Undoubtedly, one of the most worrying environments in our environment for those who have the desire to invest, and for those who have already done so, is the legal one.
And it is that in our society, laws should be dynamic, but that many times they are poorly focused, which is why it is necessary to have an updated knowledge of legal reforms, even without being lawyers.
And, the effect of laws on economic organizations is not unknown to anyone. Consequently, the basic knowledge of the main regulations that affect the administration must be constantly updated.
This fact is reflected, in the conference given by Dr. Carlos Solórzano Constantine, on October 29, 1999, in the Solemn Session for the Twenty-third Anniversary of the Faculty of Administrative Sciences, whose theme was: «Need for a framework adequate legal framework for the reactivation and development of business activities in Ecuador ».
Thus, seeing the need for knowledge of the legal part that is incumbent on the administrator, the main objective of this monographic work is to group, summarize, analyze and explain, all those legal aspects that, directly or indirectly, will affect the work of direction carried out by the Management.
The purpose is to consider from four points of view, the influence exerted by Ecuadorian legislation, namely: corporate, contractual, labor and tax.
These four points will be addressed in such a way that they are clear and concise for those who, in one way or another, exercise administrative functions, in order to reach them with simple and precise language.
Among the specific objectives, the following can be mentioned:
- The analysis of the legislation that concerns the administrator.
- Know the different types of companies that can be chosen. Distinguish the different contracts applied in our environment and recognize their differences. Master the tax area in transcendental aspects, such as taxes and billing. Improve labor relations, through an approach produced by the laws. Investigate national and international jurisprudence, to adapt it to our own organizations, in order to assimilate the successes and avoid the errors. Provide guidance guidelines in legal conflicts. The practical application of our legislation.
- Corporate legislation and its influence on management.
General features.
The Commercial Code determines in an express way, which acts are commercial acts. Commercial acts may be carried out by natural or legal persons, the latter must be constituted as commercial companies.
The Civil Code defines the company or company as the contract in which two or more people stipulate to put something in common in order to divide the benefits that come from it. The company forms a legal entity distinct from its individually considered members.
We can say that the following are elements of the companies:
The people, who in most cases are two; Although the reforms applied to the Companies Law currently allow them to subsist with a single partner.
The common purpose or corporate purpose, which determines the contribution of media of different nature. The end must have a lucrative character, since it will try to obtain benefits for the members of the society.
The Civil Code classifies civil and commercial companies; civil societies are those that are capable of exercising rights and contracting civil obligations, and of being represented judicially and extrajudicially; The commercial ones are those that are formed to carry out business that the Law classifies as commercial acts.
The Companies Law defines a company contract as one in which two or more people join their capitals or industries, to undertake commercial operations and participate in their profits.
Commercial companies are governed by the provisions of the Companies Law, but in a supplementary way, they are also affected by those of the Commercial Code, the Civil Code, and other laws that generally have to do with the public sector. In addition they must be subject to the norms that the Social Statute indicates.
Brief analysis of each of the species of companies .
Companies can be classified by formal aspect, common purpose or corporate purpose in industrial, tourist, artisanal societies, etc.
By the responsibility of the partners the companies can be classified as follows: Limited Liability and Unlimited Liability.
Depending on the origin of the capital, they can be national, foreign and mixed. They can also be Personalistic companies and capital companies.
But the Companies Law strictly defines the classification of companies, the most important being the following:
Company in Collective Name.
Limited Company:
Simple; and, By shares.
Limited Liability Company.
Anonymous company.
Mixed Economy Company.
These kinds of companies will be briefly explained below.
Companies in Collective Name.
Company in collective name is the one that is contracted between two or more people who do the trade under a business name.
Denomination: This type of company is rare in recent years. Only the names of the partners can be part of the company name, such as: "Herrera & Marañón y Cía".
Constitution: The contract for the constitution must be concluded by public deed, which must be approved by a civil judge of the respective jurisdiction. The publication of an extract by the press and the inscription in the Mercantile Registry will then be ordered.
Capital: It is made up of the contributions delivered by each of the partners, through obligations, securities or assets, which will be included in the Social contract.
The partners: Any person who according to the Commercial Code has the capacity to trade will also have it to form part of a company in the Collective Name. The partner will participate in the profits, provided they are liquid and realized, or in the losses; and will be subject to joint and unlimited liability for the acts carried out by him or the partners under the company name, provided that the partner is authorized to act by the company.
The partner may not be part of another company that has the same purpose, or carry out operations in the same type of business, without the prior consent of the other partners.
The exclusion of a partner may only be decided for the reasons expressly indicated by the Law, and is not a cause for the partnership to end.
In the constitutive contract, one or more partners may be authorized to carry out the acts necessary for their administration and the fulfillment of social purposes; but if there has not been an express provision, it will be understood that all the partners have the power to manage the company and sign for it.
The managing partner or partners will be appointed and removed by majority vote, but may only be removed for intent, gross negligence or inability to conduct business. They must render an account of their administration every six months.
Unless the unanimity requirement has been established, resolutions will be taken by majority vote, in relation to the capital contributed, but in the event that a single partner represents the majority, the additional vote of another will be required.
Common provisions regarding limited and limited companies
The Law considers these companies as a contract, which for their validity must meet the following requirements:
- Capacity of the people who celebrate it.
- Purpose and lawful cause The solemnities with which it must be celebrated.
The liability of the partners or shareholders is limited, they respond only up to the amount of their shares or contributions. The company responds up to the amount of its assets.
They are constituted as follows:
- Se eleva a Escritura Pública el contrato de constitución. Si hay aporte en dinero en efectivo debe depositarse en una cuenta de integración de capital indicando los nombres de los depositantes, a nombre de la compañía en formación, abierta en un banco, y los certificados de depósito se protocolizarán con la Escritura correspondiente. Cuando haya aportes en especie, en la Escritura se hará constar el bien en que consista, su valor, antecedentes y la transferencia de dominio a favor de la compañía y las participaciones que corresponden a los socios. La escritura debe contener el contrato constitutivo y el Estatuto por el que se regirá la compañía, y lo que sigue a continuación:
- Names, surnames and marital status of the partners or shareholders (natural persons), if he is a foreigner, will present the census certificate. Also nationality and domicile. At the time of the constitution, spouses and minor children cannot participate in it.
- Objective name or business name of the company. Corporate purpose, duration and address of the company. Amount of the share capital, with the expression of the number of shares in which it is divided, with its nominal value. Indication of the shares that each partner subscribes and pay in cash or kind, the value of these, the part of the unpaid capital, the form and the term to integrate it. Way in which the administration and inspection of the company will be organized, if the establishment of an inspection body has been agreed, and the indication of the officials that have the legal representation. Way of deliberating and taking resolutions in the General Meeting, and the way of calling and constituting it; and, The other legal covenants and special conditions that the partners deem convenient to establish,provided they do not oppose the provisions of the Law.
- Three Notarial copies of the Deed are presented to the Superintendency of Companies, with a request signed by an attorney and the person authorized to process the approval, together with the certification that the company in formation is affiliated with the corresponding Chamber. The Superintendency issues the Resolution approving that the Deed is in order.
- One-time publication of an extract of the Deed, conferred by the Superintendency, in one of the newspapers with the largest circulation at the company's domicile. The Articles of Incorporation with the Superintendency's Resolution are registered in the Commercial Registry of the main domicile. A copy of the Articles of Incorporation with the reasons that the Notary before whom it was granted and the Commercial Registrar must return to the Superintendency, along with the company's RUC certificate and a copy of the appointments of the Legal Representative and the administrator who surrogate. With this, the company is registered in the Companies Registry and, if there are contributions in cash, the Superintendency will notify the depositary bank that the company has completed the constitution process, so that the contributions are returned.
The General Meeting will be formed by the legally called partners or shareholders. It is the supreme body of the company. It has powers to resolve all matters related to the operation, activities and social business.
There are three types of General Meetings:
- Ordinary: They meet at the main domicile of the company at least once a year, within three months after the end of the financial year.
- Extraordinary: They are those that meet at the main domicile of the company, at any time, prior call, to deal only with the matters established in the call. Universal: They meet at any time and anywhere in the national territory, with the concurrence of the total paid-in capital.
The General Meeting will be called by the administrators in the manner stated in the Social contract; or by the press, in one of the newspapers with the largest circulation in the company's main domicile, 8 days in advance at least to the date set for its meeting. The day of the call or the day of the meeting will not be counted.
Limited Liability Companies.
Limited Liability Company is one that is made up of between three and a maximum of fifteen partners, who are only liable for corporate obligations up to the amount of their individual contributions, and trade under a Company Name, to which the words company are added limited or its corresponding abbreviation.
The minimum capital required for its constitution is four hundred American dollars, which will be divided into units of one dollar or multiples thereof. The capital must be fully subscribed, and paid for at least 50% of each participation. The balance will be paid in 12 months, counted from the date of the constitution of the company. The transfer of the contribution certificates is not public, for this purpose the approval of the other partners is required.
The company name is an enunciative formula in which the names of one or more of the partners are included. The objective denomination will be distinguished from any other company, and will be the property of the company that obtained it, so it cannot be used by any other. Examples of this class of companies are the following:
- Compañía General de Construcciones C. Ltda.
- Compañía Jerarca El Prado C. Ltda. Camarones Vanamar C. Ltda.
Common terms and those that serve to determine a class of company, such as commercial, agricultural, industrial, must be accompanied by a peculiar expression. After the name, the words COMPAÑÍA LIMITADA, or its abbreviation, will be added.
Anonymous companies.
The public limited company is a company whose capital, divided into negotiable shares, is made up of the contribution of the shareholders who are responsible only for the amount of their shares.
Public limited companies in which public law or private law institutions with a social or public purpose participate may incorporate one or more shareholders. In the other cases, if only natural or private law persons participate, at least two shareholders are required for the constitution of the company. The maximum number of shareholders is not legislated, therefore there is no maximum.
The minimum subscribed capital is eight hundred US dollars, of which at least a quarter must be paid. Examples of this class of companies are the following:
- La Cemento Nacional CA
- Coffee Company EL CAFÉ CACompany of National Beers CA
The constitution can be: Simultaneous and Successive.
- a) Simultaneous: In a single act, through an agreement signed by the founding shareholders, who appear upon the granting of the deed, which will contain the following information: Place and date.
- Name, nationality and domicile of the people who make up the company, and their will to found it. Corporate purpose, name and duration. Amount of authorized and subscribed capital, which must be $ 800 minimum. Indication of what each partner subscribes and pays Company address Form of administration and powers of the administrators Form and times to call the General Meetings Form of appointment of the administrators, and clear enunciation of the officials who have the legal representation of the company Rules of profit sharing. Determination of cases in which the company has to be dissolved early; and, How to proceed to the appointment of liquidators.
- b) Successive: Through the promotion and public subscription of shares. The Promotion Deed in this case must contain the agreement to carry out this promotion, the Statute that must govern the company, in addition to the following: Name, surname, nationality and address of the promoters.
- Denomination, object, authorized capital if any and subscribed capital. Particular rights and advantages reserved for developers. Number of shares into which the capital is divided, the class and nominal value of each share, its category and series. Term and condition of subscription of shares. Name of the depository banking institution of the amounts to be paid by way of subscription. Term within which the deed of foundation will be granted; and, Address of the company.
Mixed Economy Companies.
Mixed Economy Company is one that is constituted as such, and in which the State, Provincial Councils, Municipalities, legal entities governed by public or semi-public law, together with natural or private legal entities, participate and whose purpose is satisfaction Social needs, or the provision or improvement of public services.
They are constituted to develop and promote agriculture and industries suitable to the national economy, and to the satisfaction of collective needs; and for the provision of new public services, or the improvement of those already established.
With regard to this class of companies, the company rules will apply, but the name must be added the expression "mixed economy company", or the acronym CEM Example of this type of company is as follows:
ANDEC CEM Company
Public or semi-public entities that participate in this class of companies may subscribe their contribution in money or by delivering equipment, instruments, personal or real property, as well as providing a service for a specified period. The statutes will establish how to integrate the Board of Directors, in which both the public and private sectors will be represented, in proportion to the capital contributed.
The bylaws will stipulate the conditions for the transfer of shares, and the participation of each shareholder in the capital increase of the company. The form of distribution of profits between private and public capital should be clearly established.
Companies in Limited Partnership.
In Simple Command.
This type of company has fallen into disuse in recent years. The simple limited company is the one that is constituted between one or several jointly and severally responsible or limited partners, who administer it, and one or more other simple providers of funds, called limited partners.
It acts under a company name, which will be the name of one or more of the jointly and severally liable partners, to which the words "limited company" will be added.
The limited partner who tolerates the inclusion of his name in the company name will be jointly and unlimitedly responsible for the obligations contracted by the company.
Limited partnership for shares.
The limited partnership company is constituted between joint and several or limited partners, and limited partners, and acts under a company name that is formed with the names of the former. Its capital is divided into registered shares of equal par value.
Of this capital, at least a tenth must be contributed by solidary or limited partners, who are responsible for social administration, who may not be removed except for the causes established by law.
Half plus one of the solidarity partners will have the right of veto on the resolutions of the General Meeting. The separation of one of them produces the dissolution of the company.
The rules regarding the limited company apply to these companies. They act under a company name that will be formed with the names of one or more of the solidarity partners, followed by the expression "limited partnership", or its abbreviation.
Other legal aspects of the companies.
Transformation.
A company can be transformed by adopting a different legal figure, without thereby dissolving or losing its legal status. The transformation constitutes a change of kind of company, preserving legal status.
The transformation will be recorded by public deed, to which will be added the transformation agreement derived from the General Meeting of partners or shareholders, requiring the unanimous agreement of the partners.
The list of shareholders or partners who have made use of the right to separate from the company for not settling for the transformation will be added.
Also added to the transformation deed is the final balance closed on the day prior to the granting of the deed, prepared as if it were a balance for the liquidation of the company. The transformation will take effect from the inscription in the Mercantile Registry.
The transformation of a company subject to the control of the Superintendency of Companies, may not be registered in the Mercantile Registry without previously presenting a certificate stating that the company is up to date in complying with its obligations to the Superintendency.
The public deed of transformation will be granted by the Legal Representative of the company that is being transformed.
Fusion.
The merger consists of the union of companies, the same that can be of two kinds:
- Merger proper: That occurs when two or more companies come together to form a new one that succeeds them in their rights and obligations.
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- Absorption: That occurs when two or more companies are absorbed by another that continues to subsist.
The merger will be subject to the solemnities established by the Law for the foundation of the company, according to the type of the new company or the absorbing company; must be raised to public deed, this will be approved by the Judge or by the Superintendency of Companies; The extract of the deed will be published in accordance with the Law and will be registered in the Mercantile Registry.
The merger of companies will be approved by the Superintendency of Companies in all cases in which any of the merging companies or the new company is Limited Liability, Anonymous, Limited Partnership or Mixed Economy.
For the merger of any company into a new company, the dissolution will be agreed first, and then the transfer of the respective social assets to the new company.
In the event of absorption, the absorbing company will acquire the assets of the absorbed company or companies and will increase the capital by the corresponding amount.
The partners or shareholders of the extinguished companies will participate in the new company or in the absorbing company, receiving shares, participations or contributions for a value proportional to their respective contributions in those companies.
The companies that have to be absorbed or merge to form a new company must approve the merger project at an Extraordinary Meeting called especially for it.
The dissolution agreement of the merging companies must be approved with the same number of votes as that required in the statutes for the voluntary dissolution of the company, as provided by the bylaws.
The absorbing company will be responsible for paying the absorbed company's liabilities, and will assume, by this fact, the responsibilities acquired with respect to its creditors.
In all that not expressly stipulated for the merger, the provisions for transformation cases will be applied.
Dissolution.
The dissolution of a company means the termination of the company's activities related to the corporate purpose. Once the company is dissolved, it will go into liquidation, except in cases of merger. The dissolved company maintains its legal status until the corresponding registration in the Mercantile Registry is canceled, at the end of the liquidation.
The dissolution can be classified as follows: Dissolution for legal or statutory reasons, and by voluntary dissolution of the associates. The dissolution due to causes can be both: Full rights and by decision of the Superintendency of Companies, in the case of companies subject to its control.
Dissolution due to causes:
Dissolution of Full Right. It is that which is produced by the sole provision of the Law, when the cause is fulfilled, irreversibly, without the need for a Declaration of Authority, publication or registration. The following are grounds for full dissolution:
- Due to the expiration of the term established in the Social contract.
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- By transfer of the main domicile outside of Ecuador By bankruptcy order of the company, legally enforced.
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Dissolution by decision of the Superintendency of Companies. The Superintendent of Companies, ex officio or at the request of a party, may declare the dissolution of a company and order its liquidation, for the reasons established by Law, Regulation and Social Contract, in the following cases:
- When it has not exceeded in the foreseen term, the cause that motivated the declaration of inactivity.
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- When the activities for which it was constituted have been concluded or incurred in the manifest impossibility of fulfilling the Company's purpose. For loss of reserves and half or more of the capital. For not raising the Company's capital or subscribed to the legally established minimums. non-observance or violation of the Law, its Regulations or the Statutes. For hindering or hindering the work of control and surveillance of the Superintendency of Companies, or for breach of the resolutions that it issues.
Settlement.
Once a company has been dissolved, it must go into liquidation, except in cases of merger. While the liquidation is carried out, the dissolved company will retain its legal status.
During this process, the word "in liquidation" will be added to the name of the company.
In the cases in which the Superintendent declares the dissolution and orders the liquidation, in the same resolution he will appoint the liquidator.
In the case of voluntary dissolution, the General Meeting will correspond to the appointment of the liquidator, in case the statutes do not contemplate norms in this regard.
If the General Meeting does not do so, the Superintendent will appoint a liquidator, within the term of 30 days counted from the inscription in the Register of the dissolution resolution.
Liquidators must accept the appointment within five days, if it refers to a single company; and 30 days, if the resolution does include several, counted from the notification with the resolution of dissolution and liquidation.
Once the liquidator records the appointment, the administrators will provide him with inventory of the assets, books and documents of the company. If the administrators refuse or delay compliance with this provision, for more than five days, since they were notified in writing by the liquidator, the Superintendency may impose a fine of up to 12 general vital minimum wages, without prejudice to other responsibilities.
The liquidator will publish for three consecutive days, a notice that notifies the creditors, so that in the term of 20 days they present the documents that prove their rights.
The provisions of the Social contract regarding calls and meetings of partners or shareholders, which will be chaired by the liquidator, will be observed.
After the liquidation process, at the request of the liquidator, the Superintendent of Companies will issue a resolution ordering the cancellation of the registration of the company in the Mercantile Registry, thereby definitively ending the legal existence of the company.
- Contract law in the commercial field.
Definitions and conditions of all contracts.
Definitions.
The Civil Code defines the contract in the following way: "Contract or convention is an act by which one party agrees with another to give, do or not do something." So it can be said that one of the main characteristics of the contract is the mutual obligation of the parties.
For Aubry and Rau it is "the agreement of two or more people on an object of legal interest, constituting a particular kind of convention, whose own character is to be a producer of obligations." For Savigny it is "the concert of two or more wills on a declaration of common will destined to regulate their legal relations"
Other laws define the contract as: "When several people agree on a declaration of common will, intended to regulate their rights."
Terms.
For the mutual obligation of the parties involved in a contract to arise, the following requirements must be met:
Legal Capacity: That it is the legal power of a person to acquire rights and contract obligations by their own exercise, without needing the authorization or intervention of another person.
Consent: It is the coincidence of two wills on the same point. In the case of a contract, it is the acceptance made by the parties of its content and of the obligations and mutual rights that the contract establishes.
Lawful Object: It is the material thing, the fact or the abstention; the reason for the contract; provided it is not prevented by legal provisions.
Lawful cause: It constitutes the motivation for which you hire and not always impeded by the laws.
Solemnities: The contract is solemn when it is subject to the observance of certain special formalities, so that without them it has no legal effect.
Types of contracts.
There is a great variety of contracts, so a few are briefly referred to that are not stipulated in our laws, but that nevertheless, I consider necessary to point out, and are the following:
- By its Regulations:
- Nominees: They are those that we find typified in the Law.
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- Unnamed: It is not possible to find them typified in the Law. They are created by the parties.
- Free discussion: There is a true expression of the will of the parties, who discuss and agree on the contractual terms.
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- Adhesion: One of the parties unilaterally formulates the contractual clauses, which are proposed to the other party.Individual: There must be manifestly the will of all the people involved in the contract, and who are bound by its cause. Collective: It is the one that forces a group of individuals for the fact of belonging to a community.
- Instantaneous execution: When the required obligation is met through a single service.
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- Successive tract: When compliance is required through repeated benefits while the contract is in force.
Legal classification.
The Civil Code classifies contracts as follows:
- By the parties that are bound in the contract:
- Unilateral: When one party agrees to another and the latter does not incur any obligation.
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- Bilateral: When there is reciprocity between the contracting parties to bind themselves.
- Free: When only one party receives benefits and the other is taxed.
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- Onerous: Its purpose is the utility of both contracting parties, establishing reciprocal advantages and taxes.
- Main: When it subsists by itself, without the need for another convention. It's independent.
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- Accessory: When it is intended to ensure compliance with a main obligation, so that it does not exist without it.
- Real: For it to be perfected, the tradition or dedication of the thing to which it refers is necessary.
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- Solemn: When it is subject to the observance of certain special formalities, so that without them it does not have any civil effect. Consensual: It is perfected by the sole consent, that is, the agreement of wills.
Main characteristics of some essential contracts.
Commercial contracts.
Commercial contracts are characterized by having the following elements:
- Intentionality: It is the spirit that the contractors have and that helps to define the contract.
- Personal element: The person who contracts the contract must be a merchant. Objective element: It has to do with the very nature of the contract, which prevails over the other elements, but must be expressly established in the Law.
There are also certain requirements that must be met for the existence of the commercial contract, which are the following:
- Capacity: Any person who, according to the provisions of the Civil Code has the capacity to contract, also has the capacity to exercise commerce.
- Consent: For there to be a commercial contract, there must be a valid and free consent. Object: Every contract or declaration of will must have as its object one or more things that it is about giving, doing or not doing. They can be objects of a contract not only existing things at the time of its conclusion, but also things that are expected to exist. Legal cause: There can be no obligation without real and lawful cause. Solemnities: These are formalities that must be observed in certain contracts.
Purchase Sale Contract.
They can be civil and commercial.
Civil sale
It is the contract in which one of the parties agrees to give one thing, and the other to pay it in money. The one who contracts the obligation to give the thing is called the Seller, and the one who must pay the money, the Buyer. This money is called Price.
The most outstanding characteristics of this type of contract are listed below:
- It is bilateral: Because both parties mutually oblige each other when the contract is perfected.
- It is onerous: Because the parties impose a lien. It is main: Because it does not depend on the existence of another contract. It is consensual: Because it is perfected with the consent of the parties. It is nominated: Because it is legislated. The obligation is fulfilled in a single moment, without the passage of time. It is commutative: Because each party is obliged to give something equivalent. It is freely debatable: When the negotiation fully operates. It is accession: When one of the parties imposes clauses pre-elaborated that do not admit any modification. It is random: By exception, when it has to do with things that do not exist, but it is expected that they exist. It is solemn: By exception, when it is necessary to comply with certain formalities.
The following are essential elements for the conclusion of a sale contract:
- Capacity to celebrate the contract: This capacity is possessed by all the people that the Law does not declare unfit to celebrate.
- Consent: This contract is consensual, being perfected with the sole consent of the parties. The thing sold: It is the object of the seller's obligation and the cause of the buyer's obligation. The price: It is the money that the buyer agrees to give for the thing sold. The solemnities: By exception, when it must be celebrated by public deed.
The seller's obligations are:
- The delivery of the thing: The seller must deliver the thing sold immediately after the contract, or at the time fixed in it. If due to the seller's delay in delivery, the buyer may persevere in the contract or withdraw from it, and has the right to be compensated for damages.
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- Sanitation of the thing sold: The seller is obliged to free the thing from the liens or defects that it suffers from.
The buyer's obligations are:
- Receive the thing: If the buyer is in default of receiving, the seller will be exempt from the care and conservation of the thing, and will have the right to demand reimbursement of the expenses incurred for storage.
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- Pay the price: What will be done at the agreed place and time, or failing that, at the place and time of delivery.
Mercantile sale
There are three classes of merchanting, which are:
- Ordinary sale.
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- Sale of all merchandise; and, Sale with reservation of domain.
Now I will refer to the first two, and then analyze the third in a little more detail.
Ordinary Commercial Sale
Its elements are:
- Material element: Because it refers to movable property exclusively.
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- Subjective element: Because there must be the spirit to resell.
Furthermore, this type of contract must meet certain requirements, such as:
- Capacity: The rules of the Civil Code, already stated above, will apply.
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- Consent: Perfecting with the agreement of the parties. The thing sold: The thing must be lawful trade. The price: It must be agreed in advance, either by indication of the parties, or set by a third party.
The sale of all merchandise
It is a solemn commercial sale contract, which must be executed by public deed under penalty of nullity.
The Commercial Code distinguishes the sale of merchandise and the sale of the effects of a merchant.
Merchandise.- They are the personal property of a merchant destined for the traffic it carries out. When all merchandise is sold, ancillary items such as counters, display cases, decorations, etc. are usually included as well.
Effects.- The notion is not so clear and can be confused with that of merchandise. Trade bills are said to be negotiable securities that prove the existence of a short-term debt for the benefit of the bearer, the security serving as the requirement for payment. Examples of this are the bill of exchange, the promissory note and the invoice.
Purchase Contract with reservation of domain.
It is a solemn commercial contract, in which, when the installment sale of a movable property is made, the seller may reserve the ownership of it until the buyer has paid the full price.
The buyer will only acquire the domain of the thing with the payment of the entire price, but he will assume the risk of it from the moment he receives it from the seller.
For this contract to take effect between the parties and the respects of third parties, the Law provides for two solemnities:
- Celebration by public deed: In three copies, one for the buyer, one for the seller, and one for the Records Office.
- Inscription in the Mercantile Registry: From the respective jurisdiction; and if there is no Mercantile Registry, it will be registered in the Property Registry.
The seller's rights are:
- Receive payment of the full price established within the specified period.
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- Require the delivery of the thing sold (when the pledge has not been released), and demand payment if it has been destroyed or lost by the debtor. Request the auction of the thing.
The seller's obligations are:
- Deliver the thing sold.
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- Receive payment of the price.
The buyer's rights are:
- To the possession of the thing sold.
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- To the return of the positive balance resulting from the auction. To be notified of the assignment of the contract. To the acquisition of ownership of the property (at the conclusion of the payment of the price).
The buyer's obligations are:
- Upon payment of the entire price.
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- The return of the thing sold in case of breach of the contract. The notification to the seller of the change of address.
The legal actions are substantiated in summary verbal judgment, they prescribe within three years, counted from the date of the last payment due (if it is for a term), of the price of the thing sold with reservation of title.
Lease agreement .
Leasing is a contract in which the parties mutually oblige each other to grant the enjoyment of a thing, to another that enjoys or occupies without acquiring the domain of the thing leased, or to perform a work or provide a service, and the other to pay for this enjoyment, work or service a certain price. It allows the use of things that are not in the domain.
This type of contract is temporary, it can be given in the case of real estate to use and enjoy for specific occupation; in machinery to be used in the performance of a work or job such as removal of earth, channels, etc.
It is an onerous contract, for the benefit of both parties; it is bilateral, because the two parties mutually oblige each other; and, it is consensual, because it is perfected with the consent of the contracting parties.
There are three elements of this contract, namely:
- The thing: That is the object of the lease.
- The price: Also called canon, it is regularly money, but it can also be another form of payment; And, Consent: It is the agreement of the parties.
The landlord's obligations are:
- Allow the enjoyment of the leased thing.
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- Maintain it in a state of service for the purpose for which it has been leased. To free the lessee of any embarrassment or pregnancy in the enjoyment of the thing leased. To the sanitation of the thing leased.
The lessee's obligations are:
- Have the enjoyment of the thing according to the terms of the contract.
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- Repair the deteriorations and take care of the conservation of the leased property. Pay the price. Once the contract is concluded, return the thing.
Invalidity and interpretation of contracts.
Contract nullities.
The nullity is a civil sanction that the Law imposes on the acts and contracts that have been executed, omitting the requirements for their validity. This sanction consists in denying them all value, efficacy and effect, by means of a judicial declaration of nullity. The nullity can be of two kinds:
1) Absolute nullity: Which occurs in the following cases:
- When the contract has an illegal object or cause.
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- When the requirements that the Law establishes in relation to the nature of the contract are omitted. When people with absolute legal incapacity intervene.
2) Relative Nullity: Our legislation does not rule exhaustively regarding the relative nullity, therefore, it is considered that any omission or defect that does not produce absolute nullity, gives rise to the relative nullity or termination of the contract.
Consequently, this nullity cannot be declared by the Judge except at the request of the party. The term to request it is four years, counted from the time the vice occurred.
Contractual intent.
In any contract, what prevails is the intention of those who contract, which should rule beyond the literal words.
The contractual clauses must be interpreted in such a way that they suit the contract in its entirety. The clauses of common use are presumed although they are not expressed.
Not established contrary will, a contract will be interpreted in the sense that best suits its nature.
If the above rules cannot be applied, the ambiguous clauses will be interpreted in favor of the debtor.
But if the ambiguity lies in a clause dictated by one of the parties, it will be interpreted against it, as long as there is no explanation that should have been given by it.
- Labor legislation from a management perspective.
Brief analysis of the individual employment contract.
The individual employment contract can be express, when the parties agree to the conditions verbally or in writing; but it can also be tacit when there is an employment relationship, even if the contract has not been expressly formalized.
Definitions.
Individual employment contract is the agreement under which a person agrees with another person or with an entity of any nature to provide their legal and personal services, under their dependence and for the payment of remuneration.
There are two contracting parties:
The worker, who is the person who is obliged to provide their services. Coulding be:
Employee: If the services are for intellectual knowledge, arts or trade.
Worker: If the services are paid in periods of less than a month.
The Employer: That is the person or entity to whom the services are provided.
Classification.
We can cite the following classifications:
By the way:
Written: When by legal provision or by will of the parties, the conditions of the contract have been stipulated in writing.
Verbal: If the parties' agreement has been established verbally.
For the duration:
For an indefinite period: When the duration of the employment relationship has been expressly set or no term has been stipulated.
For fixed time: When the duration of the contract has been determined in a concrete way.
For the way the work is carried out:
For certain work: The worker agrees to perform a certain task, for a remuneration that includes the entire work, without taking into account the time invested in executing it.
By task: The worker agrees to execute a certain amount of work or work in a previously established day or period of time.
A piece rate: When the work is carried out by units of work, pieces, pieces or measures and the remuneration is agreed by each unit, without taking into account the time invested.
By the number of workers:
Sole proprietorship: when the contract is concluded with a single worker.
Multi-personnel: when more than one worker is hired, which can occur in contracts of:
Hook: To work in a place other than the workers' residence.
Group: When workers are hired to carry out a common task together.
As a team: When organized workers carry out complementary tasks and have a boss who represents them.
Remuneration and its motivating drive.
Remuneration is one of the fundamental elements of the employment contract. Paying it, in a complete and timely manner, is the employer's first obligation to the worker and, simultaneously, is the worker's basic right.
Compared to the work performed by the worker, the payment of remuneration is the essential consideration of the employment relationship.
Overview.
Salary: the remuneration paid to the worker for his work is called salary. When paid for working days, it is also known as wages. Whether it is payment per day as per units of work or per task, the payment term may not exceed one week.
Salary: the remuneration paid to the employee is called salary and is calculated by months, also counting non-working days. The term for the payment of wages should not be more than one month, and other different terms for payment may be established.
Basic Salary: There is no express rule about what to understand by basic salary, wages or wages. This concept is born from Law 109 (Compensation for cost of living), and is understood as such only the stipend in money received by the worker on a normal and permanent basis, without taking into account any additional and overtime hours, or additional remuneration.
Calculation of the amount.
The parties can freely stipulate the amount of wages and salaries to be received by the worker; but in no case can it be agreed that they are lower than the legally established minimums. In this way, the contractual freedom to determine the amount of the remuneration is limited by the setting of minimum wages and salaries.
In this matter, CONADES set a value every six months as the general minimum living wage. According to the Law for the Economic Transformation of Ecuador, the general minimum living wage of one hundred thousand sucres is maintained exclusively for reference purposes. This will be applied for the calculation, determination or application of any legal or regulatory provision in which reference is made to this type of salary.
From the effective date of the aforementioned law, a process of wage unification begins that changes the concept of the minimum wage, and there is talk of unified remuneration.
The parties may freely agree in the contract on procedures of various kinds to improve the worker's remuneration within previously established deadlines. Also, of course, these increases may be by unilateral resolution of the employer in accordance with a company's salary policy.
The worker's remuneration must be paid in legal tender. In practice, payment has been adopted through bank deposits.
Convention No. 95 of the International Labor Organization (ILO), which has been ratified by Ecuador, admits payment by check when circumstances justify it. As this is the current legal regime, it should be concluded that the worker may or may not accept these other forms of payment, or demand that he be paid in cash. What the law does expressly prohibit is payment in vouchers, tokens or other similar means that should be used exclusively in previously determined warehouses, markets or other establishments.
Remuneration must be paid on business days and during working hours; and in terms of no more than one month in the case of wages, and no more than one week in the case of wages.
The remuneration has certain guarantees, which are the following:
Integrity: The worker's remuneration cannot be decreased or discounted except in the cases and with the legally established limitations.
Opportunity: The salary or wage must be paid on time, following the established steps.
Privilege: What the employer owes the worker for wages or salaries constitutes first class privileged credit.
Unattachability: The worker's creditors cannot exercise the embargo's judicial mechanism over it. There are two exceptions to this principle:
Yes, the embargo is applicable for the payment of alimony owed; and, It allows withholding for credits contracted with the Ecuadorian Social Security Institute.
Irrevocability: This means that the worker cannot voluntarily accept a decrease in any of the rights that correspond to him.
Brief analysis of some employer obligations.
Profits.
Every year, the employer is obliged to recognize for the benefit of its workers 15% of the liquid profits obtained in its business, activity or company during the previous year.
For the determination of annual profits in a company, the income tax declaration will be taken as the basis.
The payment of the profits must be made in cash, and regarding delivery, the following will be observed:
- The 10% individual participation will be delivered directly to the worker.
- 5% for family charges will be distributed through the majority association of company workers, but if there is no association, the delivery will be direct.
The percentage of profits that corresponds to the workers must be paid until April 15.
The reserve fund.
The reserve fund is the capitalized work that each worker has accumulated over the years. The worker's right to the reserve fund is established when the worker has completed a year of services to the same employer; After that first year, you are entitled to a monthly salary or wage for each full year after that first year.
Therefore, if the employment relationship ends before the first year, the worker will not be entitled to that fund; but if you return to work with the same employer, you can add the previous time with the new one. Even if the owner of the company or the employer itself changes, the worker will be entitled to the reserve fund, since it is considered that the service time has not been interrupted, if the identity of the company, activity or business is maintained..
To determine how much the reserve fund amounts for each year of service, the wages and salaries earned in that year, plus the payments for overtime and overtime, commissions and other benefit shares, and in general any remuneration will be taken into account. that has the character of normal in the company or industry. The sum obtained will be divided by twelve.
The retirement.
The worker who has provided his services for 25 years or more, continuously or uninterruptedly, has the right to retirement at the employer's expense.
If a worker has completed at least twenty years in a company and less than twenty-five years of continuous or interrupted work, and is untimely dismissed, he will be entitled as compensation to the proportional part of the employer's retirement.
The law states that the retirement pension that the employer is obliged to deliver has certain limits:
It may not be less than the general minimum living wage.
It may not be higher than the monthly average of the remuneration that the worker has received in the last year of services.
The retirement pension benefits from the same remuneration guarantees, but also has some specific guarantees:
In the event of liquidation of the company, the retiree will have a preferential right over the liquidated assets and his credits will be among the privileged.
Retirement pensions are exempt from paying income tax.
Upon the death of the retiree, their heirs will be entitled to receive the same retirement pension for one year.
The following is an example of how to calculate the amount of an employer's retirement:
Data:
Start of employment relationship: March 1, 1970.
Term of the employment relationship: February 28, 2000.
Remuneration during the entire period of service: S /. 80,000,000.
Annual remuneration during the first year of services: S /. 18,000.
Remuneration for the last five years:
1995 (March-December): S /. 3,500,000
1996 S /. 5,400,000
1997 S /. 7,800,000
1998 S /. 10,080,000
1999 S /. 15,000,000
2000 (January-February): S /. 4,500,000
Age of the worker: 61 years.
The worker was affiliated with the Ecuadorian Social Security Institute, and the employer paid for employer contributions: S /. 6,000,000
Settlement:
Calculate years of service:
| Years | Months | Days | TOTAL |
| 2000 | two | 28 | |
| 1970 | 3 | one | |
| 29 | eleven | 27 | 30 years |
Calculation of the reserve fund to which the worker is entitled.
What is calculated as follows:
| TOTAL of what was earned in the period | 80,000,000 |
| LESS what was earned in the first year | 18,000 |
| TOTAL | 79,982,000 |
79,982,000 / 12: 6,665,166 (Reserve fund to which the worker is entitled).
Then we proceed to calculate five percent of the average annual remuneration received in the last five years, multiplied by the years of service, thus:
Earned in the last five years: s /. 46,280,000
This amount is divided by five: s /. 9,256,000
From this value we calculate 5%: s /. 462,800
Finally, we multiply the result by the thirty years of services of this particular worker: s /. 13,884,000
Determination of the worker's salary:
All earned in service time divided by twelve.
80,000,000 / 12: 6,666,666
Individual retirement credit.
It is established by adding the values obtained, namely:
| Reserve fund: | s /. 6,665,166 |
| 5% of the average remuneration of the last five years of services: | s /. 13,884,000 |
| A worker's salary: | s /. 6,666,666 |
| Gross individual credit | 27,215,832 |
Net Individual Credit.
| Gross individual credit | 27,215,832 |
| LESS: Employer contribution | 6,000,000 |
| Net individual credit | 21,215,832 |
When there is a gross individual, the employer's contribution or the reserve fund will be subtracted, whichever is more convenient for the benefit of the employee's interests. As the amount subtracted is lower, it will favor the worker more.
Obtaining the annual retirement pension.
The net individual credit will be divided for the corresponding coefficient, dictated by the Labor Code, which has a direct relationship with the age of the worker.
21,215,832 / 5.4525: s /. 3,891,028 ANNUAL JUBILARY PENSION
COEFFICIENT TABLE
| Age when determining rent | Current value coefficient of annual unit life annuity | Age when determining rent | Current value coefficient of annual unit life annuity |
| 39 | 13.2782 | 64 | 4.5940 |
| 40 | 12.9547 | 65 | 4.3412 |
| 41 | 12.6232 | 66 | 4.0991 |
| 42 | 12.2863 | 67 | 3.8731 |
| 43 | 11.9424 | 68 | 3.6622 |
| 44 | 11.5919 | 69 | 3.4663 |
| Four. Five | 11.2374 | 70 | 3.2849 |
| 46 | 10.8753 | 71 | 3.1195 |
| 47 | 10,5084 | 72 | 2.9731 |
| 48 | 10.1378 | 73 | 2.8502 |
| 49 | 9.7658 | 74 | 2.7412 |
| fifty | 9.3930 | 75 | 2.6455 |
| 51 | 9.0223 | 76 | 2.5596 |
| 52 | 8.6544 | 77 | 2.4819 |
| 53 | 8.2881 | 78 | 2.4115 |
| 54 | 7.9218 | 79 | 2.3418 |
| 55 | 7.5553 | 80 | 2.2787 |
| 56 | 7.1884 | 81 | 2.2139 |
| 57 | 6.8236 | 82 | 2.1384 |
| 58 | 6.4622 | 83 | 2.0704 |
| 59 | 6.1110 | 84 | 1.9633 |
| 60 | 5,777 | 85 | 1.8350 |
| 61 | 5.4525 | 86 | 1.6842 |
| 62 | 5.1468 | 87 | 1.4769 |
| 63 | 4.8620 | 88 | 1.2141 |
Monthly retirement pension.
It is the annual retirement pension divided for the twelve months of the year.
S /. 3,891,028 / 12: s /. 324,252 MONTHLY JUBILARY PENSION.
Now, with the promulgation of the "Law for the Promotion of Investment and Citizen Participation" better known as the "Trolley II", the worker may request that the employer directly deliver a global fund based on a properly calculated founded and practiced, that covers the fulfillment of the monthly and additional pensions determined in the law, so that the same worker manages this capital on his own.
The agreement of the parties must be recorded in the minutes signed before the notary or the competent judicial or administrative authority, thereby definitively extinguishing the employer's obligation.
Regarding the "calculation duly substantiated and practiced" ruled by this Law, it should be noted that currently there is no necessary regulation, so this calculation is established through the simple and simple agreement of wills between the employer and the worker.
In consideration of dollarization and its effect on the calculation of employer's retirement, it is worth saying that there is no legislation on this matter either, and that currently the competent officials carry out the calculation based on our old currency, the Sucre, and then transform it in American dollars dividing said amount by twenty-five thousand.
Brief analysis of the collective labor contract.
The Ecuadorian legal system guarantees in various ways the right of workers to associate in defense of their specific interests, and to form entities with special characteristics in the legal order.
Among the main guarantees we have the following:
Freedom of association.
Legal status.
The union forum.
Collective Contracting.
Overview.
The collective agreement or contract is the agreement concluded between one or more employers and one or more legally constituted workers' associations, in order to establish the conditions or bases according to which the individual work contracts determined in the future must be concluded. the pact.
This means that, if in an individual contract stipulations were established in contravention of the bases established in the collective contract, the latter will prevail over those established in the individual contract.
This contract may be concluded between more than one employer and even by employers 'associations, on the one hand, and by more than one workers' association, on the other hand, with which the scope of the collective contract may extend to more than one company.
The initiative for the conclusion of a collective contract is held by the workers' association established within a company, which will present the draft contract to the respective labor inspector. The inspector will notify the employer of the project within forty-eight hours.
After the period of fifteen days from the notification, the parties must start the negotiation, which will conclude within a maximum period of thirty days.
Requirements
It must necessarily be held in writing, in three copies, before the Director or Assistant Director of labor, and in the absence of these, before an inspector or assistant inspector of labor.
The employer must appear by himself or through his legal representative.
The Workers' Association represents them and must appear through its directive, according to its own statutes, and with legally extended appointments.
If in a company there are several associations, this representation will be exercised by the association that has the largest number of workers as members.
If there is a company committee in the company, it will have preference over any other association.
Before signing the collective contract, it must have been approved by the General Assembly of the contracting workers' association.
Under Ecuadorian law, workers have the widest freedom to form associations with any denomination. They can call them "associations" or use the name "union", although in this case the custom is usually reserved for workers' organizations.
In order for a workers' association to be legally established, it is necessary to meet some requirements:
Number: The associated workers must be at least thirty.
Manifestation of will: The workers must express their will to associate, in an assembly that will meet for this purpose and which will be recorded in a constitutive act, which the assisting workers will sign or leave their fingerprint if they do not know how to sign.
Provisional directive: The assembly must choose a provisional directive that will be in place until, after the constitution process is completed, the final directive is chosen.
Statutes: The workers' assembly must approve the statutes of the association, which will be certified by the secretary of the provisional board.
Registration: The statutes will be registered with the General Directorate of Labor.
5.- Tax legislation and its application in the administration.
The tax obligation.
The Tax Code expressly defines the tax obligation as the "personal legal link, existing between the State or the entities that are tax tributes and the taxpayers or those responsible for them, by virtue of which a benefit in money, species or services must be satisfied appreciable in money, when the generating event foreseen by the Law is verified ».
In this regard, we must understand as a generator of the budget established by law to configure each tax. Therefore, when the taxable person performs the act or contract or is pigeonholed in the situation prescribed by law at that time, he acquires the obligation to pay the tax.
Overview.
The general rule is that the tax obligation is payable from the date that the law indicates for this purpose. But if the law does not set that date, then the two rules set forth in the Tax Code will govern:
- When the taxpayer or person responsible must make the payment, the obligation is required from the expiration date of the period set for the presentation of the respective declaration.
- When by legal mandate corresponds to the tax administration to carry out the liquidation and determine the obligation this will be required from the day following that of its notification to the taxpayer.
Extinction.
There are five ways in which a tax obligation can be extinguished, they are:
- Solution or payment.- It is the provision of what is owed, that is, the delivery that the taxable person makes of a certain amount of money, or appreciable species or services in money to the active subject. The last two, after valued acceptance of the active subject.
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- Compensation.- Compensation is a way by which obligations are extinguished when two parties are debtors to each other. Debts can only be offset with credits from the same tax authority. Titles of the external debt of Ecuador are not admitted. Confusion.- It is a way of extinguishing obligations when the qualities of creditor and debtor concur in the same person, for which reason the confusion operates by extinguishing the debt. means to forgive or forgive, in this case, a tax obligation, your interests and fines. The tax remission operates by order of the Tax Authority. Prescription.- It is a way of distinguishing the actions and rights of others for not having demanded them for a certain time. The action that the administration has to collect the tax credits, their interests and fines,prescribed in the following terms:
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- Five years counted from the date the tax obligations were due.
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- Seven years counted from the date in which the corresponding declaration should be presented, if it had not been done.
The tax subjects.
There are two tax subjects recognized by our legislation, the same as the following:
- The active subject; and,
- The taxable person.
The active subject.
The Tax Code defines the active subject as "the creditor of the tax". This concept includes both the State or Treasury, as well as the provincial councils, municipalities and other entities to which the law exceptionally grants rights in tax matters.
The tax administration manifests itself and exercises the powers that the laws grant them through the following bodies:
- The central tax administration, which corresponds to the President of the Republic, which exercises it through the organs that the law provides, among them are:
- The Internal Revenue Service.
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- The National Directorate of Appraisals and Cadastres. The Ecuadorian Customs Corporation.
- Sectional tax administration, in charge of the provincial councils and the municipalities.
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- Exceptional tax administration, which is made up of public entities to whom the law expressly grants tax management regarding their own taxes, such as the General Directorate of Civil Aviation, Superintendency of Banks and Superintendency of Comoañías.
The taxable person.
Taxable person is the natural or legal person who, according to the law, is obliged to comply with tax benefits, either as a taxpayer or as a person responsible.
Our legislation classifies the taxable person as taxpayer and responsible.
Taxpayer.- They are the natural or legal persons, to whom the law imposes the obligation of the tax benefit for the verification of the generating event.
The taxpayer's tax obligation arises when the taxable event is directly linked to it. The taxpayer will always be a taxable person for his own debt, in such a way that he will never lose such quality who, according to the law, must bear the tax burden, even if he transfers it to other people.
Responsible.- They are those people who do not have the quality of taxpayers, as they are not directly linked to the generating event. It is in order to achieve better control in the collection of taxes and by reason of the position or function that these people occupy that, by express provision of the law, they must comply with the obligations assigned to taxpayers. Those responsible will always be taxable but for someone else's debt.
The tributes.
Taxes are compulsory benefits, established under a law, which are generally paid in money, and that the State or active subject, based on the tax power of which it is the holder, requires taxable persons according to their taxable capacity., to be able to fulfill your specific purposes.
There are several classifications of taxes, but the two most important are:
Linked and unrelated taxes.
Related taxes are those in which there is a direct consideration by the State to individuals. The taxpayer pays the taxes because he has received or will receive a specific benefit in his favor from the tax administration.
Unrelated taxes are those in which the taxpayer does not directly receive any benefit from the State, despite which, by mandate of the law, he has the obligation to pay said taxes.
Taxes, fees and contributions.
The other classification, which divides the taxes into taxes, fees and special contributions for improvements, as it has been adopted by the Latin American Model Code and also by our legislation, will be studied below.
Taxes.
They are taxes that consist of the provision in money or in kind, which the State requires from the taxpayer as a tax obligation, the taxable fact of which is not constituted by the provision of a service, activity or work of the administration, but for business, acts or facts of a legal or economic nature carried out by the taxpayer.
Therefore, they are the taxes that are paid regardless of the activity carried out by the State. They are divided into:
- Direct: They are those in which the taxpayer is the one who receives the tax burden, making it impossible to transfer it to a third person.
- Indirect: They are those in which the taxpayer can transfer the tax payment to a third person.
Value Added Tax.
The value added tax (VAT) is applied to domain transfers and imports of personal property of a bodily nature, in all its stages of commercialization, and to the value of the services rendered.
Activities subject to VAT are taxed at a rate of 12%. VAT is payable at the time the act is carried out or the contract is signed for the purpose of transferring ownership of the personal movable property or the provision of services, for which the respective invoice, note or ballot must be issued. selling.
Income tax.
Income is the income that, from work, capital, or both, a person or entity receives in a certain period of time.
The active subject or creditor of this tax is the Ecuadorian State. Its administration corresponds to the Internal Revenue Service. Taxpayers or debtors are natural or legal persons who obtain taxable income.
The tax year for calculating income tax begins on January 1 and ends on December 31 of each year. To settle the Income Tax of individuals, the rates contained in the following income table will be applied to the tax base:
| 1999 | |||
| Basic fraction | Excess over the basic fraction until | Basic fraction tax | Tax on the excess fraction |
| S /. 0 | 80,000,000 | 0 | + 0% |
| 80,000,001 | 120,000,000 | 0 | + 5% |
| 120,000,001 | 150,000,000 | 2,000,000 | + 8% |
| 150,000,001 | 200,000,000 | 4,400,000 | + 10% |
| 200,000,001 | 250,000,000 | 9,400,000 | + 12% |
| 250,000,001 | ONWARDS | 15,400,000 | + 15% |
| 2000 | |||
| Basic fraction | Excess over the basic fraction until | Basic fraction tax | Tax on the excess fraction |
| $ 0 | 3,200 | 0 | + 0% |
| 3,200 | 5,200 | 0 | + 5% |
| 5,200 | 7,200 | 100 | + 10% |
| 7,200 | 9,200 | 300 | + 15% |
| 9,200 | 11,200 | 600 | + 20% |
| 11,200 | ONWARDS | 1,000 | + 25% |
Practical Exercises of Income Tax Declaration for Natural People
Exercise 1
If a person receives an income of $ 3,190 per year, it does not reach the tax base, therefore it does not cause taxes.
Exercise 2
If a person receives in the period of 1999, an income of 85.0000.0000 per year should pay:
The difference between what you receive as income, that is, 85,000,000 less the basic fraction, which in this case is 80,000,000, gives us 5,000,000
For the first 80,000,000 the tax provided in the table for the Basic Fraction (0) is applied, which indicates that nothing is paid for this concept.
On the difference (5,000,000) the tax on the surplus shown in the table (5%) is applied. The result (250,000) constitutes the tax to pay.
The total to pay is:
5,000,000 x 5% = 250,000
Basic Fraction Tax 0
TOTAL S /. 250,000.
Exercise 3
If in the fiscal period 2000, a person receives an income of $ 7,800 per year, they should pay the difference between what they receive as income, that is, 7,800 less the basic fraction, which in this case is 7,200. The result is $ 600
For the first $ 7,200, the tax provided in the Table for the Basic Fraction ($ 300) is applied, which indicates that three hundred dollars will be paid for this concept. On the difference ($ 600) the surplus tax that is shown in the table (15%) is applied. The result ($ 120) constitutes the tax to be paid. To these one hundred and twenty dollars the Basic Fraction tax is added, which, as we have seen, in this case is $ 300 dollars.
Basic fraction tax: $ 300
Tax on excess fraction: $ 90
Tax caused: $ 390.
Capital Circulation Tax.
The Law of Reorganization in Economic Matters in the Financial Tax area published in RO78-S, of December 1, 1998, establishes the Capital Circulation Tax, the same that originally appeared with a rate of 1%, but which As of January 1, 2000, it was reduced to the 0.8% rate.
Capital circulation is understood as the effective income in current accounts or savings accounts or in any other means of investment or savings and that are available to their holders, due to operations or monetary transactions, as well as the collection of checks at the window.. In addition to the money orders, transfers or payments of any nature made abroad.
However, the "Law for the Promotion of Investment and Citizen Participation" better known as "Trolley II", the same that came into effect on August 18, 2000, suspends the Capital Circulation Tax, interruption which in practice has not been complied with, since the Internal Revenue Services has ruled against this suspension, invoking that it must be collected until the end of the year.
This matter is reflected in Circular 0890, signed by Econ. Elsa de Mena, Director General of the Internal Revenue Service, circular that is transcribed below:
Special consumption tax.
This tax is imposed on the import and internal consumption of cigarettes, beers, soft drinks, mineral waters, purified waters, alcohol, alcoholic products and other luxury products.
Its tax base is determined by adding production costs, sales, administrative, financial expenses, marginalized profit, marketing costs and margins; The ad-valorem rates detailed below will be applied to this tax base:
| GROUP I | FLAT RATE |
| 1. Cigarettes: | |
| - Blond | 75% |
| - Black | 18% |
| 2. Beers | 30% |
| 3. Soft drinks | 10% |
| 4. Alcohol and alcoholic products other than beer | 26% |
| GROUP II | FLAT RATE |
| 1. Motorized vehicles | 5% |
| 2. Planes, light aircraft, helicopters, jet skis, tricars, stables, yachts and pleasure boats. | 10% |
The cups.
They are linked taxes, that is, those in which the generating event is constituted by a public service, the same that is divisible and quantifiable with respect to the taxpayer.
In the rates there is a relationship between the provision of the public service and the payment of a fee, the amount of money that is delivered as consideration for the service received.
The rates always have a remunerative nature, without this implying that there is a price, since it includes a profit at more than the cost, while the rates only charge the cost of the service.
There are even cases in which the rate is lower than the cost, the difference of which is assumed by the respective tax administration.
The rates, unless expressly provided in the respective Law, are taxes whose payment has no exception; In other words, every natural or legal person, private, public or semi-public, who benefits from the use of a public service, has the obligation to pay the corresponding fee. Some services for which fees must be paid are:
- Telephone.
- Post office, sewer, canalization, garbage collection, etc.
Special contributions.
This tax, being of a general nature, is at the same time special, in that it must be paid only by taxpayers who receive a specific benefit directly and indirectly.
Thus, the special contribution paid to controlling or supervisory bodies for banking or corporate activities, such as: Superintendency of Banks and Superintendency of Companies, which collect tribute from banking and financial entities in the first case, and capital companies in the second case, entities that have been under the supervision of the aforementioned controlling and vigilant organizations of the activities they carry out.
This tax must also be paid by the beneficiaries of public service works, such as those provided by the municipalities or public councils. The special contribution is then paid exclusively by the beneficiaries of such services.
As for the special contribution of improvements, it can be permanent or temporary, as in the case of street paving, drinking water, electricity, and in particular, when it comes to improvement contributions created to correct or finance extraordinary situations that affect a certain sector of the country, and that it is about to replace with the solidarity of all Ecuadorians.
Some time ago, as an example, a tax was created for the reconstruction of Ambato, after the 1949 earthquake; likewise, in the case of the Josefina, the El Niño current, the Bahia earthquake, etc., for which reasons, in particular, tributes were created, requested from the directly affected regions or simply from the entire country.
- The Unique Taxpayer Registry.
The Single Taxpayer Registry is a system that aims to register and identify taxpayers and provide information to the Tax Administration. The RUC registration number is personal and non-transferable.
All natural persons and companies, entities without legal personality, national and foreign that initiate or carry out activities in the country permanently or occasionally, must obtain the Unique Taxpayer Registry.
In the case of natural persons, the registration number in the RUC will be the same as the number of the identity card or citizenship of the natural person. Natural persons who work in a dependency relationship, or those who are only retired, only study or only do household chores are not required to obtain registration in the RUC.
The companies will obtain their inscription in the RUC, at the request of their legal representative. The companies that are subject to the control of the Superintendency of Companies, will register and update their RUC in the dependencies of this institution. The RUC certificate from 1997 and 1998 is valid indefinitely until further provision, if no change has been made to the Registry.
Registration in the RUC must be obtained within thirty days after its constitution or start of activities.
The requirements for obtaining the RUC are:
In natural persons
- Present the original and deliver a copy of the identity card.
- Provide a copy of the last ballot paper. Accompany a copy of a document that certifies the address of the place where your economic activity is carried out: electricity, water, telephone, etc.
In legal entities
- Attach a copy of the statute of the legal entity with the corresponding registration certificate.
- Appointment of the Legal Representative. Copy of the identity card and voting slip of the Legal Representative. Accompany a copy of a document that certifies the address in which the economic activity will be carried out.
The sanctions.
Those obliged to register are responsible for the veracity of the information provided for all legal effects derived from this act.
Registration must be requested within thirty business days after the start of the economic activity, otherwise it will be subject to the payment of fines. If there is a fine, it must be canceled on form 106.
- Conclusions and recommendations.
Conclusions.
The effect that our legislation produces or can produce on the administration of professionals or those who have been called to direct an organization, can no longer be unknown to anyone.
The knowledge or ignorance of a legal matter related to the good running of the organization, could be the difference that would mark that organization, and even more so, the person who is in charge of that institution.
This monographic work has sought to guide, through the analysis of the main legal institutions related to administration, those who, due to their position or position within a company, have to know matters related to Ecuadorian legislation, however, We are professionals of the law.
And it is that, at the present time, it is necessary to have certain legal knowledge, since this fact will avoid us an endless number of problems that could present us in the future; As professional administrators, it is our duty and obligation to be aware of the legal reforms that occur, and that affect the effective development of our institutions.
This small work has been focused from four points of view, which I have considered fundamental in the development of managerial activity, and which are:
- Corporate legislation.
- Contractual Legislation. Labor Legislation. Tax Legislation.
Undoubtedly, there are other areas of law that have a direct or indirect relationship in professional administration that have not been taken into account in this work, such as: laws regarding foreign trade, those of financial institutions, etc., the same ones that can be the subject of extensive analysis, but I consider that the present monograph covers for now the most important fields.
Recommendations.
The activity of the professional administrator is dynamic, committed to updating itself every day, depending on the environment and society. Likewise, his field of study never ends, he has a firm commitment to himself and to others, it is due to the institution, whose responsibility for the fulfillment of the institution's objectives rests with him.
Reasons why I allow myself to make the following recommendations to the professional administrator:
- It is important to develop a summary analysis of the legislation that concerns all administrators.
- Directly relate to the type of company to which your organization conforms. Apply a contractual policy according to our environment, differentiating the different types of contracts. Pay close attention to the tax area, taking vital care with taxes and billing. Find rapport in labor relations with subordinates, through an approach resulting from a good application of the legal framework. Assimilate the successes and avoid errors through the correct application of legal regulations. You need to know more carefully the laws that are directly related to its administration and area in which they are called to collaborate. It must always be constantly updated, attentive to the changes that occur, not only in the legal field, but also in the different fields of its managerial actions,such as in the area of productivity, marketing, sales, etc. He must be analytical, studious, attentive in the development of his work.
- Bibliography
Company Law.
Consulting Law.
Stock Market Law.
Tributary Code.
Internal Tax Regime Law.
Commercial Code.
Internal Tax Regime Law.
Work code.
Regulations and Resolutions issued by the Superintendency of Companies.
Newspaper "The Universe".
Encyclopedic Illustrated Dictionary «Oceano Uno». (Oceano Publishing Group.
Dictionary of synonyms, meanings and related ideas. (Ivar American).
Billing. Basic Guide. Internal rents service.
Basic Taxpayer Guide. Internal rents service.
Comments to the articles of the Ecuadorian Companies Law, Sections 1, 2, 3, 4, 5 and 6. By Nicolás Cassis Uscocovich. (Department of publications of the U. de G.).
Commercial law manual. By Julio Olavarría AvilaManual of commercial law. By Víctor Cevallos Vásquez Questions of modern commercial law. By Sergio Le Pera. (Astrea).
Limited Liability Companies. By Isacc Halperin. (Depalma Editions).
The anonymous company. By Miguel A. Andrade.
Business law issues. By Jorge Egas Peña.
Individual labor law. By Alberto Briceño Ruiz. (Harla).
Ecuadorian labor legislation. By Hugo Valencia Haro
Collective labor conflicts. By Celio Romero Vicuña.
Labor law. By Julio C. Trujillo. (Editorial Don Bosco).
Labor law. By Milton Jijón Saavedra.
Legal Manual for the Entrepreneur and the Executive. Volumes 1 and 2. Legal editions of MYL Corporation.
Ecuadorian tax legislation. By Washington Durango.
Schematic compendium of the Tax Code. By José Adolfo Morales.
Tax law. By Eduardo Madera Grijalva.
Category Administration and finance
Summary: Without a doubt, one of the most worrisome environments in our environment for those who have the desire to invest, and for those who have already done so, is the legal environment.
And it is that in our society, laws should be dynamic, but that many times they are poorly focused, which is why it is necessary to have an updated knowledge of legal reforms, even without being lawyers.
And, the effect of laws on economic organizations is not unknown to anyone. Consequently, the basic knowledge of the main regulations that affect the administration must be constantly updated.
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