Regulatory Framework for Non-Profit Organizations: Provisions of the Organic Law on Social Transparency and Its Regulations

The Organic Law on Social Transparency and its Regulations establish the legal framework applicable to Social Non-Profit Organizations (OSSFL) operating in Ecuador, including foundations, corporations, volunteer organizations, social development entities, and authorized foreign organizations. This legislation governs their incorporation, operation, supervision, and control, assigning SEPS the authority to verify compliance with legal and administrative requirements.

A central obligation is the registration in the Unified Information System for Social Non-Profit Organizations (SUIOS), where institutional, statutory, managerial, and documentary information must be recorded to allow monitoring and control. Maintaining complete and updated information is an essential requirement for the proper administration and supervision of OSSFL.

The regulations introduce a mandatory risk-classification system, categorizing organizations as low, medium, or high risk. This categorization is determined based on criteria such as the volume and origin of resources, territorial scope, executed projects, compliance history, and other technical parameters. The assigned category defines the level of obligations regarding control, integrity and transparency.

Low-risk OSSFL must maintain a basic integrity manual, minimum risk-prevention policies, continuous information updates in SUIOS, and compliance with basic publication obligations. Medium-risk organizations must implement formal procedures for risk identification and assessment, strengthened internal controls, designate a compliance liaison, and maintain documentary organization in accordance with SEPS guidelines. High-risk organizations must establish a comprehensive Institutional Integrity System, appoint an Institutional Compliance Officer, submit periodic reports, and comply with a broader set of documentation and transparency requirements.

Regarding supervision, high-risk organizations are obligated to submit independent external audits that include financial and compliance reviews, in accordance with SEPS timelines. Medium- and low-risk organizations must adopt internal controls unless otherwise required by the authority.

The Regulations also govern essential procedures such as incorporation and approval of bylaws, amendments, registration and updating of governing bodies, admission and removal of members, and processes of merger, spin-off, transformation, dissolution, and liquidation. In certain cases, positive administrative silence applies when the authority fails to issue a decision within the established deadlines.

Furthermore, OSSFL must comply with public transparency obligations by disclosing institutional, financial, and operational information according to their risk category.

At Quevedo & Ponce, we provide specialized legal counsel to non-profit organizations, supporting them in their incorporation, internal structure, regulatory compliance, and documentary updates, ensuring they operate with legal certainty and institutional backing.