On December 13, the Executive branch enacted the amendment to the Companies Law to cover other forms of company reorganization, such as combined operations and cross-border mergers. The regulation, which was approved by the National Assembly on 22 October, has already entered into force. Access the text published in the Official Gazette by clicking here.
A key change in the text envisages the possibility for companies to carry out multiple divisions (or separation), meaning that two or more companies may be divided in order to create a new company, and specifies the necessary provisions for these situations. The measure also contemplates the possibility of one company absorbing another.
With the aim of boosting and modernizing the Ecuadorian legal framework, the Assembly included mechanisms to simplify and facilitate company liquidation procedures. Likewise, the Assembly members considered that the reforms correct legal defects and enable the creation of new businesses and sources of employment.
Although the law was passed by the Assembly at the end of October, the delay in its publication is due to the fact that the Executive submitted a partial veto of the bill to avoid distortions in its application. These objections were analyzed and approved by the Legislative branch on December 4.