What fiduciary duties do directors have under Dominican Republic corporate law when approving related-party loans?

Hello, esteemed Sir,

In the Dominican Republic, this operation is governed by the Director’s Duty of Loyalty, which requires acting at all times in the corporation’s best interest and not for the personal benefit of the director or their family company. A transaction such as a loan to a related party must be fully disclosed by the interested director, who must also abstain from voting.

Should the loan be approved under unfavorable terms, a breach of the Duty of Loyalty occurs. As a minority shareholder, you have two primary legal remedies: first, to seek the nullification of the corporate resolution on the grounds of being adopted through an abuse of control or in contravention of the law. Second, and more importantly, to initiate a Social Action for Liability (Acción Social de Responsabilidad) against the director, aiming to have them personally indemnify the corporation for the damages and losses resulting from the prejudicial loan. It is crucial to act quickly before the General Assembly approves the director’s management.

Wishing you a pleasant day.

CGR Lawyer, always at your service.