The Organic Law of National Solidarity, published in Official Register Supplement No. 56 on June 10, 2025, introduces substantial reforms to the corporate regime, specifically related to Simplified Joint Stock Companies (SAS). These amendments aim to strengthen institutional oversight mechanisms, prevent the misuse of legal structures, and combat the infiltration of criminal economies into the business environment.

Below is a detailed overview of the corporate law changes introduced:

1. Restrictions on Simplified Joint Stock Companies (SAS)

Simplified Joint Stock Companies (SAS), which were previously subject to an express prohibition from operating in certain sectors, now face broader regulations. While SAS entities were already barred from conducting financial operations, participating in the stock market, or offering insurance services, the new law expands the scope of restrictions, further limiting the sectors in which SAS may operate.

• Strategic sectors, mining, and related activities: SAS are now expressly excluded from participating in the country’s strategic sectors, including mining and its related activities. These sectors are subject to strict regulation due to their economic, environmental, and national security significance. Their exploitation requires tighter control given the associated risks.

• Financial, securities, or insurance operations: The prohibition on SAS involvement in financial activities remains in place. This includes banking intermediation, the commercialization of financial products, or the offering of insurance. These areas are governed by specific regulatory frameworks and require additional oversight to ensure financial system stability.

• Activities subject to special regimes: SAS are also barred from participating in activities that fall under special regulatory regimes—those requiring specific licenses or subject to special control due to the nature of the services provided or the risks they entail.

These limitations on the operational scope of SAS are intended to ensure that simplified joint stock companies remain focused on lower-risk sectors with less strategic impact. The law seeks to prevent SAS from engaging in activities that could compromise the country’s economic, financial, or national security.

2. New Corporate Structure: The Sports Joint Stock Company

In Ecuador, to foster the development of activities carried out by sports organizations and ensure the integrity of their financial operations, a new legal structure has been introduced: the Sports Joint Stock Company. This structure is designed to provide a specific legal framework for professional sports clubs, allowing them to operate under a high-performance model in accordance with current legislation.

The main characteristics of Sports Joint Stock Companies are as follows:

• Capital divided into tradable shares: The company’s capital is divided among shareholders, who are liable only up to the amount of their contributions. This limited liability feature protects investors and facilitates professional sports investment.

• Flexible incorporation: These companies can be formed through a contract, unilateral act, or other methods provided by law. This flexibility enables both existing and new sports clubs to more easily adopt this legal structure.

• Exclusive purpose: The sole purpose of these companies is to engage in sports activities within a single discipline. This ensures focused, high-performance operation in their specific sports field.

• Profit motive allowed: While the company is profit-oriented, this does not prevent it from being recognized as a sports organization. Sports Joint Stock Companies may generate income, provided they operate within the legal framework and maintain their sports character.

• Integration into Ecuador’s national sports system: These companies will be formally integrated into the national sports system and governed by the Sports Law, the Companies Law, and their respective regulations. This guarantees operation under a clear regulatory framework aligned with Ecuador’s sports policies.

A key measure to ensure transparency and legality in the operations of these companies is the explicit prohibition on using their structure for unlawful purposes. Sports Joint Stock Companies are strictly forbidden from:

• Using their corporate structure for money laundering.
• Participating in the financing of criminal activities.
• Facilitating involvement in criminal economies.

These restrictions aim to protect the integrity of Ecuadorian sports and ensure that revenue generated from sports activities is not diverted toward illicit conduct. Additionally, oversight is strengthened through strict supervision of bank accounts, share ownership, and shareholders of Sports Joint Stock Companies.