The Regulation aims to regulate the promotion of health in public and private workplaces that have more than 25 employees. Both employers and employees must comply with the Regulation.

Under the Regulation, workplaces must implement a Health Promotion Plan in the Workplace, which consists of several stages:

1. Planning: Assess the health and occupational safety needs of the workplace; identify the main problems that affect workers’ health related to work activities; determine activities to improve healthy living; develop action plans regarding working conditions and health, among others.

2. Implementation: Notify the National Health Authority of the formal commitment to implement the plan, which must be executed in the workplace. Request the MSP’s support and evaluation of the plan’s implementation. Design a teaching and learning program for the project, which should include the following:

3. Adjustment: Develop awareness methods to create workers’ interest in promoting workplace health.

4. Reactivate: Conduct a diagnosis of employees’ knowledge level regarding promoting health in the workplace to establish teaching mechanisms.

5. Inform: Employers and workers together identify the problems that arise to generate information and knowledge about health in the workplace.

6. Learning process: Critical discussion of what has been learned.

7. Evaluate: Analyze whether the learning objective has been achieved. “Activate and Live” certificate: Once the workplace has submitted a compliance report on the plan, the National Health Authority will grant the “Activate and Live” certificate. This certificate will be valid for two years from the date of issuance.

8. Renewal: The workplace must request the renewal of the “Activate and Live” certificate from the National Health Authority four months before its expiration. To do so, it must comply with the plan’s stages again.

9. Focal point: Workplaces must designate a health professional to lead and form work teams to comply with the plan. Additionally, this professional will notify the MSP of the plan’s implementation in the workplace.

10. Control: The National Health Authority, through the Agency for Quality Assurance of Health Services and Prepaid Medicine (ACESS), will verify that workplaces that have health establishments have the “Activate and Live” certificate to grant the respective operating permits.

Additional provisions:

• Workers must participate during the planning and implementation of the plan.
• The National Health Authority may require workplaces to incorporate other health measures if deemed necessary.
• Within six months of the Regulation’s publication in the Official Gazette (i.e., by November 14, 2022), workplaces must have the promotion plan in place. Within 12 months, they must implement the plan and obtain the “Activate and Live” certificate. Within 13 months, the ACESS will verify that workplaces with health establishments have the certification.

Application of the Resolution: By Article 200, Numeral 4 of the Tax Code, “the debtor and/or its responsible party may request authorization from the Tax Administration to sell a seized or prohibited asset to a private individual, provided that the sale price is not less than the expert appraisal value and the proceeds are used to pay the outstanding tax obligations. In these cases, notaries, registrars, and/or other competent authorities must execute and register the corresponding deeds attaching the authorization granted by the active subject and the payment certificate. Once the registration and payment certificate have been submitted, the measure shall be deemed revoked.”

Direct Sale Request: The debtor may request authorization from the IRS to sell the seized or prohibited asset directly before the auction process and must attach the following documents:

Certificates: For real estate, a history of ownership and encumbrances certificate; for vehicles, a single vehicle certificate; and for other movable property, an encumbrances certificate issued by the Mercantile Registry. These certificates must be up-to-date with a date no less than one month before submitting the request.

An expert appraisal of the asset carried out by a qualified expert from the Judiciary Council, Superintendency of Companies, Securities and Insurance, and/or Banking Superintendency, which must have been performed at least 6 months before the submission of the request in the case of real estate, and 2 months for other assets.

Deadline: The IRS, through special collectors designated by the highest authority of the institution, will grant the debtor a period of up to 6 months to carry out the direct sale and deposit the proceeds in the IRS’s account, as well as provide information about the conditions they must comply with to proceed with the sale. The deadline may be extended by one month.

The authorization for sale granted by the IRS suspends the execution of the auction of the asset. However, other collection actions within the coactive process will not be stopped.

If the debtor fails to achieve the direct sale of the asset within the deadline, the particular collector may proceed with seizure or auction. Before the ruling of the order and time for the execution of the auction, the debtor may pay the value of the asset’s sale to the IRS.

Other Encumbrances: The IRS is not responsible for other encumbrances on the asset whose direct sale is authorized other than those ordered by the IRS, so it may proceed with the auction process, respecting the credit priority order provided for by law.

Lifting of Measures: Once the money from the sale has been deposited into the IRS’s account, the particular collector shall issue an authorization to register the sale deeds in the corresponding registers, which shall implicitly revoke any precautionary or execution measures that may have been given over the asset.

Sale Value of the Asset: The direct sale value of the asset cannot be less than the appraised value, which will be considered for the total payment of the tax obligations subject to the coactive process. If the sale value does not cover the total amount of the obligations, it will be considered a partial payment, with interest being paid first, then taxes, and finally fines.

This resolution applies to any assets seized or prohibited from being sold within enforcement proceedings initiated by the SRI, which pertain to outstanding obligations as of the publication date of the Resolution in the Official Registry, i.e., October 28, 2022.

[1] The Resolution was published in the Third Supplement of the Official Registry, number 179, on October 28, 2022.

Alternative dispute resolution methods: regarding tax transactions, mediation is the only and exclusive way to settle them, according to the provisions of the Tax Code.

Exclusion of tax transaction: it is not possible to settle or reach agreements in a mediation process on disputes related to the following assumptions:

Debts arising from unpaid or undeclared tax returns.

Obligations relating to taxes that were effectively withheld or collected by the taxpayer but not delivered to the IRS promptly.

Claims seeking total or partial annulment of regulations, ordinances, and resolutions, among others, issued by the IRS.

Tax obligations that are under control and are subject to persuasive measures, and for which no communication of differences or draft minutes have been notified. The settlement of differences process is considered a tax determination process.

Concessions in tax matters: the following elements are not susceptible to settlement in tax transactions:

An abstract interpretation of legal provisions.

Facts whose accreditation in the administrative or judicial procedure is specific due to the existence of direct evidence.

Facts that are not directly related to the determination of the tax obligation that is the subject of the mediation process or its collection.

Interest waiver or interest rate reduction: the IRS may waive interest or reduce the interest rate according to the cost-benefit report issued for this purpose in the following cases: i) tax obligations that are under determination process; and ii) tax obligations contained in administrative acts, before or after they have become final or enforceable.

If the coercive process has been initiated, the IRS may waive up to 100% of the interest or reduce the interest rate, provided that the obligation is considered challenging to collect and the taxpayer expresses their willingness to pay the total capital amount immediately.

Rejection of mediation request: the IRS may reject participating in the mediation process, as this is a voluntary procedure for conflict resolution and/or if the object to be mediated is excluded from the scope of the transaction. The IRS has 30 days to express its decision (from the date of notification of the mediation request). In the case of interprocess transactions, the deadline mentioned above does not apply, and the competent judicial authority will determine the terms.

Agreement period: although the IRS may grant the taxpayer a period of 24 months, in monthly, quarterly, or semi-annual instalments, to fulfil the obligation payment, provided that the first instalment is equal to 20% of the tax obligation balance, the periodicity of the referred dividends will not apply to payment facilities requested by the taxpayer within a tax mediation process.

According to the resolution, ultimate beneficiaries are natural persons who hold at least 10% of the capital, votes, dividends, or exercise any other form of control over a legal person or any natural person in charge of making strategic decisions for the legal person. For trusts or legal structures, ultimate beneficiaries include natural persons who hold positions of the settlor, trustee, beneficiary, or any other natural person who exercises absolute effective control over the assets, results, or profits.

Legal persons or structures, through their legal representatives, are required to identify their ultimate beneficiaries, update information related to them, identify each member of their chain of ownership and submit the necessary annexe to the IRS within the deadlines, forms, and conditions provided. They must also ensure the availability of information on ultimate beneficiaries for the previous 5 years before the date of cancellation or extinction. The IRS may request additional information as necessary.

Ultimate beneficiaries, in turn, must disclose their updated information, including their names, surnames, identity documents, date and place of birth, jurisdictions of tax residence, and tax identification numbers, to the legal representative through the document prepared by the IRS for this purpose.

Furthermore, they must indicate the nature of their control over the person or legal structure and provide supporting documentation of their status as the ultimate beneficiary. This information must be provided annually, with a cut-off date of December 31 of each year, within January of the following fiscal year, whether or not there have been changes since the last submission. If there are changes in the ownership or control of persons or legal structures, such changes must be reported within the following calendar month.

Information quality: the information provided must be complete, meaning that all required fields in the annexe have been filled out; adequate, meaning that it is sufficient to identify the ultimate beneficiary of the person or legal structure and the means through which that natural person exercises ownership or control; and accurate, meaning that the information must be precise to the identity of the ultimate beneficiary, using documents obtained from an independent source, among other things. In addition, the data must always be up-to-date, so the annexe must be submitted to the SRI annually within the following month of any changes to the information.

Professionals: legal, economic, accounting, administrative, and other professionals must comply with the obligations contained in the resolution whenever they act on behalf of a client in:

Buying and selling real estate.

• Managing their client’s money, securities, savings accounts, or other assets.
• Organizing capital and contributions for creating, operating, maintaining, or administrating legal persons or structures.
• Creating, operating, administering, or transforming legal persons or structures, and buying and selling commercial entities.

These professionals must keep their client’s information for 5 years from the date their relationship with their clients ends and supply it to the SRI if requested. This does not affect the professional secrecy between the professional and their client.

Registration of ultimate beneficiaries: the information contained in the registration of ultimate beneficiaries will be reserved and confidential. State entities may only access the information in the registration of ultimate beneficiaries necessary for exercising their powers.

Information retention: the legal representatives of legal persons or structures must retain the information that supports the annexe containing information about their ultimate beneficiaries, as well as the due diligence procedures they apply, for 5 years from the date of submission of the annexe on ultimate beneficiaries.

Sanctions: in the event of sanctions being imposed, they do not exempt the offender from complying with the obligations generated by the resolution. The sanctioning procedure, including expiration and prescription, as well as administrative remedies, will be governed by the Tax Code.

Additional provisions:

• State institutions with access to information about ultimate beneficiaries of legal persons or structures from sources other than the SRI’s records will inform the SRI of such information for verification and, if necessary, updating. Similarly, anyone with information about ultimate beneficiaries that differs from that contained in the SRI’s records may communicate this to the abovementioned entity. Total confidentiality and secrecy will be maintained.
• The SRI will implement the system for the Registration of Ultimate Beneficiaries within 24 months from the date of entry into force of this Resolution, that is, September 30, 2022.
• Compliance with the obligations contained in the resolution will be enforceable 3 months after the SRI notifies that it has completed the Registration of Ultimate Beneficiaries implementation process.
• Taxpayers who must submit the “Annex of Shareholders, Participants, Partners, Board Members, and Administrators” will continue to do so until the Registration of Ultimate Beneficiaries is implemented.

Accreditation as SERCOP operators is mandatory for public servants. However, for private contractors or state providers, training the company’s personnel who manage and generate the necessary documents to participate in pre-contractual stages and perform activities during the contract execution in coordination with the contracting entity’s administrator is optional. These actions are of vital importance when safeguarding the contractor’s interests.

Regarding this, the regulations do not prohibit participation in public procurement processes for State contractors who do not have the SERCOP operator certificate. Nevertheless, the purpose of the accreditation issued by the National Public Procurement Service is to ensure sufficient knowledge of public procurement of the actors involved in the different stages.

The lack of knowledge about the obligations of a State provider can cause strategic process deficiencies, severe economic losses, and sanctions for the contractor. This can be overcome by prior training that observes the principles governing this matter, its legal bases, its sanctioning regime, and, generally, the legal implications that a State contractor may have.

• In our opinion, the essential concepts that personnel representing the provider or contractor in public procurement with the State must know are:
• Use the SERCOP platform and accreditation as a State Provider for natural and legal persons, including holdings and specific requirements for the latter.
• Strategies for reviewing bidding documents, technical specifications, and terms of reference.
• Correct calculation in the application of fines does not only apply to breaches of deadlines or terms.
• Responsibility of private contractors before the General Comptroller’s Office of the State and the Financial Analysis Unit.
• Responsibility with subcontractors and co-responsibility with the State.
• Application and scope of cases of force majeure and fortuitous event regarding obligations with the State.
• Unilateral termination of contracts with the State.
• Prevention of the Declaration of Non-Compliant Contractor or Failed Bidder.
• The challenge of resolutions of the contracting entity, deadlines, and strategies.
• Payment agreements recognize the payment of obligations generated by acquiring goods and services provided by State providers.

Therefore, SEIKLA offers advice on the different stages where State contractors act, as well as training the State providers’ personnel to prevent unnecessary losses or legal inconveniences for the company and its representatives.

Free transferability is one of the shares’ main characteristics and, therefore, simplified joint-stock companies. According to the law and doctrine, this right is considered fundamental for the shareholder. However, there are limitations on exercising this right, either by law, bylaws, and/or by contract.

This article aims to provide different alternatives to our client-readers when discussing the freedom to transfer shares and, therefore, ownership of the business. In many cases, our clients seek to restrict this right to avoid a change in administrative and capital control, maintain the relationship with current shareholders, ensure compliance with personal obligations, or maintain a certain number of shareholders, among other reasons.

The general regime for the transfer of shares.

The Companies Law, in article 207, establishes “the fundamental rights of the shareholder, of which he cannot be deprived: […] 8. To freely negotiate his shares”. Therefore, the general rule for simplified joint-stock companies is that the shareholder can freely dispose of his shares, as and when he deems fit, without any restrictions. The same is stated in doctrine 65 issued by the Superintendency of Companies, Securities, and Insurance, which mentions that “in the bylaws […] it is not admissible to stipulate a limitation on the right to negotiate the shares, not even as a waiver freely.”

That is why the transfer process is intentionally fast and straightforward. It consists of a share transfer letter signed by the transferor and the transferee and notified to the administration of the simplified joint-stock company so that it registers the act in the share and shareholder book. It is worth noting that the administration’s duty is limited only to registration, not to approve or review the act. Even in Article 189 of the Companies Law, the legislator is categorical in prohibiting the creation of additional formalities through the company’s bylaws as a form of restriction on the free transfer of shares. However, it should be mentioned that this limitation refers to formalities and requirements not indicated in the Law.

The right to free transferability ceased to be absolute through the reform of the Companies Law in 2020. Before the reform, Article 191 established “the right to freely negotiate shares does not admit limitations.” However, currently, the same article shows:

Art. 191.- The right to freely negotiate shares does not admit limitations in the bylaws. Agreements between shareholders that establish conditions for negotiating shares or are entered into for any other lawful purpose shall be valid. Shareholders’ agreements of joint-stock companies shall be governed, insofar as they do not contradict this section, by the provisions for shareholders’ agreements of simplified joint-stock companies.

Therefore, in the case of joint-stock companies, the only permitted limitation will be contractual and not bylaws. However, in the case of simplified joint-stock companies (SAS), it is possible to have statutory and contractual restrictions on the transfer of shares.

Statutory restriction on the transfer of shares in a SAS

There are two types of statutory limitations, which vary according to their effects. For didactic purposes, I have decided to call them absolute and relative. The fundamental rule is the one found in the unnumbered article within the section of simplified joint-stock companies (SAS) in the Companies Law that mentions:

Art. […].- The bylaws may provide for the prohibition of trading in shares issued by the company or any of its classes, provided that the validity of the restriction does not exceed ten [10] years, counted from the corresponding issuance. This period may only be extended for additional periods not exceeding ten [10] years by unanimous will of all the shareholders. The back of the share certificates must refer to the restriction in this article.

This means the law establishes the following requirements to restrict the right to free transfer by bylaws: first, a maximum restriction period of 10 years. Second, applicable from the issuance of the share, and third, that the restriction be expressly mentioned on the back of the share certificate to prevent the certificate from being freely traded due to lack of knowledge. This is an absolute limitation since it is an express prohibition in the company’s bylaws. Any subsequent modification or elimination will require the unanimous agreement of the shareholders through a Shareholders’ Meeting. Consequently, in this case, there are three filters for the right to free transfer: 1. the bylaws, 2. the unanimous support of the shareholders to reform a provision that regulates everyone and therefore changes the relationship of present and future shareholders, and 3. the registration of the reform in the Registry of Companies of the Superintendence of Companies, Securities, and Insurance. Only after this process can the interested shareholder proceed with the transfer of shares. Therefore, I consider this limitation absolute due to the difficulty and complexity of exercising the right to free transfer.

On the other hand, there is a relative limitation, and this is because there is no express statutory prohibition but rather partially restricts the right to the sole approval resolution of the Shareholders’ Meeting. This is recognized in the unnumbered article of the Companies Law that orders:

Art. […].- The bylaws may subject any negotiation of shares or any class thereof to prior authorization by the assembly or some prior agreement or condition. If such provision has not been expressly agreed upon, it shall be understood that the shares are freely transferable.

Therefore, the interested shareholder in exercising their right should only request authorization from the Shareholders’ Meeting, which does not require the unanimous agreement of the shareholders but a simple majority vote. Although this limitation is also statutory, it is much more flexible than the absolute limit. Since the approval or not of the transfer of shares is left to the discretion and will of the Shareholders’ Meeting. In this case, no bylaw amendment is required. The decision of the Shareholders’ Meeting is sufficient for the shareholder to exercise their right to sell.

Restriction on the free transfer of shares by contract.

Another way to restrict the free transfer of shares is by contract between shareholders, which affects the signatories. Therefore, it does not limit the rights of third parties or shareholders of the same simplified joint-stock company. However, this restriction will be allowed if the bylaws establish it as a possibility. In the aforementioned unnumbered article, the Companies Law shows that “the bylaws may subject any negotiation of shares or any class thereof (…) to some type of prior agreement or condition.”

However, it may also have effects on third parties, provided that they have been made aware by the administration of the simplified joint-stock company of the provisions outlined in the unnamed article mentioned below:

Art. […]. Shareholders’ agreements regarding the purchase or sale of shares, preference to acquire them or to increase the share capital, restrictions on their transfer, (…), must be complied with by the company when they have been deposited in the offices where the administration of the simplified joint-stock company operates. Otherwise, despite their validity between the parties, such agreements will become unenforceable against the simplified joint-stock company. Shareholders’ agreements may not have a term exceeding ten [10] years, which may be extended by unanimous agreement of its subscribers for periods that do not exceed the same time frame. (…) The chairman of the assembly or the collegiate deliberation body of the company shall not count the vote cast in contravention of a shareholders’ agreement duly deposited. Under the conditions in the agreement, shareholders may promote, before the Civil Judge of the registered office of the simplified joint-stock company, the specific performance of the obligations agreed upon in the agreements.

Therefore, for the contractual restriction to be valid, the contract must be made known to the administration of the simplified joint-stock company. Otherwise, without notification, the agreement will only affect the subscribers. This means that if a shareholder notifies the administration of a transfer of shares, which does not have a known contractual restriction for the administration, the latter may proceed with the registration in the book of shares and shareholders, granting rights to the assignee. However, the law also gives the affected shareholder the right to resort to ordinary justice for breach of contract against the assignor.

On the other hand, in the same article, the law establishes as a restriction on the right of an internal configuration of the contract a maximum term for the limitation on the right of free transfer, corresponding to 10 years, but subject to extension. This express provision allows us to assume that any provision restricting the transfer of shares that exceeds 10 years will be null and void.

In conclusion, in Ecuador, the right to free transfer of shares is fundamental but not absolute since there are legal, statutory and contractual limitations. This seems reasonable to provide alternatives to company shareholders when configuring their bylaws or regulating their relationships.

Bibliography

Ecuador. Ley de Compañías. Registro Oficial 312, 5 de noviembre de 1999.

–––. Ley de Modernización a la Ley de Compañías. Registro Oficial 347, Tercer Suplemento, 10 de diciembre de 2020.

–––. Superintendencia de Compañías, Valores y Seguros. Doctrina 65. Registro Autentico, 29 de agosto de 1997.

Reyes Villamizar, Francisco. Derecho Societario. Bogotá: Editorial Temis S.A., 2014