Simplified Joint-Stock Companies in Small and Medium-Sized Enterprises in Cuenca

Abstract

The Organic Law on Entrepreneurship and Innovation, in effect since February 28, 2020, reformulated the traditional concept that recognized five types of companies. Simplified joint-stock companies promote small and medium-sized national production with modern and flexible rules that facilitate the legal process and reduce economic and administrative barriers. They simplify procedures with the possibility of online incorporation without a public deed and without a minimum capital requirement; they adapt the corporate governance structure to the needs of entrepreneurship, increase investors through direct share transfers, and allow for a single shareholder; among other available options. Tax exemptions do not limit bank financing but rather optimize it, facilitate institutional growth, and streamline operations, presenting a serious and reliable image to clients, suppliers, and public entities. In Cuenca, the strategic use of Simplified Stock Companies (SAS) drives the growth of the productive ecosystem in creative, technological, tourism, and commercial sectors. It also strengthens entrepreneurs with limited resources, integrating them into the formal sector and providing access to credit and public programs. Business effectiveness is diminished by a lack of oversight from regulatory bodies, abuse by powerful economic groups, weak protections for minority shareholders, and institutional distrust. Furthermore, a limited business culture regarding compliance with legal and tax obligations also contributes to this situation, which is exacerbated by concerns about the use of SAS for concealing illicit economic flows.