Conflicts of interest in Ecuadorian corporate bodies: compliance as a mechanism for strengthening corporate governance

Abstract

Introduction: this article analyzes the legal treatment of conflicts of interest in Ecuadorian corporate bodies and the role of corporate compliance as a mechanism for strengthening corporate governance. Objectives: a) To analyze the legal treatment of conflicts of interest in Ecuadorian corporate bodies and the role of corporate compliance as a prevention mechanism; b) to identify the limitations of the regulatory framework against conflicts of interest; c) to determine the scope of compliance as an instrument of good governance; d) to examine the relevance of commercial companies to voluntarily incorporate compliance standards aimed at their prevention and management. Methodology: based on a qualitative review of the Ecuadorian regulatory framework, the provisions applicable to the prevention of conflicts of interest are examined, especially in SMEs, as well as the civil liability that the Civil Code attributes to directors in support of their fiduciary duties. Likewise, the scope of corporate compliance as an instrument of good governance is studied and its potential contribution to transparency, organizational integrity and the protection of the social interest is assessed. Results: the results show that the civil liability of directors, together with compliance programs, codes of ethics, whistleblowing channels, compliance and abstention officers, are relevant tools to strengthen corporate management and promote a culture of compliance in Ecuadorian societies.  Conclusions: Ecuadorian law recognizes, in a general way, the duties of diligence, loyalty and good faith of directors, but lacks specific mechanisms for disclosure, abstention and control in the face of conflicts of interest, a gap that is aggravated in SMEs. Corporate compliance, through a code of ethics, compliance officer, reporting channels and declaration of conflicts, is confirmed as an ideal mechanism to operationalize these duties, provided that its incorporation follows a staggered model that distinguishes between large corporations and SMEs. General area of study: Law. Specific area of study: Corporate law. Type of article: original.