Corporate Transformation and Sports Joint Stock Companies: Effects of the Constitutional Court Decision that Invalidated the Organic Law of National Solidarity

The recent ruling of the Constitutional Court of Ecuador, embodied in Judgment No. 51-25-IN/25, issued on September 26, 2025, represents a major change in the national legal landscape. Through this decision, the highest constitutional control authority declared of the whole Organic Law of National Solidarity, published in the Official Register, Supplement No. 56 of June 10, 2025, unconstitutional determining that its approval violated essential principles governing the legislative process.

The Court held that the Law had been improperly processed under the emergency economic procedure, in spite of it involves matters of a criminal, security, tax, corporate, and administrative nature, without any clear, specific, or necessary connection among them. Such ruling dispersion infringed the principle of unity of subject matter set forth in Article 136 of the Constitution, which requires that every law maintains internal coherence and thematic consistency. Furthermore, the use of the expedited procedure unjustifiably restricted democratic deliberation within the National Assembly, undermining the principle of legislative debate.

As a direct consequence, all provisions of the Law — including those introducing new obligations for Simplified Stock Companies (S.A.S.) and regulating the creation of Sports Joint Stock Companies (S.A.D.) — have not legal effect. Accordingly, companies operating in strategic or regulated sectors are no longer required to transform, amend their bylaws, or dissolve under the terms established by the General Regulation to said Law, now also without legal effect.

This constitutional decision reinstates the prior normative framework and reaffirms the importance of sound legislative technique and respect for the parliamentary due process as fundamental guarantees of the Constitutional Rule of Law.

At Quevedo & Ponce, we continue advising and supporting to our clients in interpreting and applying these precedents, ensuring legal certainty and regulatory compliance throughout their corporate transformation and governance processes.