Tips from our lawyer in Ecuador on company formation. There is nothing better than receiving direct advice from an expert.
What is the Best Way to Incorporate a Company in Ecuador? – Go Online!
In Ecuador, both Public Limited Companies and Limited Liability Companies can be incorporated online using the website of the Superintendency of Companies. The company incorporation is completed on the webpage. Once the form is completed, the public notary will receive the information and if everyting is in order, they will request a signature in person from the shareholders or their proxy and the President and General Manager (CEO) of the company. The public notary will send the information to the Mercantile Registry where it will be reviewed and if there are no corrections, it will request the tax identification number (RUC for its acronym in Spanish) from the Servicio de Rentas Internas del Ecuador (SRI), and with this it will approve and register the company. From that moment on the company is legally incorporated. This procedure takes about two to three weeks.
The Corporate Purpose in Ecuador
In Ecuador, companies are allowed to have only one corporate purpose and up to 5 additional activities. Therefore, it is very important that the corporate purpose reflects what the economic activity of the company will be. This will avoid problems once it is established. In the online constitution, the allowed corporate objects are those included in the catalogue of National Classification of Economic Activities. Finding the right object can be a complicated and tedious process, but it is very important to do it well. If the first attempt is not successful, the notary or the Mercantile Registry can examine the chosen object and delay the process by demanding it is changed.
New Company – Reserve the Company Name in Ecuador
The first step to establish incorporate a company in Ecuador is to reserve the name or denomination. This is done online and it is very simple. In the same way, we recommend having more than one name prepared since it is possible that the name you want to put or a more similar one is already registered, case in which the webpage will not allow you to register it. We also recommend reserving more than one name as a simple precaution, it never hurts. Once you have reserved the name, work quickly in the incorporation of the company because the name reservation lasts only 30 days.
President (Chairman) and General Manager (CEO)
In order to be able to set up a company in Ecuador, you need a President and a General Manager, at least one should reside in Ecuador to be able to respond to the obligations and possible lawsuits against the company. Normally, one of the two is the legal representative and the other is the subsidiary, although they may have joint legal representation. When the incorporation of the company is done online, you must take into account that both representatives must sign and accept the appointments so they must be in Ecuador, and appear before the public notary .
To form a company in Ecuador, it is necessary to have at least 2 shareholders. These can be national or foreign, and natural or legal persons. In the event that the shareholders are foreign, it is necessary to grant a power of attorney to a person domiciled in Ecuador to sign the deeds (bylaws) on behalf of the shareholders. The same person can be proxy of all the shareholders but each power of attorney and must be individual and duly legalized, apostilled and translated into spanish if necessary.
This advice is very important because your corporate lawyer should already have knoweledge and experience handling business matters in Ecuador. The corporate lawyer will have experience in the processes of incorporation of companies, and will help you find the most appropriate corporate purpose and help streamline the process of incorporation. In addition, a corporate lawyer will advise on subsequent issues such as the hiring of employees and compliance with obligations to the various control entities. Corporate lawyers can act as the legal representative of a company, being proxy of the shareholders, providing fiscal domicile for your company and supply any other need that may arise until you can establish your own team in Ecuador. It is also common for corporate lawyers to handle the visa and residency processes for your team, if necessary.
Do You Want to Form a Company in Ecuador?
If you have any questions or enquiries about how to form a company in Ecuador, our Ecuadorian business experts have created a company formation presentation. We hope it helps! If you have any more questions about how to incorporate your company in Ecuador, please do not hesitate to contact us now. Our Biz Latin Hub team in Ecuador includes local and expat professionals who have the knowledge and expertise to support you throughout the process.
View our slideshow on “How to Form a Company in Ecuador”