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Inclusion of freight in the calculation of customs duties

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From the enactment of the Organic Law for Economic Development and Fiscal Sustainability (“LODES“), published in Official Gazette Supplement 587 of November 29, 2021, freight was excluded from the calculation of the taxable base for customs duties.

However, Article 6 of Decision 571 – Customs Value of Imported Goods of the Andean Community (CAN) establishes that the customs value of the goods must include the transportation costs to the port or place of import. Therefore, the legal provision that excluded the freight cost is contrary to CAN communitarian legislation.

After several requests from Ecuador before the CAN, on March 16, 2022, Decision 894 was issued by which member countries were allowed to reduce a percentage of the transportation and/or related expenses from the taxable base for the calculation of customs duties until December 31, 2023. Decision 894 established that this period could be extended for an additional year if agreed by the member countries.

To date, there has been no extension of the exclusion period. Neither the Foreign Trade Committee (COMEX) nor the Customs Authority (SENAE) have issued a statement regarding the application of the legal provision included in the LODES as of January 2024.

In this scenario, the urgent draft of the “Law for Economic Efficiency and Employment Generation”, currently in process in the National Assembly, provides for the reinstatement of freight costs for the calculation of the taxable base of customs duties.

The reinstatement of freight costs for the calculation of the customs value of goods will increase the value to be paid for foreign trade taxes such as customs duties, the Child Development Fund (FODINFA) and the Value Added Tax (VAT), among others.

In the following link you can review the complete text of the Resolution:
DECISION 894

Andrea Moya, Parter at CorralRosales
amoya@corralrosales.com
+593 2 2544144

 

Fernanda Inga, Associate at CorralRosales
ainga@corralrosales.com
+593 2 2544144

DISCLAIMER: The previous text has been prepared for informational purposes. CorralRosales is not responsible for any loss or damage caused as a result of having acted or stopped acting based on the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm.

 

CORRALROSALES

Ministry Agreement No. MDT-2023-140 “General rules to control employer obligations and inspection proceedings”

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On November 14, 2023, the Labor Ministry issued the General Rules to Control Employer Obligations and Inspection Proceedings by means of the Ministry Agreement No. MDT-2023-140, regulating the following relevant aspects:

  • Employee data registry: The employer is required to register its employee’s information on the Sistema Único de Trabajo (hereby “SUT”) until 15 days after the beginning of the employment relationship.
  • Employment agreements registry: The employer is required to register the employment agreements on the SUT until 15 days after the beginning of the employment relationship.
  • Thirteenth and fourteenth remuneration accumulation (hereby “Remunerations”): Employees may require accumulating their Remunerations until January 15 of each year or 15 days after the beginning of their employment relationship (new employees).

Employees that may require to change the way they receive their Remunerations are able to do so by a written request presented until the January 15  of each year.

The following schedule is stablished for the employees to register the fourteenth and thirteenth remunerations and profit-sharing payment forms:

Thirteenth Remuneration Payment Registry RUC
Nineth digit Registry date From Until 1,2,3,4,5 January 5 February 5 6,7,8,9,0 February 6 March 6

 

Fourteenth Remuneration Payment Registry:
Coast and Insular Region RUC
Nineth digit Registry date From Until 1,2,3,4,5 March 20 April 20 6,7,8,9,0 April 21 May 21

 

Fourteenth Remuneration Payment Registry:
Amazon and Highland Region RUC
Nineth digit Registry date From Until 1,2,3,4,5 August 20 September 20 6,7,8,9,0 September 21 October 21

 

Profit Sharing Registry RUC
Nineth digit Registry date From Until 1,2,3,4,5 April 20 May 20 6,7,8,9,0 May 21 June 21

–    Internal Work Regulations: The employer that has 10 or more employees is required to elaborate and submit for approval the Internal Work Regulations before the Labor Ministry. The employer has a 30-day term to do so from the existence of the obligation.

–    Electronic Inspection: The Labor Ministry may conduct electronic inspections through the electronic mail registered in the SUT.

The information registered in the Labor Ministry Systems shall not be required by the labor inspectors unless the veracity of the information needs to be verified.

–    Sanction concurrency: The Labor Ministry may sanction the same employer for different obligations breach, to a maximum of 20 SBU (USD 9.000).

–    Recurrence: The Labor Ministry may sanction the recurrence con breach of labor obligations to a maximum of 20 SBU (USD 9.000).

Sanctions will be applied according to the following chart:

MINOR INFRACTIONS Number of employees 1 to 9 10 to 25 26 to 49 50 to 199 200 to 540 541 or more 1 SBU 4.17 SBU 7.33 SBU 10.5 SBU 13.67 SBU 16.83 SBU

 

SERIOUS INFRACTIONS Number of employees 1 to 9 10 to 25 26 to 49 50 to 199 200 to 540 541 or more 2.58 SBU 5.75 SBU  8.92 SBU 12.08 SBU 15.25 SBU 18.42 SBU

 

VERY SERIOUS INFRACTIONS Number of employees 1 to 9 10 to 25 26 to 49 50 to 199 200 to 540 541 or more 4.17 SBU 7.33 SBU  10.5 SBU 13.67 SBU 16.83 SBU 20 SBU

Sanctions may also be applied according to the specific breaches without considering the number of employees, as shown in the following chart:

SPECIAL INFRACTIONS Not registering the employment agreements $50 per agreement Late registering of employment agreements $25 per agreement Not registering the severance deed $200 per severance deed Late registering of the severance deed $50 per severance deed No authorization for reduce working day 0.5 SBU Not registering the thirteenth remuneration payment form $200 Not registering the fourteenth remuneration payment form $200 Not registering the profit-sharing payment form $200 Late registering of the fourteenth remuneration payment form $100 Late registering of the fourteenth remuneration payment form $100 Late registering of the profit-sharing payment form $100 Not registering the Internal Work Regulations $200 No fulfillment of the percentage on disabled personnel 10 SBU Hiring of children and adolescents $1.000

 

DISCLAIMER: The previous text has been prepared for informational purposes. CorralRosales is not responsible for any loss or damage caused as a result of having acted or stopped acting based on the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm.

 

CORRALROSALES

General Regulation on the Violet Economy impulse Organic Law

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On November 20, 2023, the Republic President issued the General Regulation on the Violet Economy Impulse Organic Law (hereby the “Regulation”) published on the Second Supplement of the Official Registry Nr. 444 on November 25, 2023. We highlight the following:

Equity Plans: Employers with 50 or more employees must elaborate, implement, and register their Equity Plans, according to the following conditions:

  1. Equity Plans minimum content: i) Company general data, ii) Inform containing the diagnosis outcome results, iii) Equity measures, priority, and term of execution, iv) Human and material resources, v) Implementation, follow-up, and evaluation schedule, and vi) Follow-up, evaluation, and revision system.
  2. The evaluation phase of the Equity Plans shall include quantitative and qualitative parameters on: i) The employer economic activity, operational years, number of employees (identifying their gender), ii) Hiring and selection process, iii) Training and education, iv) Rise and promotions, v) Administrative positions control (including gender equity control), vi) Salary equity, vii) Work environment conditions, schedules and benefits, viii) Exercise of personal, family and labor rights, ix) Female representation and participation on the work environment, and x) Harassment and discrimination prevention measures.
  3. The Equity Plans will be valid for 4 years and must be registered on the Labor Ministry.
  4. The Equity Plan must be physically and directly present to the Labor Ministry so long as a digital platform is stablished.

Sexual harassment in the workplace and prevention measures: The Regulation defines sexual harassment in the workplace, as occasional or repeated action whose purpose is to harm the sexual integrity of the employee. This type of harassment can occur during the working day, in work activities or because of these, whether by physical or digital means.

The following measures are established to prevent sexual harassment:

  1. Provide every year trainings on the importance of prevention and immediate action in cases of sexual harassment.
  2. Adapt the Internal Work Regulations to include mechanisms for preventing sexual harassment at work and including action plans to be taken.
  3. Develop protocols or procedures for the prevention and investigation of harassment, discrimination, and violence in accordance with the principles of i) Confidentiality, ii) Equality and non-discrimination, iii) Impartiality, iv) Non-revictimization, v) Non-retaliation against those who make complaints, vi) Pro human being, vii) Transversality and viii) Attention, protection and accompaniment.

Legal termination of the employment relationship (visto bueno) on grounds of harassment: The Regulation determines that the time for the prescription shall be counted from the moment the Employer has knowledge of the facts through its representative or highest authority.

The victim’s testimony may be presented orally or in writing but does not constitute sufficient evidence on its own. To safeguard contact between the offender and the victim, the Employer may temporarily relocate or separate the accused on paid leave, holiday, or temporary telecommuting.

Violet Seal: This is an optional certification that will be awarded by the Labor Ministry or by non-profit organization qualify to award this Seal. This certification implies a recognition for companies that stand out in the areas of equal treatment and opportunities at work.

Entities that meet the requirements for obtaining the Violet Seal must submit their application to the Labor Ministry, which will issue a report granting or denying within a maximum of 60 days. The ” Violet Seal” certificate will be valid for one year.

Verification of the percentages of inclusion on boards of directors: The Superintendency of Companies, Stock and Insurance will control that all entities have one female member for every three members on their Board of Directors until December 31, 2024.

Verificación de los porcentajes de inclusión en directorios: La Superintendencia de Compañías, Valores y Seguros controlará que hasta el 31 de diciembre de 2024 todas las sociedades cuenten con un miembro femenino en su Directorio por cada tres integrantes.

DISCLAIMER: The previous text has been prepared for informational purposes. CorralRosales is not responsible for any loss or damage caused as a result of having acted or stopped acting based on the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm.

 

CORRALROSALES

Draft law for economic efficiency and job creation

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On November 27, 2023, the President of the Republic submitted to the Legislature the draft of the “Law for Economic Efficiency and Job Creation”. The draft bill was classified as urgent; therefore, it must be processed by the National Assembly within the next 30 calendar days.

Below, we detail the most important content regarding tax and custom matters:

1.    Temporary tax domicile: Non-tax residents that enter Ecuador can apply a temporary tax regime. This regime allows the payment of income tax solely on Ecuadorian source income. The following individuals are eligible for applying this regime: (i) those who make an investment in real estate or productive activities of at least US$150,000; or (ii) those who have monthly earnings of at least US$2.500 over which social security contributions are paid.

2.    Income tax exemptions: Those taxpayers who invest in non-conventional renewable energy and industrialization of natural gases will be entitled to an income tax exemption of 10 years, beginning from the date in which income is generated. The exemption will not exceed the total amount of the investment.

3.    Additional deduction for employment generation: Those who generate a net increase of jobs for young people between ages 18 and 29 years old will be entitled to an additional deduction of the salary expense according to the following chart:

New jobs created Percentage of additional deduction 12 20% 25 30% 50 40% 100 50% 200 60% 300 70% 400 80% 500 90%

4.    Tax stability: Taxpayers who pay 2 additional percentage points over the applicable income tax rate are entitled to tax stability over the tax regime.

5.    Self-withholding for large taxpayers: Large taxpayers will be required to self-withhold income tax over their taxable income on a monthly basis. The withholding rate will be up to 3%, as established by future regulations.

6.    VAT paid on real estate projects: There will be a right to obtain a refund of VAT paid on the acquisition of goods and services for the construction of real estate projects.

7.    Banking: The use of the financial system is mandatory for all transactions over US$100.00 (the currently value is US$1,000.00).

8.    Calculation of customs tariffs: The freight cost is reinstated for the calculation of the taxable base of customs duties.

9.    Investment contracts: Job creation is required for applying tax incentives for new investments.

10.    Free Trade Zones: A free trade zone regime is established. This regime may be applied by a single user, or by several users organized under the same regime. The activities that can be developed in a free trade zone are:

a.    Production of goods, such as manufacturing, agriculture, aquaculture, and forestry.
b.    Provision of services, including tourism, auditing, consulting, professional services, telecommunications, healthcare, scientific research, and technical support.
c.    Commerce and logistics, such as transportation, storage, distribution, and handling.

The free trade zone regime will have the following characteristics:

a.    Tax regime: Tax benefits include:

–    Income tax rate of 0% for 5 years and 15% for the entire period of the regime.
–    Exemption of foreign trade taxes on the import of capital goods and raw materials, destined to the free trade zone.
–    Exemption from Value Added Tax (VAT), Outflow Tax (ISD), foreign trade taxes and other taxes that may be created in the future regarding the transactions carried out within the free trade zone.
–    Exemption of income tax on dividends paid by operators and users to their shareholders.

b.    Labor regime: employment agreements entered within the free trade zones will be considered as temporary and can be renewed indefinitely.

c.    Customs regime and foreign trade:

–    Goods that enter the free trade zone from the Ecuadorian territory shall be considered as exported.
–    Goods that enter the Ecuadorian territory from a free trade zone are considered imported. Up to a maximum of 30% of the goods produced in free trade zones can be allocated to the Ecuadorian territory.
–    Goods exported from a free trade zone to third parties are not subject to export customs formalities.

11.    Remission of interest, fines and surcharges: The remission of interest, fines and surcharges is established for the payment of tax obligations collected by the Internal Revenue Service. The percentages, deadlines and conditions will be established by future regulations.

NOTE: The previous text has been prepared for informational purposes. CorralRosales is not responsible for any loss or damage caused as a result of having acted or stopped acting based on the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm.

 

CORRALROSALES

Regulation to install and operate distributed generation systems for self-sufficiency

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Under Resolution No. ARCERNNR-031/2023, effective since November 1, 2023, the Agency for Regulation and Control of Energy and Non-Renewable Natural Resources (“ARCERNNR”) issued Regulation No. ARCERNNR-008/23 containing the “Framework for Distributed Generation Enabling Self-Sufficiency Among Regulated Electric Energy Consumers” (“Regulation”).

This framework establishes the requirements and procedure to install and operate a distributed generation system for self-sufficiency (“SGDA”). An SGDA comprises equipment generating electrical power for the self-sufficiency of individuals or entities with supply contracts with an electricity distribution company (“Regulated Consumers.”)

The procedure to install and operate an SGDA is carried out before the electric distribution and commercialization company (the “Distributor”) in whose service area the Regulated Consumer is located.

Key features of an SGDA, as per the Regulation, include:

  • Nominal power limitations are based on whether it injects electrical energy into the distribution network. If it does, the nominal power is limited to 2MW. In cases where it does not inject electrical energy, the nominal power is determined by both the maximum power demand registered by the associated Regulated Consumer with the SGDA and the approved connection capacity by the Distributor.
  • It is possible to use energy storage equipment.
  • It can operate under the following self-supply modalities:
Individual Multiple The SGDA and the Regulated Consumer are in the same property. The SGDA and the Regulated Consumers are in the same property (in a condominium or under a horizontal property regime). The SGDA and the Regulated Consumer are in different properties. The property where the Regulated Consumer is located must not be a condominium or declared under a horizontal property regime. The SGDA is in a property, and the Regulated Consumers are concentrated in another property constituted in a condominium or declared under the horizontal property regime. The SGDA and the Regulated Consumers are in different properties; the latter belong to the same legal entity.

The term during which a Regulated Consumer may operate an SGDA depends on the useful life of the generation technology used, which is limited as detailed below:

Technology Useful life (years) Photovoltaic 25 Wind 25 Biomass 20 Biogas 20 Hydraulic 30

The Regulated Consumer must own the SGDA or acquire ownership at least 5 years before the end of the authorized term of operation of the SGDA. The Regulated Costumer can engage third-party services for installation, operation, maintenance, dismantling, and other SGDA-related activities.In excess energy production, a credit is generated for the Regulated Consumer, which can be offset against its consumptions from the distribution network. The compensation’s treatment varies based on the applicable tariff: (i) general tariff without demand, (ii) general tariff with demand, (iii) general tariff with hourly demand.

The Regulation, published in Official Registry Supplement 441 on November 21, 2023, can be accessed through the following link:

NOTE: The previous text has been prepared for informational purposes. CorralRosales is not responsible for any loss or damage caused as a result of having acted or stopped acting based on the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm.

 

CORRALROSALES

The citizen participation processes for environmental consultation are reactivated

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The Constitutional Court, by means of a judgment in Case 51-23-IN, dated November 9, 2023, notified on November 17, 2023, declared Presidential Decree 754 unconstitutional, considering that it violates the constitutional rule of reserve of law.

The effects of the ruling will be deferred until the National Assembly issues the corresponding law. Therefore, Decree 754 may be applied to carry out the Citizen Participation Processes for Environmental Consultation, provided that the guidelines and standards determined by the Court in paragraphs 196 to 205 of the decision are applied in such processes.

Among the guidelines and standards, the following stand out:

Regarding the subjects consulted, Decree 754 determines that they are the community or communities, regardless of their ethnicity, whose environment may be affected by any decision or permit in environmental matters, which will be determined according to the area of direct social influence of the decision or permit. Those people who can demonstrate, in a technical and/or legal manner, the environmental impact that could be caused to them, may also be considered as consulted subjects. The subject consulted must be determined in a broad and representative manner, so that any person who considers, in a substantiated manner, that the measure affects them must be included in the process.  The direct impact analysis should not demand technical requirements that are difficult to comply with for a community to be considered potentially affected.

With respect to financing, although Decree 754 determines that the costs or values demanded by the citizen participation process for the environmental consultation will be assumed by the operator of the project, work or activity, and that the latter will provide the necessary facilities and resources for the execution of such process, the Court determines that the State may not delegate the environmental consultation process, in any aspect (i.e. provision of inputs or financing) to the operator of the project, work or activity to be carried out.

The Ombudsman’s Office is obliged to promote the bills on environmental consultation that it has presented and that are being processed in the Assembly or, failing that, to draft a bill regulating the matter. It also establishes that the National Assembly must approve, within a period of one year, counted as of the moment of the impulse or presentation of the new project.

Finally, the Court emphasizes that the process of environmental consultation should not be confused with that of prior, free, and informed consultation, and therefore the content of Decree 754 should not be applied to communes, communities, indigenous people, and nationalities.

carlos-torres

Carlos Torres, Senior Associate at CorralRosales
ctorres@corralrosales.com
+593 2 2544144

NOTE: The previous text has been prepared for informational purposes. CorralRosales is not responsible for any loss or damage caused as a result of having acted or stopped acting based on the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm.

 

CORRALROSALES

Extension of the Enforcement Deadline of the Law for Environmental Promotion

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On January 12th, 2020, the Constitutional Court of Ecuador issued the ruling 58-11-IN/22, by which the Law for Environmental Promotion and Optimization of State Revenue was declared unconstitutional for infringing the unity of subject matter principle.

The Constitutional Court ordered the delay of the effects derived from the ruling until December 31, 2023, aiming to avoid the creation of a severe regulatory gap related to tax matters and to guarantee legal certainty. However, neither the Executive, nor the National Assembly submitted to the Constitutional Court any information regarding the progress of the amendments needed to avoid such legal void.

Therefore, the Constitutional Court issued the verification order 58-11-IN/23 on November 1st, 2023, by which it extended the enforcement deadline for the Law of Environmental Promotion and Optimization of State Revenues until December 31, 2024. The deadline extension is only applicable to those norms that have not been amended, repealed, or replaced by other laws.

Among the articles that remain enforceable, we highlight the following:

  1. Article 10, clause 18 of the Internal Tax Regimen Law which regulates the deduction of expenses related to the acquisition, use or ownership of vehicles engaged in revenue-generating commercial activities.
  2. Unnumbered article added below the article 162 of the Equity Tax Law which regulates the right to use as tax credit for the payment of income tax, the Outflow Tax (ISD) paid on imports of raw material, supplies and goods employed in productive processes.

 

Andrea Moya, partner at CorralRosales
amoya@corralrosales.com
+593 2 2544144

NOTE: The previous text has been prepared for informational purposes. CorralRosales is not responsible for any loss or damage caused as a result of having acted or stopped acting based on the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm.

 

CORRALROSALES

Regulation of the Law on Personal Data Protection

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On November 6, 2023, the President of the Republic signed the Executive Decree 904, through which the Regulation of the Law on Personal Data Protection is issued (hereinafter the “Regulation“).

Below, we highlight the key points:

I. Definitions:

The Regulation includes relevant definitions for the application of the Law on Personal Data Protection (hereinafter “LOPDP“). One of the most important definitions is the term “large-scale processing” which includes the processing of data affecting a large number of data subjects. To determine “large-scale processing” the following factors must be considered: the number of data subjects, volume and variety of data, duration or permanence of the processing activities, and the geographical scope.

Specifically, the Regulation considers the following as “large-scale processing”:

    1. Patient data from hospitals and healthcare institutions.
    2. Data on the movement of individuals using public transportation.
    3. Real-time geolocation data.
    4. Data from customers from insurance companies or financial institutions.
    5. Data for behavioral advertising by a search engine.
    6. Data of content, traffic, and location data by telecommunications or internet service providers.

II. Obligations of data controllers and processors located outside of Ecuador:

Controllers and processors of personal data not established in Ecuador but processing data of residents in Ecuador must appoint a special representative in the country.

III. Impact assessment of personal data processing:

LOPDP establishes the obligation to evaluate the impact of personal data processing when it is identified that such processing may generate a high risk to the rights and freedoms of the data subject.

The Regulation describes an impact assessment as a preventive analysis in which the data controller evaluates the actual impact of the data processing.

The impact assessment must be submitted to the Data Protection Authority and should include the following elements:

    1. Description of the operations and purposes of processing.
    2. Reasoning for the necessity to carry out the processing.
    3. Risk assessment to the rights of the data subjects; and,
    4. Security measures to address the risks.

IV. Record of Processing Activities:

The following are required to maintain a Record of Processing Activities: Controllers of personal data processing with 100 or more employees, controllers processing special categories of personal data, and any processors if the controller has the obligation to maintain such record.

The Record must include:

    1. Name and contact details of the controller,
    2. Purposes of the processing,
    3. Categories of recipients to whom the data has been communicated,
    4. Categories of personal data of the subjects,
    5. Use of profiles,
    6. International transfers,
    7. Legitimating basis;
    8. Data retention periods, and
    9. General description of technical, legal, administrative, and organizational measures.

V. Data Protection Officer:

Individuals with a third-level degree in Law, Information Systems, Communication, or Technologies, and a minimum of 5 years of professional experience, may be appointed as Data Protection Officers (hereinafter “DPO“).

The DPO may perform other data protection-related activities that do not conflict with the inherent responsibilities of their role.

The DPO can be hired as an employee or through a service provision contract.

Controllers or processor that are not required to appoint a DPO may do so voluntarily as a good practice and proof of compliance with the principle of proactive responsibility.

VI. Joint Responsibility:

Controllers jointly responsible for data processing with the same purposes and means will be considered as joint controllers. These joint controllers will establish their tasks and responsibilities regarding data protection through a contract, which data subjects can access if required.

VII. International Data Transfers:

The Data Protection Authority will establish the countries or organizations with an adequate level of data protection for international data transfers.

If the country or organization to which the international data transfer is made has not been qualified by the Authority, the transfer will only be permissible if certain legal instruments support the transfer.

The Regulation establishes the following criteria to establish if a country or organization has an adequate level of data protection:

    1. Legislation and sectoral regulations in the country on data protection.
    2. Subsequent regulations on personal data by authorities.
    3. Judicial rulings on data protection.
    4. Recognition of rights and mechanisms for their exercise in favor of data subjects.
    5. Establishment of rights and duties of data controllers and processors.
    6. Independent and autonomous authority.
    7. International commitments assumed by the country or organization regarding personal data protection.
    8. Legislation related to national security, public security, and any laws pertaining to the defense and security of the State.

The National Data Protection Registry will record:

    1. The country where the data recipient is located.
    2. The categories subject to the transfer.
    3. The purposes of the transfer.
    4. The identification data of the recipient.
    5. The authorization mechanism or exemption criteria for the transfer.

VIII. Security Breaches:

The Regulation establishes that security breaches must be reported to the Data Protection Authority and the Telecommunications Regulation and Control Agency in the following cases:

    1. When personal data has been destroyed, no longer exists, or is no longer available to the data controller,
    2. When personal data has been altered, corrupted, or is no longer intact,
    3. When the data controller has lost control or access, or personal data is no longer in their possession,
    4. When the processing has not been authorized or is unlawful, including unauthorized disclosure or access by recipients.

The Regulation will enter into force upon its publication in the Official Registry.

    Rafael Serrano, asociado de CorralRosales, con traje y corbata. En el fondo, una parte de Guayaquil (Ecuador)

Rafael Serrano, associate at CorralRosales
rserrano@corralrosales.com
+593 2 2544144

NOTE: The previous text has been prepared for informational purposes. CorralRosales is not responsible for any loss or damage caused as a result of having acted or stopped acting based on the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm.

 

CORRALROSALES

Repeal of resolution no. SCVS-INC-DNCDN-2023-0019 regarding the additional documentation to be submitted by the legal representatives of companies incorporated in Ecuador

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By Resolution No. SCVS-INC-DNCDN-2023-0022 dated October 26, 2023, published in the First Supplement of the Official Gazette No. 428 of October 31, 2023, the Superintendent of Companies, Securities and Insurance ordered the repeal of Resolution No. SCVS-INC-DNCDN-2023-0019 dated August 29, 2023, which established the “Guidelines of probity and civil capacity of companies or individuals which act as legal representatives or officers of companies subject to the control and supervision of the Superintendence of Companies, Securities and Insurance”: Therefore the following documents will NO longer be required for the recordation of appointments in the Commercial Registry or the Superintendence of Companies, as the case may be, and on an annual basis before said entity:

  1. The certificate of not appearing in the Database of Persons with Convicted Ruling, issued by the Financial and Economic Analysis Unit (UAFE),
  2. Proof of not appearing on the following public international lists: (i) Office of Foreign Assets Control (OFAC); and (ii) United Nation’s Security Council.

The repeal is based on the fact that the Financial and Economic Analysis Unit (UAFE), and not the Superintendence of Companies, Securities and Insurance, is in charge of elaborating policies and strategies on prevention of money laundering and crime financing, as well as requiring information from the regulated entities or individuals.

     

Sofía Rosales, associate at CorralRosales
srosales@corralrosales.com
+593 2 2544144

NOTE: The previous text has been prepared for informational purposes. CorralRosales is not responsible for any loss or damage caused as a result of having acted or stopped acting based on the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm.

 

CORRALROSALES

Are the plans for the mining sector to be fulfilled, or not?

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Throughout our lives, especially within the professional and corporate sphere, we are constantly making plans. These plans, in theory, should be related to the different challenges and opportunities we have or plan to have. However, the most important aspect of these plans is that we can execute them. Doing so signifies an achievement of objectives, beyond the results.

In October 2020, the Ministry of Energy and Non-Renewable Natural Resources (now the Ministry of Energy and Mines) developed and enacted the Mining Sector Development Plan 2020-2030. According to Minister René Ortiz Durán, the goal of this plan was to contribute to the fulfillment of both national and global objectives. It also represents a strategic vision for the development of the mining sector through the implementation of harmonious, efficient, transparent, and sustainable industry management.

On the other hand, in August 2021, through Presidential Decree No. 151, the Action Plan for the Ecuadorian Mining Sector was issued, which determined public policies to promote the sector’s development. These policies have been fundamental for certain decisions and actions of the government of Guillermo Lasso.

Now that the electoral campaign has ended, and Daniel Noboa has been elected, it is advisable to look back and review the plans proposed for the mining industry.

The “Multi-year Work Plan for the President and Vice President of the National Democratic Action Alliance” consists of 76 pages, and it emphasizes that investment in strategic sectors is a priority for national economic growth. It will promote the development of activities in hydrocarbons, mining, energy, electricity, telecommunications, water resources, and the environment. Regarding the topic we are analyzing, the ADN movement established three actions: i) promoting national mining production through delegation to private initiatives, cooperatives, and associations of popular and solidarity economy; ii) regularizing artisanal activities so that participants can affiliate with the IESS (Social Security Institute) and have access to healthcare and loans to improve their living conditions; and iii) conducting controls against illegal mining, coordinated by the armed forces and national police, to dismantle the involved mafias and gangs.

Apart from the legal nuances that the industry is currently facing, especially before the Constitutional Court, President-elect Noboa has the legal resources to carry out his Work Plan. However, it will be crucial for him to have a qualified team that, along with his political will, can implement what has been planned. We don’t know if they will plan something new, but it is essential that there is a clear work plan for the 18 months of his term to provide some certainty to one of the few sectors that can truly inject foreign direct investment into the country.

 

Carlos Torres Salinas
Senior associate at CorralRosales
ctorres@corralrosales.com

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