Company Formation in Ecuador
Updated on Wednesday 21st June 2023
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This country from Western Latin America has a well-developed economy and enjoys great petroleum resources as well as crude oil production, therefore many foreign investors make the decision to open a company in Ecuador.
Our specialists in company formation in Ecuador can assist you in the process, so please contact us for more information.
Legal structures in Ecuador
There are more than several options when wishing to set up a company on Ecuadorian ground. A foreign entrepreneur can opt either for a limited liability company (public or private), an unlimited liability company, a partnership (general or limited), a joint venture or a sole proprietorship.
However, the majority prefers the limited liability company and here are some requirements for establishing a company of this sort:
- minimum 2 directors;
- at least 2 shareholders (they can be of any nationality and do not have to be Ecuadorian residents);
- a share capital of $400;
- it can be 100% foreign-owned;
- 50% of the capital ($200) must be deposited upon the process of company formation in Ecuador.
Please know that another obligation investors have is to set up a registered business address in Ecuador for their newly founded company. Although in other countries the number of shareholders can go up to 50, in Ecuador, the law states that a limited liability company can’t have more than 15 shareholders.
As a part of the process of company incorporation in Ecuador, investors will be required to appoint a legal representative, who can provide all the necessary legal support during the incorporation of the business.
Having a legal representative is mandatory when the investors are foreigners, it is not just a recommendation.
Here is where our consultants can be of help, as they can offer incorporation services that cover all the areas of the registration process. It is also worth knowing that local institutions will only accept documents issued or translated into Spanish.
Therefore, if you are not from this country or you do not arrive from a Spanish speaking jurisdiction, all the foreign paperwork will have to be translated into Spanish by a local translator and then notarized at a Spanish public notary.
Our consultants can provide you with assistance in this sense, as we can put you in contact with our partners. It is advantageous to set up a company here, given that the capital requirements are very low.
In general, countries around the world have higher financial requirements in this sense and setting up a company here is similar to offshore company formation in this sense, as incorporating in offshore countries generally implies low capital for the set up of the business.
Steps for registering a company in Ecuador
If you want to open a company in Ecuador, you first have to reserve the company's name; the certificate of reservation is valid for 30 days.
Then a notary is necessary for the registration documents and for the bylaws. You can consult our team of company formation experts for further information and assistance.
The next step of the company registration in Ecuador is to register with the Superintendence of Companies in order to obtain the company's number and to pay the annual registration levy.
You will need to submit some papers, such as the address of the company or the name of the legal representative you have chosen.
When setting up a company in Ecuador, you also need to publish the incorporation of the new company in a local mass-circulation newspaper.
Another thing you need to do in order to form a company in Ecuador is to sign up for Social Security at the Ecuadorian Institute of Social Security and get a password to be able to navigate the system. This is also a step our specialists in company formation in Ecuador can help you with.
Contracts of the company's employees must be inscribed with the Ministry of Labour. Then you must obtain the operations authorization from the municipality.
Last step is to pay for the commercial certificate at the Municipality of Quito.
The process of company registration in Ecuador can take up to four weeks to be completed, but our team can take care of these procedures.
Are there any tax registration obligations in Ecuador?
Yes, both local and foreign investors are required, as a part of the registration process, to apply and obtain a tax identification number. This step must be concluded after the basic incorporation formalities (which refer to the part where the company obtains legal recognition).
Companies incorporated here must apply for a Fiscal Code (in Spanish – Registro Unico de Contribuyentes) with the tax authorities in Ecuador (Servicio de Rentas Internas).
This step can be completed in approximately 24 hours.
Is it required to set up a corporate bank account in Ecuador?
Another obligation during the registration of the company is to open a corporate bank account. Just like in other countries, the procedure can be completed at a local commercial bank, and in all cases, investors have to prepare the incorporation documents of the legal entity.
Along with these, they must present information on the shareholders, directors, the place where the company will operate, etc., and any other documents that can be required by the bank (procedures can slightly vary based on the selected bank).
The need to have a corporate bank account is imposed across the world. For instance, those who will start the process of offshore company formation will also need to set up an offshore bank account.
Exemptions from having a corporate bank account opened in the country where the business operates can happen only in certain cases, such as it is for the sole trader.
The sole trader does not need a corporate bank account as it does not have legal personality, therefore the owner can use his or her own bank account for business transactions, given that there is no distinction from the owner and the company.
We are available at any time to offer consultation to foreign entrepreneurs who want to invest in Ecuador or in other parts of the world. Please seek counsel from us for more details or for a personalized offer.
We invite you to contact our team for advice on other company types. We can also help you incorporate a branch office in Ecuador. Please mind that the law states that the branch must have a minimum share capital of $2,000, unlike the lack of capital requirement which can be met across the world.