Buying a company or assets: when it makes sense to buy assets instead of shares

I When the business is attractive and the company is not

In a share deal the buyer acquires the company with its history. The vehicle continues to own the real estate, remains the employer of its workers and the party to its contracts, and in principle keeps the intellectual property and the permits granted in its name. That continuity can have a value that is hard to replicate.

But what remains inside the company is the bank debt, the guarantees granted, the tax contingencies, the labor claims, the litigation, the environmental obligations and the potential regulatory sanctions. Some of those obligations do not appear as certain liabilities on the financial statements. The first job of legal due diligence is precisely to distinguish economic value from legal history.

Financial debt illustrates the point. In a share deal it remains in the acquired company, so financing agreements, guarantees, covenants, acceleration events and change-of-control clauses must be reviewed. The fact that the formal debtor does not change does not mean the bank is indifferent to the change of owner. In an asset deal the debt may stay with the seller, but only after checking which assets are mortgaged or subject to restrictions and under what conditions they can be released at closing.

II Tax decides how much it costs to move the business

In the share deal, General Rule No. 07-2011 designates as withholding agent the legal entity that acquires shares or quotas, with a withholding of 1 % of the value paid to the seller, which constitutes a payment on account of the seller's capital gain. The release may be requested when it is shown that there will be no gain, no later than thirty days before the payment is due. In the typical structure, with an individual seller or no subsequent redistribution, the seller is taxed only once. If the seller is a company that later distributes the proceeds to its shareholders, the comparison must be redone.

In the asset deal there is no single rate, and the first step is to separate the definitive cost from the mere cash need. The 3 % real estate transfer tax is a real cost: it is not recovered and is added to the value of the asset. The ITBIS levied on the transfer of industrialized goods may not be: when the legal credit conditions are met, among them the buyer's status as a taxpayer, the deductibility of the expenditure, the separate statement of the tax in the document and its reporting, it operates as a creditable advance tax against the tax itself. In that case it produces a financing requirement at closing and a decision on who assumes it and how long it takes to recover. Treating both concepts as a single cost artificially inflates the price of the asset deal and distorts the comparison.

Law No. 30-26 added calendar variables that are now part of the negotiation. It opened a tax amnesty in force until December 31, 2026, which allows converting a detected contingency into a cleanup before closing. It reduced the late-payment surcharge from 10 % to 3 % per month, which alters the quantification of every tax contingency. It provided for the phase-out of the 2 % tax on taxed real estate transactions until its elimination in 2028 and the repeal, as of 2027, of the 1 % on company incorporation and capital increases, two typical costs of an asset deal with mortgage releases and a new vehicle. And it prohibited accumulating more than one incentive regime over the same activity, investment or transaction.

III What an asset purchase mitigates and what it does not

It is worth saying it plainly and precisely. An asset purchase does not transfer to the acquirer, by the mere fact of the acquisition, the seller's personality, its corporate history or its personal obligations. Defects in incorporation, poorly documented capital increases, previous share transfers, disputes between partners, surety bonds granted in favor of third parties and the fines and disqualifications imposed on the selling company do not become obligations of the buyer because the buyer acquired a plant or a trademark. No clause in a share deal produces that effect.

The exception is what defines the work. That history remains relevant when it affects the ownership of the asset, the power to dispose of it or its legal condition, and when the law establishes succession or joint liability. An internal dispute between the seller's partners does not concern the buyer; one that questions who could authorize the sale of the critical real estate does.

Table 1 · Where each contingency lands in an asset purchase

The boundary responds to a simple criterion. What belongs to the entity that operated the business stays with it. What the law attaches to the business, the asset or the acquirer follows along. That is why structuring does not consist in drafting better clauses, but in determining on which side of that line each finding falls, and through which legal route it arrives.

IV What the law attaches to the business

Article 11 of the Tax Code, as reformulated by Law No. 25-24, makes acquirers of establishments, companies and their assets and liabilities jointly liable. Liability for unassessed tax obligations ceases three months after the transfer takes place, provided the acquirer notified the Tax Administration no less than fifteen days before carrying it out, and is limited to the value of the assets received except in cases of willful misconduct. That turns a tax provision into a closing-agenda item.

The same article disarms the contractual illusion. Its paragraph VII provides that agreements between private parties concerning the position of the taxpayer are not enforceable against the Tax Administration, and its paragraph IX allows attributing obligations between related entities when the structure was adopted to avoid them. A clause stating that all prior taxes correspond to the seller allocates the risk between the parties. It does not decide whether the tax authority may pursue the buyer.

In labor matters, Article 63 of the Labor Code transfers to the acquirer the prerogatives and obligations of the contracts corresponding to the transferred establishment, including those already the subject of a claim. Article 64 makes the new employer jointly liable for obligations arising before the substitution until the action is time-barred. Article 65 requires notifying the transfer to the union, the workers and the labor authority within the following 72 hours and punishes non-compliance by making the assignor and assignee jointly liable.

Liquidating and rehiring does not by itself extinguish the risk when there is material continuity of the establishment and the staff. The Third Chamber of the Supreme Court of Justice has placed this in the realm of facts: no change of ownership or transfer of assets is required for the acquirer to assume the labor obligations, continuity in the operation of the establishment is enough, and determining whether there was a transfer of undertaking requires verifying that continuity case by case.

V The most valuable asset may not follow the business

A plant is not only the land and the machinery. It may depend on trademarks, software, distribution contracts, licenses, environmental authorizations, power access, incentives or administrative rights. In a share deal those rights remain inside the company if they actually belong to it, without prejudice to change-of-control clauses. In an asset deal they must be audited one by one.

Law No. 20-00 allows transferring a trademark separately from the company, but the transfer takes effect against third parties from its registration with ONAPI. In copyright, Law No. 65-00 requires assignments and licenses to be in writing and limits their effects to the rights, modalities, time and territory actually granted.

As of the date of this note, the Dominican Republic does not have a general prior merger-control regime under Law No. 42-08, and ProCompetencia filed in February 2026 a draft bill that would introduce it. That a transaction does not require general competition authorization does not mean it can close without regulatory consent: change-of-control approvals and license endorsements remain in the financial, insurance, electricity, telecommunications and environmental sectors. For the foreign investor, the registration of the investment and the documentation necessary for the subsequent exercise of remittance and repatriation rights must be added.

VI Contracts with the State: the legal limit of assignment

The extreme case is the contract with the State, and it deserves separate treatment because it is often the asset that motivates the purchase. Under Law No. 47-25, in force since January 2026, the assignment of a public contract is not an act between private parties. Its Article 151 reserves it to exceptional cases of public interest and encloses it within precise limits: the assignment may only cover up to 50 % of the value of the contract and does not proceed before performance has exceeded 20 %. It is also excluded in obligations of immediate execution or single delivery and in consulting or professional services contracts. Its paragraph I requires a technical justification report and verification of the assignee; paragraph II prohibits the transaction from generating increases, cost overruns or harm to the Administration; and paragraph III keeps assignor and assignee jointly liable before the contracting entity. On top of that legal basis lies a layer of control: for assignments signed as of July 6, 2026, the Comptroller General requires prior verification that the assignee meets the technical, legal and financial conditions of the case and is registered as a beneficiary in SIGEF, a technical report justifying the assignment and detailing the physical and financial status of the contract, registration by addendum and the proportional assumption of the guarantees by the assignee.

The structural consequence is direct. An asset deal cannot take away a portfolio of public contracts by decision of the parties: each contract depends on an authorization that may be denied, half of the contractual value is out of reach by legal mandate, a contract with incipient performance is not assignable at all, and denial leaves the buyer with productive assets and without the income that justified the price. A share deal preserves ownership because the contractor does not change, but carries over the supplier's entire track record, its status in the state registry and its disqualifications, if any. When the value lies in state contracts, the structure is usually decided on that comparison before the tax one.

VII The new liability: the penalty that falls on the company

Law No. 74-25 introduced the criminal liability of legal entities and Law No. 44-26 deferred the entry into force of that block until November 5, 2026, so as of the date of this note the regime is not yet in force. The attribution criterion is the organizational defect: the company is liable when the act of its organs or subordinates is a consequence of the breach of its own duties of direction, control or supervision.

The penalties explain why this matters in an acquisition. In addition to fines, the company may suffer forfeiture of assets derived directly or indirectly from the offense, closure of establishments for up to three years or permanently, revocation of administrative licenses and authorizations for up to five years, disqualification from participating in public tenders and legal dissolution.

Criminal liability is not extinguished by dissolution or merger, and it may extend to the legal entity that maintains control when it intervened, ordered, tolerated, consciously benefited from, or created a serious organizational defect. The buyer is not reached by the past merely by acquiring control, but it is reached by its conduct after closing. In an asset deal the penalty remains with the seller, although it is worth separating two distinct institutions. Forfeiture has a patrimonial dimension and falls on assets derived from the offense, with the express reservation of the rights of the good-faith third party, so it may reach what was acquired. Closure and revocation of authorizations, by contrast, are sanctions directed against the convicted legal entity and against the titles and establishments under the terms set by law, and do not operate as an encumbrance that automatically travels with any asset.

How the criminal risk travels

VIII From finding to contractual mechanics

Detecting the problem does not finish the work. Each finding must be converted into price, condition or protection. If the company has financial debt, the price may be negotiated on a debt-free, cash-free basis, adjusting the consideration by net debt, cash and working capital at closing. If there is volatility between signing and closing, closing accounts may be used; if the parties prefer a locked box, the negotiation shifts toward leakage controls.

Risks must not all be treated alike either. A known tax contingency requires a specific indemnity and not a generic representation. A quantifiable litigation justifies price retention or a guarantee trust under Law No. 189-II. The release of a mortgage is a condition precedent. An essential contract requires prior consent. And a contingency that destroys the economic logic of the transaction justifies the buyer simply not closing. Baskets, deductibles and survival periods must reflect the type of risk: a tax warranty need not expire at the same time as an ordinary commercial representation.

Table 2 · The decision, structure by structure

IX The architecture of the deal

Legal review identifies the risk. Tax determines how much it costs to move the business. Regulation decides which rights may follow it. Criminal law, as of November 2026, adds a different question about whether the business will be able to keep operating with its licenses. And the contract defines who pays when reality turns out to be different from the one that justified the price.

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This material is for general informational purposes and does not constitute legal, tax or financial advice regarding a particular transaction. The conclusions depend on the specific facts of each deal.