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Manage Business Risks With Due Diligence in Ecuador

Manage Business Risks With Due Diligence in Ecuador

When doing business in Ecuador, managing your business risks with due diligence is essential to achieve success. Entrepreneurship in a new market entails facing different barriers. These include linguistic or cultural barriers, as well as lack of local market understanding or know-how. Buying existing companies or partnering with locals are key ways to mitigate these challenges and obtain support for navigating an unfamiliar market.  However, it is essential to protect yourself in Ecuador by conducting exhaustive due diligence controls on the companies and people your business works with. This process minimizes the risk in a transaction by conducting detailed and independent analyses. Here we outline information about due diligence in Ecuador and how to manage your commercial risks. Due diligence to prevent money laundering in Ecuador The Financial and Economic Analysis Unit of Ecuador defines due diligence as developing a set of actions, in the most efficient and diligent way possible, to adequately know your clients. As a result, your company can know who, due to their activity or condition, is more likely to conduct money laundering, finance terrorism or be part of other crimes. As a new investor in the country, it is important to take into account the sector that you enter. The regulatory body of the sector is the one in charge of reviewing procedures for preventing money laundering locally. Why is it important to conduct due diligence in Ecuador? Due diligence in Ecuador lowers your risk of partnering with companies that have questionable backgrounds and...

Simplified Shares Company (SAS) in Ecuador: A New Opportunity to Do Business

Simplified Shares Company (SAS) in Ecuador: A New Opportunity to Do Business

Ecuador is promoting business in the country by introducing a new legal entity, the Simplified Shares Company, or SAS (Sociedad de Acciones Simplificadas). On February 28, 2020, the new Law of Entrepreneurship and Innovation came into force in Ecuador. This law is a very important advance in Ecuadorian legislation and is accompanied by the implementation of a series of new regulations in the field of business promotion in this country. Among the most important points of this law is the creation of a National Council for Entrepreneurship and Innovation to support commercial development in Ecuador, and to promote entrepreneurship education and culture. However, the most striking point of this new law is that it establishes the opportunity to form a new legal entity, the SAS in Ecuador. This follows in the footsteps of countries such as Uruguay and Colombia, who have established the same entity in the name of business growth. What are SAS Simplified Stock Companies and what is their creation process? Simplified Stock Companies (SAS) are a type of company whose shareholders are held liable up to the amount of their respective capital contributions to the entity only. Shareholders can choose to waive this limitation to insure with their own assets any operation of this type of entity. It is important to mention that the SAS in Ecuador cannot not be listed on the stock exchange. The SAS is constituted by means of a private document that will be registered in a new Registry of Companies by the Superintendence of Companies. Additionally, SAS entities do not have a minimum capital...

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