Market (SIMV) must extend a tender offer to all remaining shareholders on equal and no-less-favourable terms than those obtained in the triggering transaction. The SIMV may also require a mandatory offer where it determines that a transaction results in a change of control even below the 30% threshold, based on the specific governance structure of the issuer, this according to Article 67 of said Securities and Market Law.

Public Policy Nature of the Obligation

This mandatory offer obligation is a matter of public policy under Dominican law, meaning it cannot be waived or modified by private agreement between the parties. There is no contractual "way out" of the 30% threshold: once triggered, the obligation to launch a tender offer is mandatory and enforceable, regardless of any arrangement among shareholders or acquirers. The underlying principle is central to investor protection within the Dominican securities market framework, ensuring that minority shareholders can exit at a fair price whenever a controlling interest changes hands.

Typical Transaction Structures

Acquisitions of energy and infrastructure companies in the Dominican Republic are predominantly structured as privately negotiated share purchase agreements with controlling shareholders. The securities market is not a customary avenue for trading equity, and the following transaction structures apply primarily as a theoretical framework under existing law rather than as established market practice.

Public Tender Offer

In the event of an acquisition involving a publicly held interest, the applicable structure would be a public tender offer (oferta pública de adquisición – OPA) directed at all shareholders. A privately negotiated share purchase may also trigger a mandatory OPA under the Securities Market Law (Law No 249-17) if applicable ownership thresholds are crossed. The OPA mechanism ensures equal treatment of minority shareholders, though its practical application remains limited.

Mergers

Mergers by absorption are available under Law No 479-08 (as amended by Law No 31-11). However, mergers are not the customary avenue for acquiring a company. The process requires shareholder and creditor notifications, publication of the merger plan, and creditor objection periods, making it slower and procedurally more complex than a share purchase or tender offer. A merger may be used as a second-step transaction once majority ownership has been achieved through a prior OPA.

Cash Versus Stock Consideration

Cash consideration is the predominant form in Dominican acquisitions, reflecting the limited liquidity of the local equity market. Stock-for-stock transactions are rare because the bidder's shares would need to comply with SIMV requirements, and local investors generally prefer liquid consideration.

Minimum Price Requirements

Where a mandatory OPA is triggered, SIMV regulations require that the offer price be no less than the highest price paid by the acquirer during a look-back period, generally the twelve months preceding the triggering transaction. The SIMV may also require an independent valuation where the proposed price does not adequately reflect the company's value. In voluntary offers, no statutory minimum price is prescribed, but the SIMV may examine the pricing basis.

Contingent Consideration and Value Bridging

Contingent value rights (CVRs) or earn-out mechanisms are not common in Dominican acquisitions. The legal framework does not expressly address CVRs, and implementation in a public offer would raise regulatory uncertainty. Value gaps are more typically addressed through price-adjustment mechanisms in private acquisition agreements.

Common Offer Conditions

Tender offers customarily include several conditions precedent. The most common are

• minimum acceptance levels required to achieve control;
• absence of a material adverse change in the target’s business or assets;
• prohibition on the target issuing equity-diluting instruments during the offer period; and
• confirmation that no insolvency or dissolution proceedings have commenced against the target.

Regulatory Approvals

Energy and infrastructure transactions require sector-specific consents from the CNE, SIE, and where applicable the Unified Board of Electricity Distribution Companies (Consejo Unificado de las Empresas Distribuidoras – CUED) or the Operating Co-ordinator (OC), in addition to securities regulatory approval. These form customary conditions precedent to closing.

Regulatory Oversight of Conditions

The SIMV may reject or require modification of conditions it considers unduly broad, subjective, or contrary to the principle of certainty and equal treatment. Conditions that allow a bidder to withdraw on purely discretionary grounds are not permitted, and material adverse-change clauses must be defined with sufficient specificity to function as genuine conditions rather than exit mechanisms.

Transaction Support Agreements

It is customary for the bidder and the controlling shareholders or target board to enter into a transaction support agreement prior to or simultaneously with the launch of an OPA. This agreement typically covers the obligation of controlling shareholders to tender their shares, the board's recommendation, and exclusivity or non-solicitation covenants during the offer period.

Target Company Undertakings

The target board may undertake to recommend the offer, refrain from soliciting competing proposals, and maintain ordinary course of business during the offer period. Significant asset disposals, extraordinary dividends, or capital increases require SIMV notification and may require prior authorisation.

Representations and Warranties

It is not standard practice for a publicly listed target to provide representations and warranties in the manner typical of private M&A. Disclosure is made through public filings and the offer prospectus approved by the SIMV. Bidders rely on publicly available information and limited confirmatory due diligence rather than contractual warranties.

Typical Minimum Acceptance Levels

The minimum acceptance condition in a Dominican public tender offer (OPA) is typically set at the level necessary to achieve the bidder's stated control objective. In practice, this is usually set at 50% plus one share, which represents simple majority control and enables the bidder to direct ordinary business decisions and prevail in shareholder votes on routine matters.

Supermajority Thresholds

Where the bidder seeks structural control allowing it to approve supermajority resolutions under the target's bylaws (estatutos sociales), the minimum acceptance condition is set accordingly. Under Law No 479-08, certain resolutions – including amendments to bylaws, mergers, transformations, and voluntary dissolution – require approval by shareholders representing at least two thirds (66.67%) of the voting capital at an extraordinary general assembly, as established under Article 189 of that law. Bidders seeking the ability to execute structural post-closing steps without minority shareholder consent will accordingly set their minimum acceptance at or above that threshold to ensure the necessary voting power. It should be noted that a company's bylaws may validly establish supermajority requirements higher than the statutory minimum, meaning the relevant threshold must always be verified against the specific target's bylaws.

Absence of a Statutory Squeeze-Out Mechanism

Dominican law does not currently provide a statutory squeeze-out or compulsory acquisition mechanism equivalent to those found in European jurisdictions. An acquirer that has achieved a high level of ownership following a successful public tender offer (OPA) cannot compel remaining minority shareholders to sell their shares solely by virtue of exceeding a particular ownership threshold. This represents a significant difference from jurisdictions with mandatory buy-out regimes.

Practical Alternative Mechanisms

In practice, acquirers pursue minority buyouts through several methods. First, they may launch follow-on tender offers or conduct open market purchases at negotiated prices. Second, they may pursue voluntary delisting from the Dominican Republic Stock Exchange (Bolsa de Valores de la República Dominicana – BVRD), which may itself prompt minority shareholders to exit. Third, and most commonly in Dominican corporate practice, an acquirer that holds sufficient shares may effect a statutory merger by absorption approved by the requisite shareholder supermajority, with dissenting shareholders entitled to appraisal rights under Dominican commercial law. The SIMV and the BVRD impose procedural requirements for voluntary delisting, including fair-exit pricing, which in practice function as a partial substitute for a formal squeeze-out regime.

Financial Capacity Requirement

Dominican securities regulations require that, at the time of launching a tender offer, the bidder demonstrate to the SIMV that the financial resources to satisfy full acceptance are either available or committed. The SIMV requires evidence of available own funds, committed bank financing, or a bank guarantee or irrevocable letter of credit sufficient to cover total consideration. The offer may not be launched until financial capacity is confirmed.

Identity of the Offeror and Role of Banks

The offer is formally made by the bidder itself. Financing banks do not become parties to the offer, but their written commitments underpin the financial capacity demonstration required by the SIMV.

Financing Conditions Not Permitted

Because demonstrated financial capacity is required at launch, a tender offer may not be conditional on subsequent financing. The “certain funds” standard effectively prohibits financing-conditioned offers, and bidders must secure committed facilities before submitting the offer prospectus.

Permitted Deal Protection Measures

Dominican law does not expressly prohibit deal-protection measures in public M&A transactions. Non-solicitation provisions are common, with target boards agreeing not actively to solicit competing bids during the offer period, though they retain fiduciary discretion to consider unsolicited superior proposals. Matching rights are also frequently used, granting the bidder a right to match any competing offer before the target board may change its recommendation.

Break-Up Fees and Board Recommendations

Reverse break-up fees payable by the bidder upon failure to close are increasingly used. Break-up fees payable by the target are less common, given SIMV caution about measures that could coerce shareholder decision-making. The target board's agreement to recommend the offer and not withdraw that recommendation in the absence of a superior offer is the most consistent form of deal protection in Dominican practice.

SIMV Review and Limitations

The SIMV may review deal protection measures filed as part of the offer documentation. Measures considered unduly restrictive of shareholder choice or contrary to equal treatment principles may be challenged. Force-the-vote provisions are not a developed concept given the civil law framework, but shareholders as parties to support agreements may agree to vote in favour of related corporate resolutions.

Board Representation and Shareholders' Agreements

Where a bidder does not achieve 100% ownership following a tender offer, it may obtain meaningful governance rights through several mechanisms. Under Law No 479-08 and the target's bylaws, board representation is typically allocated in proportion to shareholding. The bidder may also negotiate a shareholders' agreement establishing veto rights over specified material decisions, securing de facto control over key strategic matters.

Bylaw Amendments and Governance Structures

If the bidder holds sufficient shares to pass the required supermajority, it may amend the target's bylaws (estatutos sociales) to introduce enhanced quorum and voting requirements or reserved matters, such as capital increases, related-party transactions, or asset disposals.

Absence of Domination Agreements

The Dominican Republic does not have a concept equivalent to the German domination agreement (Beherrschungsvertrag) that would allow a controlling shareholder formally to direct subsidiary management. Post-acquisition integration is managed through conventional corporate governance tools: board control, management agreements, and intercompany arrangements, which must be structured on arm's-length terms to avoid liability risks. There is no formal legal mechanism to legitimise top-down instructions from parent to subsidiary or corresponding statutory protection regime for minorities and creditors.

Nature and Prevalence of Irrevocable Commitments

Given the concentrated ownership structures typical of Dominican companies – including energy and infrastructure issuers in which large family groups, institutional investors, or state-related entities hold significant blocks – it is common and important for bidders to obtain irrevocable or firm commitments from controlling or significant shareholders to tender their shares in the offer or to support related corporate approvals. These commitments are typically structured as binding undertakings contained in a support agreement executed prior to or simultaneously with the announcement of the offer.

Scope and Content of Support Agreements

Support agreements commonly cover the obligation to tender, to vote in favour of related resolutions, and to refrain from transferring shares to third parties during the offer period. Commitments may be "hard" (unconditional) or "soft" (containing a fiduciary out). In practice, controlling shareholders of Dominican energy and infrastructure companies tend to negotiate hard commitments in exchange for certainty of deal execution and agreed deal price, particularly in transactions where the controlling shareholder is also the seller. Soft commitments allowing withdrawal upon receipt of a superior offer are more common where minority institutional shareholders are involved, reflecting their weaker negotiating position and desire to preserve flexibility.

SIMV Approval and Review Timeline

A public tender offer (OPA) must be approved by the SIMV before it may be launched. The bidder submits an offer prospectus (prospecto de OPA) with supporting documentation, including financial capacity evidence, offer-consideration details, conditions, and transaction agreements. The BVRD co-ordinates the mechanics of acceptance during the offer period. The SIMV's review typically takes 20 to 30 business days from submission of a complete file, though this may be extended if additional information is requested.

Sector Regulatory Co-ordination

Transactions requiring sector regulatory approvals may need co-ordination with the CNE, the Ministry of Industry, Commerce, and Micro, Small, and Medium Enterprises – MSMEs (Ministerio de Industria, Comercio y Mipymes – MICM), or other competent bodies, extending overall timing. The SIMV does not certify the fairness of the offer price, but reviews compliance with minimum price requirements and adequacy of pricing methodology disclosure. It may require an independent valuation report where the pricing basis appears insufficient.

Offer Timeline and Competing Offers

The offer acceptance period is typically 20 to 30 business days. If a competing offer is announced, the SIMV may extend the acceptance period and co-ordinate timelines to ensure equal treatment of bidders and shareholders.

Extension and Regulatory Approval Timing

It is common in the Dominican energy and infrastructure sector for transactions to require approvals beyond securities regulation, including authorisations from the National Energy Commission (CNE), the Operating Co-ordinator (OC), and, potentially, the Ministry of Energy and Mines or the National Competition Authority (Pro-Competencia). It is standard practice to seek and obtain these regulatory clearances after signing or announcement but before or concurrently with launching the formal public tender offer (OPA). The offer may be made conditional on receipt of outstanding sector approvals, provided those conditions are sufficiently defined.

Extension of the Offer Period

The SIMV may authorise extensions of the offer acceptance period where regulatory approvals are pending. Extensions are generally available in defined increments and require prompt notification to the market. The SIMV expects bidders to have a clear regulatory roadmap and a realistic timeline for obtaining required consents before granting extended offer periods. An offer may not remain open indefinitely: timely closure or termination is required once the regulatory uncertainties have been resolved or the conditions have become incapable of satisfaction.

Private Acquisitions as the Predominant Structure

The large majority of energy and infrastructure company acquisitions in the Dominican Republic involve privately held entities, as very few operators are exchange-listed. Private acquisitions are typically structured as share purchase transactions governed by a share purchase agreement (SPA) under Dominican law, or as asset purchases where the target holds concessions or licences that are more practically transferred as assets. The choice between share and asset structures depends on the regulatory nature of the target's business and the grantor authority's consent requirements.

Regulatory Authorisations

Transfers of shares in companies holding generation, transmission, or distribution licences, or concession agreements with the Dominican state, typically require prior approval from the National Energy Commission (CNE), the Ministry of Energy and Mines, the Superintendency of Electricity (SIE), and/or the relevant grantor authority. Change-of-control provisions in power purchase agreements (PPAs) and concession contracts must be carefully reviewed. Acquirers should confirm that consent or notice to the relevant grantor does not impose conditions on the transfer or require payment of additional fees.

Due Diligence and Representations

Comprehensive legal and technical due diligence is essential in private acquisitions of Dominican energy and infrastructure companies, with particular attention to regulatory compliance, tariff frameworks, outstanding contingent liabilities with the electricity distribution companies (EDENORTE, EDESUR, EDEESTE), and any pending administrative or judicial proceedings before the Superior Administrative Court. Private SPAs in this sector customarily include detailed representations and warranties covering title, regulatory standing, material contracts, tax compliance, and environmental matters, backed by indemnity regimes and, increasingly, representations and warranties insurance.

Anti-Corruption and Foreign Investment

Acquirers should include specific representations regarding compliance with anti-corruption laws, including the Law on Money Laundering and Asset Forfeiture (Law No 155-17). No specific regulatory approval is required for foreign investment in most energy sub-sectors, but registration with the Centre for the Promotion of Exports and Investment of the Dominican Republic (ProDominicana) is recommended and required for access to certain investment protections.

Regulatory Framework

The energy sector in the Dominican Republic is governed by a dedicated regulatory regime. The principal legislation is the General Electricity Law (Law No 125-01), supplemented by its implementing regulations. The Incentive Law for Renewable Energy Development (Law No 57-07) and its implementing regulations also play a fundamental role in the regulation of the energy sector. While these laws have been amended over time, the core of the regulatory framework remains intact.

Key Regulatory Bodies

The principal institutions involved in the licensing, installation, and operation of electricity industry activities in the Dominican Republic are the Superintendency of Electricity (SIE), the Ministry of Energy and Mines, and the National Energy Commission (CNE). The Executive Branch plays a decisive role in the approval of the authorisations necessary to operate. The Ministry of the Environment is also a key actor in granting the environmental permits required for the installation of energy projects.

Permits and Timelines

Developing and commissioning an electricity project in the Dominican Republic typically takes no fewer than 12 months and may extend to 24 months or more. This timeline reflects a combination of factors, including the construction of the necessary infrastructure and the management and approval of required permits. Applicants should expect processing times of no fewer than six months for environmental permits and no fewer than three months for the electricity concession authorisation itself, though actual timelines vary depending on the type and scale of the project.

The Superintendency of the Securities Market

The Superintendency of the Securities Market (SIMV) functions as the autonomous technical body responsible for the regulation, supervision, and promotion of the nation’s securities market. Its primary mandate is to ensure market integrity and transparency by overseeing the conduct of all participants – including stock exchanges, brokerage firms, and investment fund managers – thereby safeguarding the interests of the investing public. By enforcing rigorous compliance standards and maintaining a robust legal framework, the SIMV seeks to foster a stable financial environment that encourages capital formation and supports the sustainable economic development of the country.

Equity Market as an Available Pathway

Although the energy sector has not traditionally accessed the securities market, the legal framework does permit energy companies to issue shares to the public through the equity market. The regulatory infrastructure exists and is fully operational, albeit with limited practical use for equity M&A transactions in the energy sector, as demonstrated at a general market level by the public offering by Cesar Iglesias in 2023. Companies seeking to issue publicly tradable shares must be incorporated as a corporation (sociedad anónima), as the Law on Commercial Companies and Individual Limited Liability Enterprises (Law No 479‑08, as amended by Law No 31‑11) does not allow other types of entities to issue negotiable shares.

An Open Investment Regime

The Dominican Republic has established itself as an open market for foreign investment. The Foreign Investment Law (Law No 16-95) ensures equal treatment between domestic and foreign investors, with no restrictions on foreign investment in the energy sector. Foreign investors may repatriate capital and profits without prior authorisation. Registration with the Dominican Republic Export and Investment Centre (Centro de Exportación e Inversión de la República Dominicana – CEI-RD) is required within 180 days but is a declaratory filing that does not suspend the investment.

Investment Protection and Dispute Resolution

Foreign investors also benefit from protections under bilateral investment treaties and the Central America-Dominican Republic-United States Free Trade Agreement (CAFTA-DR), including guarantees against expropriation without compensation, fair and equitable treatment, and free transfer of funds. Investors have access to international arbitration mechanisms, including proceedings under the International Centre for Settlement of Investment Disputes (ICSID). These protections are particularly relevant for capital-intensive sectors such as energy and infrastructure.

National Security Review of Acquisitions

The Dominican Republic remains among the more open jurisdictions for foreign investment. The Executive Power retains discretionary oversight over defence-adjacent sectors and strategic border regions.

Obtaining a power generation or distribution concession requires compliance with the vetting framework under the General Electricity Law (No 125-01) and Law No 57-07: technical proficiency through engineering designs and grid-stability assessments, financial robustness through audited accounts and performance guarantees, and probity through disclosure of ultimate beneficial owners.

Export Control Framework

The export control regime is anchored in Law No 168-21 (General Customs Law), with the DGA as primary enforcement body. Defence-related or dual-use exports require prior authorisation from the Ministry of Defence under Law No 631-16. Energy investors must also navigate the Ministry of Environment (Law No 64-00) for hazardous materials and ProDominicana and the Ministry of Industry and Commerce for regulated commodities.

In the energy sector, the “Hostos Project” will export electricity to Puerto Rico through a submarine cable (anticipated start 2031), with approval from the United States Department of Energy – opening a new dimension for the Dominican generation market.

Competition Framework

The Dominican Republic's competition regime is governed by the General Competition Law (Law No 42-08), which seeks to promote and protect competition to enhance economic efficiency. The law prohibits anti-competitive practices and provides for the oversight of market concentration. Monopolies are permitted only in favour of the Dominican State.

Sector-Specific Antitrust Considerations in Energy

In the energy sector, the General Electricity Law (Law No 125-01) and its implementing regulations specifically address anti-competitive conduct within the electricity market. The law expressly prohibits vertical integration by preventing a single agent from simultaneously engaging in the activities of generation, transmission, and distribution, thereby precluding the formation of a vertical monopoly in the electricity sector. Transmission remains a state monopoly, operated through the national transmission company (Empresa de Transmisión Eléctrica Dominicana – ETED). Distribution companies, for their part, are permitted to self-generate up to a limited percentage of their demand as established by the applicable regulations but are otherwise restricted from engaging in generation activities.

Although Dominican law does not establish a general pre‑closing antitrust notification regime for M&A transactions, acquisitions involving electricity generation or distribution concessionaires are subject to sector‑specific ex ante review. In such cases, the Superintendence of Electricity (SIE), as the competent regulatory authority, assesses whether the transaction complies with applicable competition and economic concentration principles as part of the approval process for any change in ownership or control of the concession.

Approval and Notification

Dominican labour law does not require prior worker approval for enterprise sales. However, the new owner assumes all labour liabilities of the acquired company. Worker rights continue automatically upon change of employer, creating legal continuity in employment relationships.

Notification Obligation

The new owner must notify workers of the change within 72 hours. This requirement protects worker rights, ensuring employees are fully informed about new management. Dominican law maintains joint and several liability between seller and buyer for all labour rights and entitlements.

Labour Liabilities

Labour liabilities include statutory benefits such as severance payments and vacation accruals under the Labour Code (Law No 16-92). These benefits are calculated based on length of service and accrued salary. An acquisition does not reduce accrued worker entitlements; the new owner becomes jointly responsible for satisfying these obligations. All existing employment contracts continue unless terminated for cause.

Free Market Currency Regime

The Dominican Republic operates its foreign exchange market under a free market regime, respecting the principles established in the Constitution of the Dominican Republic. The Central Bank exercises its powers to issue general policies designed to maintain economic and exchange rate stability. However, these regulatory functions do not extend to M&A transactions.

No Central Bank Approval Required

M&A transactions and business combinations do not require approval from the Central Bank or any other monetary authority. The Central Bank plays no supervisory role in acquisitions or mergers, as these transactions are fundamentally private-sector activities. The absence of exchange control requirements for M&A transactions reflects the country's commitment to facilitating capital flows and business transactions in a market-driven environment.

Confidentiality of PPA Disputes

Power Purchase Agreements (PPAs) in the Dominican energy sector typically include arbitration clauses, meaning that disputes are generally resolved outside the public court system and remain confidential.

Thermal Conversion and Firm Capacity

Most regulatory disputes concern the interpretation of regulatory authority. A significant development is Administrative Court Decision No 0030-02-2025-SSEN-00057 of 25 January 2025, which validates a conversion pathway for thermal plants. The decision allows thermal generating plants that convert to natural gas to calculate their firm capacity (potencia firme) as if they were "new units," effectively erasing operational history and penalties that had diminished their market value. This reflects the Dominican state's pragmatic approach of using natural gas as a transitional fuel toward decarbonisation.

For M&A practitioners, this decision significantly alters asset valuation. A legacy thermal plant with poor performance history now possesses substantial latent value if conversion to natural gas is feasible, directly stimulating investor interest in acquiring undervalued assets.

Appellate Risk

However, this decision has not yet acquired the status of final, non-reviewable judgment. Advisers should include contractual risk-protection mechanisms in transaction documentation until all appellate remedies are exhausted.

Incentive Framework Under Law No 57-07

The Dominican Republic has pursued a clean energy policy since 2007, anchored in the Incentive Law for Renewable Energy Development (Law No 57-07). This law provides exemptions from import duties on equipment needed for renewable energy production, reductions in financing taxes, and recognition of emissions reduction credits, significantly reducing capital costs for project development.

Distributed Generation Regulation

At the start of 2026, the SIE issued Regulation SIE-007-2026-REG, governing the approval, interconnection, and operation of distributed generation installations. This regulation enables renewable projects to connect to medium and low-voltage distribution networks and inject surplus generation back into the grid, complementing Law No 57-07.

Renewable Energy Installed Capacity

As of December 2024, total installed capacity of the National Interconnected Electric System (Sistema Eléctrico Nacional Interconectado – SENI) reached 5,984 MW, of which renewable sources accounted for 2,022 MW – comprising 434 MW of wind, 934 MW of solar photovoltaic, 624 MW of hydroelectric, and 30 MW of biomass. In 2024, 274 MW of new renewable capacity entered operation (258.4 MW of solar and 15.6 MW of wind). Renewable energy represented approximately 34% of total installed capacity, with all new generation projects executed by private-sector operators.

Private Commercial Law Framework

Due diligence in energy and infrastructure transactions operates within the framework of private commercial law, where parties agree on the scope and nature of information to be shared. Confidentiality agreements typically accompany information exchanges, establishing the permitted uses of disclosed information, the duration of access rights, and remedies for unauthorised use or disclosure.

Limited Public Market Context

The Dominican securities market for publicly listed companies remains nascent. Although the regulatory framework exists for public offerings, market participation remains limited. To date, only one company – Cesar Iglesias – has conducted a public equity offering, and one entity (Leche Rica) has executed a public offering of investment trust units. This limited market history means that most energy and infrastructure M&A in the Dominican Republic occurs outside the public tender offer regime and is governed instead by the law of private contracts.

Board Discretion in Private Transactions

In private transactions, boards of directors have full discretion to determine which information to share with prospective bidders, subject only to confidentiality constraints and the company's commercial judgment. The level of due diligence permitted by the board is therefore determined by negotiation between the target and bidder, rather than by regulatory prescription.

No Statutory Restrictions on Disclosure

From a regulatory or legal standpoint, no provision restricts the categories of information that may be disclosed during due diligence of an energy or infrastructure company. However, practical limitations do exist. Companies often cannot freely disclose certain contracts executed with third parties – particularly Power Purchase Agreements (PPAs) with distribution companies and fuel supply agreements – which are typically subject to strict confidentiality clauses agreed with counterparties. These contractual confidentiality restrictions may limit the information a company can provide even during a transaction process.

Contractual Confidentiality as a Practical Limitation

Advisers should therefore conduct early diligence to identify any contractual confidentiality obligations that might impede disclosure of material transaction-related information. Where such restrictions exist, obtaining consent from the relevant counterparties (eg, fuel suppliers or distribution companies) before the offer process begins reduces friction and delays in subsequent negotiations.

Private Transactions as the Market Norm – Public Bid Requirements

To date, there are no publicly listed energy or infrastructure companies traded on the BVRD, meaning that the formal public bid announcement regime under Law No 249-17 is not currently triggered in practice for this sector. Energy and infrastructure M&A in the Dominican Republic is conducted through privately negotiated transactions, where no mandatory public announcement obligation applies and disclosure is governed exclusively by the terms agreed between the parties and any sector regulatory requirements.

Where a public tender offer is involved, a bid must be made public through a simultaneous filing with the SIMV and disclosure via the BVRD’s official information system, triggered at the point the bidder has made a firm decision to proceed and has the financial capacity to support the offer. The announcement must identify the bidder, describe the target and securities, state the consideration and its basis, and indicate the conditions to which the offer is subject.

Prospectus Requirements: Limited Application in a Privately Held Sector

Since energy and infrastructure companies in the Dominican Republic are privately held, prospectus requirements under Law No 249-17 are not triggered in practice for this sector. Where a public tender offer does arise, a formal offer prospectus must be submitted to and approved by the Securities Market Superintendency (SIMV) before launch. If the consideration includes bidder shares, those must be registered separately with the SIMV, significantly increasing the regulatory burden – which is why cash consideration dominates in both public and private energy M&A contexts. Dominican law imposes no requirement that bidder shares be listed on the Securities Exchange (BVRD) to be used as offer consideration.

Financial Statement Requirements: Private Flexibility Versus Public Offer Obligations

In privately negotiated energy and infrastructure transactions – which represent the norm in this sector – there is no regulatory requirement to produce financial statements in any prescribed form. The parties negotiate the scope and form of financial disclosure as part of the due diligence process. Where a public tender offer is involved, the offer prospectus must include audited financial statements of the bidder for a minimum of two fiscal years, prepared under the International Financial Reporting Standards (IFRS). The target’s most recent audited financials must also be included, enabling shareholders to assess the value of what they are being asked to sell.

Transaction Document Disclosure: Private Confidentiality vs Public Offer Filing Requirements

In private energy and infrastructure M&A, there is no obligation to file transaction documents with any securities regulator. Confidentiality of transaction terms is the norm, subject only to any disclosure obligations arising from the target’s existing financing agreements or regulatory reporting requirements. Where a public tender offer is involved, material transaction documents – including support agreements, irrevocable commitments, and financing letters – must be filed with the SIMV as part of the offer documentation package, with limited scope for confidential treatment of commercially sensitive provisions.

Duties Under Dominican Law

Under Law No 479-08, directors of Dominican companies owe duties of loyalty (lealtad) and diligence (diligencia) to the company. In the context of a business combination or takeover offer, these duties require directors to act in the best interests of the company and its shareholders as a whole, to be adequately informed before making any recommendation or taking any action, and to avoid conflicts of interest that could compromise their independent judgment.

To Whom Duties Are Owed

Dominican corporate law frames directors’ duties primarily as duties owed to the company itself and, through it, to shareholders collectively. There is no statutory formulation equivalent to the broader stakeholder duties found in some common-law jurisdictions. In practice, however, directors of publicly listed companies are expected to give consideration to the interests of employees and creditors in the context of major transactions, particularly where SIMV regulations require disclosure of the acquirer’s post-closing intentions regarding the workforce and business operations.

Fiduciary Duties in a Takeover Context

When a takeover offer is made or anticipated, directors must focus on obtaining the best reasonably available outcome for shareholders. This means conducting a genuine assessment of the offer’s merits, seeking independent financial advice where appropriate, and making a recommendation that is honest and based on the directors’ informed business judgement. Directors may not take defensive actions primarily designed to entrench themselves or frustrate a transaction that would be in shareholders’ interests.

Use of Special Committees

The formation of special or ad hoc committees of the board to evaluate takeover offers or business combinations is not yet a deeply embedded practice in the Dominican Republic, reflecting the relatively small number of contested public M&A transactions to date. However, governance best practice – and increasing SIMV guidance – points toward the formation of independent committees in transactions where conflicts of interest are present.

Conflict of Interest Situations

A special committee composed of independent directors is particularly appropriate where one or more members of the board have a personal financial interest in the transaction – for example, where a director is also a significant shareholder tendering into the offer, or where a management buyout is involved. In those circumstances, a committee of disinterested directors provides a governance mechanism to ensure the recommendation to minority shareholders is made by persons without a conflicting interest, which in turn strengthens the board’s legal position.

Formal Requirements

Law No 479-08 requires directors with a conflict of interest in any corporate resolution to declare that conflict and abstain from voting. In practice, boards handling contested or conflicted transactions will often go further and establish a formal committee with a specific mandate, its own legal and financial advisers, and documented deliberation procedures, in order to demonstrate procedural fairness.

Active Role in Negotiations

Dominican corporate law permits and expects the board of a target company to play an active role in evaluating and, where appropriate, negotiating the terms of a takeover offer. The board is not limited to a passive role of simply accepting or rejecting what is placed before it. Directors may engage with the bidder to seek improved terms, explore alternative transactions, or take steps to maximise shareholder value, provided those steps are consistent with their duties and do not involve defensive measures that improperly frustrate shareholder choice.

Board Recommendation

Once the board has completed its evaluation, it is required under SIMV regulations to publish a reasoned opinion on the offer for the benefit of shareholders. This opinion must address the offer price, the bidder’s stated intentions, the interests of employees, and the board’s overall assessment of whether the offer is in the best interests of shareholders. A clear and reasoned board recommendation is a central feature of the Dominican public offer process.

Shareholder Litigation

Shareholder litigation challenging board decisions in M&A transactions is not a prominent feature of Dominican legal practice, in contrast to the active litigation environment seen in jurisdictions such as the United States. The civil law tradition, combined with the relatively nascent development of the domestic capital markets, means that shareholders are more likely to exercise their rights through the offer mechanism itself – including by choosing not to tender – than through court challenges. That said, directors who fail to act in accordance with their duties risk civil liability claims and, in cases of egregious conflict of interest or fraud, potential criminal exposure under Dominican law.

Financial Advisers

It is standard practice for both parties to retain independent financial and legal advisers in Dominican energy and infrastructure M&A transactions, whether structured as a public offer or a privately negotiated deal. Energy asset valuation is technically specialised – built on dispatch projections, fuel costs, PPA revenues, and capacity payment structures – and advisers must have the sector expertise to engage with those inputs meaningfully.

Fairness Opinions

While Dominican law does not expressly mandate a fairness opinion, it is increasingly customary for the target's financial adviser to deliver one. In the energy sector this is particularly relevant, given that most transactions are privately negotiated – the fairness opinion provides the target board with a documented record that it discharged its duty of diligence under Law No 479-08 and obtained the best reasonably available price. This is especially important where the target holds state-granted concessions or PPAs with public entities, as arm's-length pricing carries regulatory as well as corporate significance. In transactions requiring CNE approval, a documented fairness process also strengthens the regulatory submission by demonstrating that the transaction was conducted on commercially reasonable terms.

Legal Advisers

Independent legal counsel is invariably retained by both sides. In the Dominican energy context, counsel's role extends well beyond standard transactional support to encompass the sector-specific layer present in virtually every deal: change-of-control provisions in concession agreements and PPAs, the regulatory consent process before the CNE and the SIE, implications for existing project finance facilities, and any notification or consultation obligations owed to the Dominican state as a contract counterparty. Where assets are subject to the General Electricity Law (Law No 125-01), specialist energy regulatory counsel is essential to ensure both parties fully understand the regulatory constraints and opportunities before terms are agreed.