Law 28-23 on public trust is enacted

The president of the Dominican Republic, Luis Abinader, promulgated the law that regulates the public trust in the Dominican Republic in mid-March 2023. This legal norm is now Law 28-23, which regulates for the first time the important figure of the public trust, establishing an innovative legal framework for its organization, structure and operation.

According to a press release from the Presidency, the law stipulates that the constitution of public trusts will be subject to the approval of the Executive Branch by decree and must comply with article 128, paragraph 2, of the Constitution of the Republic, in specific cases.

Likewise, it guarantees that public purchases and contracting within the framework of the public trust are governed by Law No. 340-06, on Public Purchases and Contracts, Works and Concessions, and its modifications, ensuring effective and responsible management of public funds. .

Regarding access to information, the law establishes a precedent by requiring that all information contained in the Trust Contract or other acts subject to public registration be revealed by the trustor through its respective Department or Office of Access to Information. Public, in accordance with the Law of Free Access to Public Information.

The supervision and regulation of public trusts will fall to the government entity participating in the trust, the Chamber of Accounts, the Superintendency of Banks and the Superintendency of the Securities Market, as appropriate, depending on the purpose of the trust. This supervision structure guarantees transparency and accountability in the use of public resources.

The regulation in question also addresses administrative sanctions, establishing a system of classifying violations into very serious, serious and minor violations. The Superintendency of Banks will have the power to impose sanctions on fiduciaries, following the criteria established in Law no. 107-13, on the Rights of People in their Relationships with the Administration and Administrative Procedure.

Public trust rules

• The trust assets will be in charge of the trust entity from the formation of the trust assets, for their disposal, administration and conservation, according to the instructions issued by the trustor and the Technical Council.

• The actions of public officials who are part of the fiduciary governance and who intervene in decision-making or in the direction and administration of the trust assets, will be subject to the supervision of the Chamber of Accounts and the Comptroller General of the Dominican Republic.

• The correct administration of the assets and resources of public trusts will be subject to the supervision, transparency and control regime of the State over public funds.

• Through the fiduciary manager, the fiduciary will periodically send to the supervisory bodies, the financial statements corresponding to the close of each fiscal year, the accountability reports, the complementary trust documents and other reports that may be required.

• Debts, loans and other economic obligations that are the responsibility of the trust will be exclusively affected by the trust assets.

• The credits contracted by the trust will only be payable against the public trustor, when the latter has guaranteed the debt, has been validated and registered in the National Public Investment System (SNIP) or recognized as a contingent liability of the State.

• A matrix structure may be established to support compliance with the purpose of the trust with other trusts, under the criteria and processes regulated for said purpose.