Ecuador´s action plan for the mining sector

Ecuador´s action plan for the mining sector - CorralRosales - Lawyers Ecuador
Through Executive Decree 151, signed on August 5, 2021, the President of Ecuador issued an Action Plan for Ecuador’s Mining Sector (from now on “Action Plan”) that seeks promoting development through the positioning of mining as a relevant industry of the country’s economy.

The main objective of this Action Plan is to articulate the development of efficient and responsible mining and promoting national and foreign investment to achieve the exploitation of Ecuadorian mineral resources through the best practices in the industry.

In turn, through this Action Plan, Ecuador also seeks to reaffirm its commitment to guarantee legal security by complying with existing regulations and respecting pre-existing rights.

With this in mind it is important to highlight the guidelines, included in the Action Plan, that the Ministry of Energy and Natural Resources (after this “the Ministry”) must follow. On this sense, the Ministry must:

1. Communicate clear and transparent information regarding the amount and destination of benefits and taxes received from the mining industry, and regarding public policy in this matter.

2. Design a comprehensive plan for the prevention, combat, and application of sanctions to the illicit exploitation of minerals.
3. Work with the Ministry of the Environment, Water and Ecological Transition so that the appropriate measures are adopted for environmental permits related to the mining industry to be resolved in a timely manner, so they do not interfere with investment commitments.

4. Instruct the National Mining Company ENAMI EP to facilitate associative agreements to attract and allow the participation of private investors.

5. Promote the adoption and compliance with international codes, protocols, agreements, declarations and instruments in each of the phases of the mining activity.

6. Encourage the adoption of socially and environmentally responsible practices and respect for labor rights and access to complaint mechanisms.

7. Develop a technological tool that facilitates and guarantees the correct exercise of current and future mining rights.

The Action Plan also instructs the Agency for the Regulation and Control of Energy and Non-Renewable Natural Resources to prepare a detailed report about mining rights conceded under the regimes of large mining, medium mining, small mining and artisanal mining that have been granted and are in force.

Finally, the Action Plan provides that the Ministry presents a project to create a Public-Private Mining Advisory Council that will promote civil society participation in the construction of public mining governance.

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Regulations for the return to in person work activities in the private sector

Regulations for the return to in person work activities in the private sector - CorralRosales - Lawyers in Ecuador

The Ministry of Labor issued Ministerial Agreement MDT-2021-214, published in the Official Register No. 507 of August 02, 2021, that contains the “Guidelines to Return to In Person Work Activities”. Hereafter their main features:

With the exceptions detailed below, it is up to employers to determine if employees return to in person work, whether they are immunized or not.

Employers must comply with the “Guide and General Plan for the Progressive and Safe Return to In Person Work Activities” approved on June 29, 2021, by the Emergency Operations Committee – COE National.

Employees with aggravating conditions or who have under their care a person with an aggravating condition, who have been vaccinated and necessary time for immunization has lapsed, shall return to in person work.

Even if employees with aggravating conditions are immunized -or the individual with aggravating conditions under their care is immunized- if the occupational physician or a center accredited by the Ministry of Public Health, certifies that the employees may not perform in person work, he or she will remain under telework modality.

Employer´s failure to comply with the Ministerial Agreement may be sanctioned by the Ministry of Labor with a fine up to one (1) minimum statutory wage (currently US$400).

Aggravating conditions are considered:

  • Individuals over 65 years old.
  • Individuals with chronic non-transmissible diseases.
  • Individuals with cardio-vascular diseases.
  • Individuals with cerebrovascular diseases.
  • Individuals whit disability of 50% or more.
  • Pregnant and breastfeeding women.
  • All types of congenital malformations of the heart and all types of heart valve diseases.
  • Oncological and oncohematological patients with recent diagnosis or active disease.
  • Individuals with brain tumor in any state and any type.
  • Chronic renal insufficiency.
  • Cirrhosis.
  • Individuals who have received an organ transplant or are waiting for a transplant.
  • Individuals with sequels of severe burns.
  • Individuals with Klippel Trenaunay syndrome.
  • Individuals with thoracic-abdominal aneurysm.
  • Individuals with HIV.

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Implementation of boards of directors of the port authorities of Guayaquil, Manta, Puerto Bolívar and Esmeraldas

Implementation of boards of directors of the port authorities of Guayaquil, Manta, Puerto Bolívar and Esmeraldas - CorralRosales - Lawyers Ecuador
By Executive Decree 78 of June 15, 2021, the President of the Republic implemented the boards of directors of the Port Authorities of Guayaquil, Manta, Puerto Bolivar and Esmeraldas.

The boards will be constituted as follows:

1. Members of the board of directors:

  1. A member appointed by the President of the Republic, who shall preside over the board of directors
  2. A member appointed by the General Commander of the Navy of Ecuador, who will replace the president of the board of directors in case of absence.
  3. A member appointed by the Ministry of Production, Foreign Trade, Investment and Fisheries.
  4. A member appointed by the Ministry of Transportation and Public Works; and
  5. A member appointed by the Customs Administration.

The Subsecretary of Ports and Maritime and River Transportation of the Ministry of Transportation and Public Works will act as secretary of the boards of directors. The members of the board of directors are freely appointed and removable officials.

The President of the Republic is responsible for appointing the managers of the Port Authorities of Guayaquil, Manta, Puerto Bolivar and Esmeraldas.

2. Functions of the board of directors (Article 8 of the National Port Administrative Regime Law):

  1. Submit an annual report to the Direction of the Merchant Marine and Littoral -currently Subsecretary of Ports and Maritime and Fluvial Transportation of the Ministry of Transportation and Public Works- on the activities carried out during the previous fiscal year.
  2. To appoint the Departmental Chiefs from among the candidates suggested by the Manager.
  3. To know and approve the Financial Statements, balance sheets, and other reports of the Entity.
  4. Approve the Port Services Regulations, organization manuals, personnel organization manuals and other pertinent regulations, based on the preliminary drafts submitted by the Manager; and formulate the regulations of uniform application to all the Port Entities, to be submitted for consideration of the Direction of the Merchant Marine and Littoral -currently the Subsecretary of Ports and Maritime and Fluvial Transportation of the Ministry of Transportation and Public Works.
  5. To authorize the Manager to sign contracts, investments, acquisitions, studies and other acts necessary for the fulfillment of the purposes of the Entity, the amount of which requires the Bidding Contest, subject to the Bidding Law -current public contracting regulations- and the approved Budget.
  6. To resolve in second instance the claims of the users, in all matters related to port services.
  7. The others determined in the General Ports Law and in the respective statutes.

3. Liability of the members of the board of directors (Article 11 of the National Port Administrative Regime Law):

They are civilly and criminally responsible, personally and jointly and severally, for all acts or resolutions that are detrimental to the interests of the Entity and that have been taken with their vote. They are especially liable for decisions that contravene Port policy and resolutions issued by higher authorities. The manager and officers of the Entity shall also be liable for their participation in such acts.

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New methodology for the calculation of fines for infractions to the Organic Law for the Regulation and Control of Market Power

New methodology for the calculation of fines for infractions to the Organic Law for the Regulation and Control of Market Power - CorralRosales - Lawyers Ecuador
The Resolution No. SCPM-DS-2021-19 issued by the Superintendency of Market Power Control (“SCPM”) containing the new methodology for the calculation of fines for committing infractions to the Organic Law for the Regulation and Control of Market Power (the “LORCPM” and the “Fines Calculation Resolution”, as appropriate) was published in the Fourth Supplement to the Official Gazette No. 465, on June 3, 2021.

Along with other modifications introduced in the Regulation for the Application of the Organic Law for the Regulation and Control of Market Power (“RALORCPM”) last December, the power to determine fines was brought back to the SCPM. Up until this reform, the determination of fines was regulated by Resolution No. 012, issued by the Market Power Regulation and Control Board (“Resolution 012”).

Although this new calculation model is based on the same principles as Resolution 012, it provides greater clarity in the application and, therefore, greater predictability – and the possibility of verification – of the fines that may be imposed in the event of an infringement of the LORCPM. The calculation formulas incorporated in the Fines Calculation Resolution continue to have a certain level of complexity, but each term is clearly defined, which will allow the fined operator to verify it.

The Fines Calculation Resolution seeks to transmit a dissuasive effect on economic operators through the application of exponential fines, so that those imposed for the most serious anti-competitive acts are proportional and markedly higher to those applicable to the less serious infractions.

The aforementioned resolution establishes the following criteria for the calculation:

  1. Turnover in the relevant market
  2. Degree of participation in the relevant market
  3. Temporality
  4. Size of the relevant market
  5. Market concentration and state of competition
  6. Geographical determination segmented by province or at the national level.
  7. Effect of the infringement on the rights and legitimate interests of consumers and users or on other operators
  8. Benefits obtained as a result of the infringement.
  9. Proportion
  10. Weighing
  11. Damage to the competition
  12. Subsidiarity
  13. Aggravating and mitigating circumstances that concur in relation to each of the investigated/responsible parties.

And establishes as calibration parameters the severity rating as set forth by the LORPCM (mild, serious, or very serious) as well as specific rules for agreements and restrictive practices by object and for collusion (in bids, auctions, contests, and the like).

Among the novel parameters of the methodology, we highlight the inclusion of a differentiated weighting criterion for each of the provinces affected by the illegal conduct.

Additionally, the Fines Calculation Resolution introduces the regulation of fines applicable to the following circumstances/behaviors, which are determined in article 79 of the LORCPM:

  • Sanctions to legal representatives or members of the governing bodies of the infringing economic operator.
  • Cases of noncompliance with information requests by the Authority, delivery of incomplete information and delivery of incorrect information.
  • Calculation of coercive fines, depending on the delay – in days – to comply with the Authority´s decision.
  • Calculation of fines for obstruction of inspections.
  • Fines for failure to comply with a resolution.

The Fines Calculation Resolution is applicable in sanctioning procedures that begin after its publication in the Official Gazette (June 3, 2021). The determination of fines regarding sanctioning procedures that are in the investigation or sanction stage will be governed by the norm in force at the time of their initiation.

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Amendments to regulations for traceability of medicines and medical devices

Amendments to regulations for traceability of medicines and medical devices - CorralRosales - Lawyers Ecuador
Regulation ARCSA-DE-010-2021-LDSS issued on May 19, 2021, amended Regulation ARCSA-DE-030-2020-MAFG, published in the Official Gazette of November 26, 2020, through which the “Substitute Technical Sanitary Regulation establishes the guidelines for the Control of Traceability of Medicines, Biological Products and Medical Devices” was issued. The main aspects of this reform, which entered into force on the date of its subscription, are the following:

1.It is clarified that the inclusion of the unique traceability code in the packaging of medicines, biological products, and medical devices does not require a modification to their marketing authorization unless changes must be made to the packaging to include said code.

2. The maximum term to implement the traceability of medicines, biological products, and medical devices (hereinafter, the “Products”) is modified, depending on the phase to which they correspond. The national health authority shall determine the Products list for each phase.

3. The members of the National Traceability System (hereinafter, “SNT”) must submit to the National Agency for Sanitary Regulation, Control and Surveillance (hereinafter, “ARCSA”) a gradual plan for the implementation of the traceability of their Products (hereinafter, “Gradual Plan”), according to the regulations issued[1] by ARCSA for this purpose.

4. Until ARCSA has a computer system to control the traceability of the Products, the members of the SNT must record the logistical movements of their Products in the system they have for that purpose.

5. The ARCSA computer system will have a database where all the records generated by the systems of each SNT member will be stored. The characteristics of the ARCSA system shall be indicated in the regulations issued by the said authority for this purpose.

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Income and VAT withholdings regime applicable to payment aggregators and online markets

Income and VAT withholdings regime applicable to payment aggregators and online markets - CorralRosales - Lawyers Ecuador
Regulation NAC-DGERCGC21-00000026 issued by the Tax Authority and published in the Third Supplement to Official Gazette 461 of May 28, 2021, establishes special rules for income tax and value added tax (VAT) withholdings.

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Effects of the derogation of the Regulations for the Application of the Organic Law of Communication in advertisement production

Effects of the derogation of the Regulations for the Application of the Organic Law of Communication in advertisement production - Lawyers Ecuador - CorralRosales
The President, Guillermo Lasso Mendoza, issued the Executive Decree No. 32 on May 24th, 2021, which ordered the derogation of the Regulations for the Application of the Organic Law of Communication.

The Organic Law of Communication (“LOC”) determines, in article 98, the rules of nationality for the production of advertisement to be disseminated through social communication media (“Rules of Nationality of Production”) which establish that advertisements transmitted through the social communication media:

Art. 98. – Production of National Advertising. – Advertising that is disseminated in Ecuadorian territory through the communication media must be produced in Ecuadorian territory by Ecuadorian natural persons or foreigners residing in Ecuador or produced abroad by Ecuadorian persons residing abroad or foreign legal entities whose ownership of the majority of the shares in said entity is held by Ecuadorian persons and whose payroll for its realization and production is made up of at least 80% of people of Ecuadorian nationality.

This payroll percentage will include the hiring of professional services.

The import of advertising pieces produced outside the country by foreign companies is prohibited, with the exception set forth in the first paragraph regarding foreign legal entities with a majority of the share package held by Ecuadorian persons.

For the purposes of this law, advertising production is understood to be television and film commercials, radio sports, photographs for static advertising, or any other audiovisual piece used for advertising purposes.

The advertising of international campaigns designed to promote respect and the exercise of human rights, peace, solidarity and human development is exempt from what is established in this article.

Social communication media are defined in the LOC as: “… public and private entities and community organizations, as well as the concessionaires of radio and television frequencies, who provide the public service of mass communication that utilize print media o radio services, television and audio and video subscription services, whose contents can be generated or replicated by the media through the internet.”

The Regulation for the Application of the LOC, among other aspects, regulated the application of the Rules of Nationality of Production for advertisement through alternative channels other than social communication media; and clarified on its application for each type of advertising piece in the case of advertisements aimed at promoting tourist destinations or events abroad or those in which the images of famous people or animated fictional characters that are the image of the brands are used. The derogatory provided by Executive Decree 32 has the following relevant implications in terms of advertising:

– Advertisement to be disseminated through alternative media such as (i) billboards or photographs located in public space in commercial premises; (ii) catalogs; (iii) flyers is no longer subject to the Rules of Nationality of Production.

– Importing printed advertising materials such as diaries, notebooks and catalogs is allowed.

– There is no prohibition for advertisement photography to be disseminated by social communication media to be taken by a foreign photographer – that is not an Ecuadorian resident – as long as the Rules of Nationality of Production regarding the property of the producer is complied with and the production team is at least made up of 80% Ecuadorians.

– There are no guidelines that regulate the application of Rules of Nationality of Production in the case of advertising intended to promote touristic destinations or events located outside Ecuador, the use of images of famous people or animated characters that are the international image of a brand (the derogated Regulations for the application of the LOC allowed the use of these videos/images for up to 20% of the duration of the video or the composition of the piece).

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Standards of govermental ethical behavior

Standards of govermental ethical behavior - CorralRosales - Lawyers Ecuador
The President Guillermo Lasso Mendoza issued on May 24, 2021 Executive Decree No. 4 regarding the Standards of Governmental Ethical Behavior.

This Executive Decree establishes the standards to which the public servants of the Executive Branch to achieve a transparent and efficient public administration at the service of the citizens.

Below the main standards of the Executive Decree No. 4:

Nepotism: Relatives of the president, vice president, ministers and vice ministers of State, secretaries and undersecretaries of State, managers, and directors of public companies, up to the fourth degree of consanguinity and second degree of affinity or those with whom there is a relationship by common-law relationships, cannot be hired or appointed within the same administrative entities. The relatives of the aforementioned officials, within the stated degrees, cannot contract directly nor indirectly with public entities of the Executive Branch.

The use of public assets and resources shall be exclusively for the performance of specific duties

Conflicts of interest shall be declared, and the public servant is prevented form intervening in matters in which such conflicts exist.

Transparency, which includes:

– The promotion of good corporate practices.

– The entities that are part of the Executive Branch will promote the contracting of national and foreign companies that have adopted codes of good corporate practices, including commitments against corruption, environmental protection, promotion of human rights, labor safety and non-discrimination.

– Companies that have their corporate headquarters in countries where executives of such companies are not sanctioned for corrupt practices incurred abroad will not be contracted. It is prohibited to contract with individuals or legal entities that have outstanding assessments from the Comptroller General’s Office.

– It is prohibited to receive gifts, presents, or any other type of benefit, gift or reward, invitations, payments in restaurants, from national or foreign executives or private persons who do or intend to do business or have any other type of commercial relationship with the State.

– When a public official attends an event due to his/her functions, and the protocol so dictates he/she may give and receive gifts that its value does not exceed USD$200.

Equal opportunity and fair treatment by Executive Branch officials who will not discriminate any person based on race, ethnicity, gender, marital status, nationality, age, political affiliation, religion or sexual orientation. Public servants shall be kind, friendly and polite and shall not get involved in situations, activities or interests incompatible with their functions, refraining from any conduct that may affect their independence of judgement.

The Secretary of State for Public Administration and Cabinet will oversee supervision and compliance.

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Data Protection Law

Data Protection Law - Lawyers Ecuador - CorralRosales
The President approved the new Data Protection Law, without any observation.

This is the first data protection law in Ecuador, which represents a radical change in the processing and security mechanisms of personal data.

The Data Protection Law has 77 articles distributed in 12 chapters. The main elements and obligations are the following:

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Visa requirement prior entering the country

Migratory bulletin - Visa requirement prior entering the country - Lawyers Ecuador - CorralRosales
By Ministerial Agreement No. 0000080 dated May 10, 2021 the Ministry of Foreign Affairs & Human Mobility establishes the visa requirement prior entering the country for nationals of the following countries:

1.    Haiti
2.    Republic of the Congo
3.    Mali
4.    Ivory Coast
5.    Myanmar

Nationals of these countries that carry diplomatic, official or special passports, subject to reciprocal visa exemptions under multilateral and bilateral agreements signed by the Republic of Ecuador, are exempted from this provision.

The above mentioned are added to the nationals of the following countries who also require a visa to enter Ecuador:
Afghanistan, Angola, Bangladesh, Cameroon, North Korea, Cuba, Egypt, Eritrea, Ethiopia, Filipinas, Gambia, Ghana, Guinea, India, Irak, Irán, Kenia, Libya, Nepal, Nigeria, Pakistan, Democratic Republic of Congo, Senegal, Syria, Sri Lanka, Somalia, Venezuela, Vietnam and Yemen.y.

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