Commercial Loan StructuringStructuring of commercial loans
After all, multi-lateral MFIs have been playing an important role in securing funding in the Dominican Republic for years, mostly for large infrastructural ventures.
Does your legal system use customary commercial credit transaction documents? The big names in the finance sector have, however, created their own models for collateralised credit business. Procedures for the enrolment of transferable securities differ according to the nature of the transferable Securities. Does your legal system typically have collateralized credit lines?
Indeed, funding through revolving lines of syndication is very widespread in the Dominican Republic. What is the general structure of all syndicated funds? In your jurisdictions, does the Act allow a facilitator to be nominated to act on account of other members of the consortium? Arrangers of revolving loans may act in the name of the members of the group.
In your jurisdictions, does the Act allow collateral and warranties to be fiduciarily retained by a collateral fiduciary for the account of the bank consortium? In the case of collateralised financial operations for SEVs (Special purpose vessels, SPVs), is it customary to use the funds to be funded for safekeeping? As a rule, would collateral be provided for the SPV units or would creditors demand immediate collateral?
It depends on the nature of the transactions. We also recommend it for those who have a credit in the Dominican Republic, as after January 2017 all mortgagors must have a Dominican Republic fiscal credit. Does the interest most frequently come from a basic interest rates of a banking institution or a floating interest rates (e.g. LIBOR, EURIBOR or HIBOR)?
When the latter, what is the most frequently used benchmark in your jurisdictions? According to dominant legislation, the contracting partners can decide for themselves on the interest rates to be applied (e.g. percentages, fix, variable). LIBOR is used as a regular benchmark for dollar-denominated lending operations. Is there a regulator's limit on the interest rates that can be applied to credit from banks?
The interest rates that can be applied to credit from banking institutions are not subject to any regulator's limitations. Participants in a credit contract are free to negotiate the interest rates. Do warranties apply in your jurisdictions? Absolutely - Usually Domino bankers require at least a guaranty or a co-signatory for a loan, sometimes more.
That means that when requesting a loan, the debtor must provide proof of security or have at least one or more co-signatories. Thus, for example, a traditional mortgages on immovable properties is subject to the general rules of the Civil Code (Articles 2114 et seq.) and the Land Registry Entry Act (108-05), which is also available under the specific rules of Law 189-11.
Civilian mortgages are subject to the German Code of Civil Law; commercial mortgages are subject to the German Commercial Code; furniture mortgages - usually to protect cars, machines, inventory and other movable property - are subject to Law 6186; all collateral arrangements for airplanes and vessels are regulated by the National Institute of civil Aviation, the Mercantile Marine Agency or the Naval Office;
Pledging of IPRs (e.g. patent, design, trademark, trading name) is subject to Act 20-00; pledging of FI s and S ( e.g. banking account, investment, certificates issued as deposits, stocks, loans, securities proceeds ) is subject to Currency and Finance Code, Stock Exchange Act and similar regulations.
Does legislation influence or limit the provision or enforcement of warranties in your jurisdictions (e.g., up-stream warranties)? Guarantee creation and enforcement processes vary according to the nature of the underlying assets. According to the new Insolvency and Reorganization Act, if insolvency proceeds are opened, the executability of securities and enforcement measures could be deferred.
Outline the most commonly used ways to structure the priorities of debt and collaterals. Typical ways of structuring the seniority of debt and securities are pledges or mortgage and lien arrangements (e.g. equities, finance products, movable property, claims and contract rights). Techniques for determining prioritisation and terms for improving safety vary according to the type of safety.
Creditors must also take into consideration the special rights laid down in the Civil Code. Is there any tax, stamping tax or other charge to be paid when a loan, surety or interest is granted or enforced? Perfecting securities or securities is associated with charges that differ according to the nature of the securities.
Example: Mortgages pfandbriefe are taxed at 2% on the amount hedged; share pfandbriefe are required to pay minimal registry charges at the Commercial Registry; movable pfandbriefe are required to pay minimal registry charges at the relevant Friedensgericht (the lower courts legally known as the registrars of such securities); IP pfandbriefe are required to pay minimal registry charges at the Dominican Intellectual Property Office; bank transfer payments are required to be made at 0.15% of the value of the amount conveyed.
There may be extra cost for the enrolment of liens in sectors subject to regulation.