#CostaRica 🇨🇷 #BDS_Article: Successes and Failures in Corporate Compensation Schemes
When designing a compensation scheme, companies typically consider two fundamental objectives: how...
The upcoming enactment of the new Criminal Code of the Dominican Republic, scheduled for August 4, 2026, represents one of the most significant changes for the business sector in terms of legal risk and corporate compliance.
For the first time, Dominican criminal law expressly incorporates a regime of criminal liability for legal entities. This means that companies could face criminal consequences stemming not only from the actions of their directors and officers, but also from the absence of adequate supervision, prevention, and internal control mechanisms.
This new approach substantially changes the traditional logic of corporate defense, as it will no longer be sufficient to claim lack of knowledge regarding irregular conduct occurring within the organization. The absence of effective controls could be interpreted as a relevant omission for purposes of attributing liability.
Article 8 of the new Criminal Code expressly establishes that companies must adequately prevent, supervise, and control their internal operations, raising the standards of corporate diligence expected by the authorities. This may have particularly sensitive implications in scenarios where companies have historically managed labor or regulatory risks without robust documentation and control protocols.
One particularly sensitive example involves the handling of the dismissal of employees enjoying special labor protection or immunity. Decisions made without proper legal validation, prior authorization, or internal traceability could eventually expose companies not only to labor and financial consequences, but also to scrutiny under broader corporate liability frameworks.
Likewise, corrupt practices or improper payments, systematic regulatory non-compliance, failures in middle-management supervision, irregularities in hiring or occupational safety matters, as well as internal decisions adopted without documented controls, could result in a significantly higher risk under the new criminal framework, particularly if authorities determine that the company lacked reasonable prevention and oversight mechanisms.
Key Recommendations for Companies
In practice, this change transforms corporate compliance into a strategic pillar of corporate defense, rather than merely a reputational or good-governance practice.
Under this new landscape, organizations are strongly advised to promptly undertake a comprehensive review of:
- internal policies and risk matrices;
- approval and supervision mechanisms;
- sensitive disciplinary and labor-related processes;
- whistleblowing channels and internal investigations;
- documentation controls and decision traceability processes; and
- training programs for both senior management and operational personnel.
The entry into force of this regime could considerably increase the legal exposure of companies operating without minimum documented internal control structures, particularly in environments involving significant labor, operational, or regulatory conflict.
Our advisory team can assist organizations in risk assessments, internal protocol reviews, strengthening compliance programs, and adapting control structures in order to mitigate legal contingencies and effectively prepare for this new regulatory landscape. Contact us.
