The Institute hosts Ecuador’s second annual Corporate Law Congress

Ecuador-based The Institute, a promoter of educational technology, is currently holding the second edition of its Corporate Law Congress, which runs until March 30th. Leaders League spoke with Fabricio Davila, one of its founders and M&A co-lead partner at Lexvalor Abogados, who gave us more details about this virtual event.

Posté le mercredi, mars 29 2023
The Institute hosts Ecuador’s second annual Corporate Law Congress

Fabricio Davila

Leaders League: What type of audience is the Corporate Law Congress intended for and how does it differ from last year’s inaugural event?

Fabricio Davila: It is designed for lawyers who advise companies on commercial and corporate matters, and who are involved in mergers and acquisitions.

The differentiating aspect with respect to the first edition is, this year, each day has a clearly-defined theme. The first day dealt with the corporate law problems lawyers encounter on a regular basis in practice, such as virtual General Meetings, and the practical problems they pose. On the second day, we will address the reforms to the Ecuadorian Company Law, and on the last day, we will turn our attention to the anatomy of merger and acquisition transactions.

Briefly, what are the most important aspects of Ecuador’s new Law for Business Optimization and Promotion?

This law eliminates the obligation to carry out corporate acts (incorporation, capital increases, mergers, spinoffs) through a public deed, which reduces transaction costs. However, some in the legal community take the view that legal certainty will suffer as a consequence. It is precisely this issue that will be addressed in the Congress from both points of view.

The liability of company administrators and of majority shareholders with respect to conflicts of interest is strengthened. A new system of mergers, spinoffs and liquidation of companies arriving.

And in terms of changes, what issues are still pending?

Improving the enforcement of the laws already on the books, for one thing. A specific regulation - separate from the Companies Act - for listed companies is needed.

What do you consider to be the fundamental aspects to be taken into account before an M&A operation?

It is essential to have specialized advisors to negotiate the agreements and conditions that will be stipulated in the share purchase agreement (SPA), the baskets and caps, as well as to guarantee the fulfillment of pricing conditions for the payment of earnings (Earn outs). In general, everything that is addressed in an M&A negotiation has a broad scope, which is why it is necessary to have an interdisciplinary team.

Generally speaking, how is Ecuador positioned in relation to its Latin American peers in terms of corporate regulations?

Ecuador's corporate regulations have been reformed more than three times in the past four years. Thanks to the flexibility now afforded certain types of companies, it has favored startups and foreign investment in certain aspects.

Neighboring countries indicate that Ecuador is on the right track, in terms of corporate matters, now it is a matter seeing how this translates in practice.