Most frequent used form of corporations in Ecuador are Limited
Liability Companies (S.A.), and Limited Responsibility Company
(Cia. Ltda). In case of foreign companies they also consider to
establish local branches. Particulars are as follows:
Limited Liability Company: (S.A.)
These companies are incorporated with a minimum of 2
shareholders, and with no limit of shareholders. Minimum subscribed
Capital is USD 800, which has to be paid at incorporation time with
at least the 25% of said capital. Remaining capital must be paid in
no more than 2 years.
Shares are freely transferable by shareholders.
Limited Responsibility Company: (C. Ltda.)
These companies are incorporated with a minimum of 2
shareholders, with a limit of 25 shareholders. Minimum subscribed
Capital is USD 400, which has to be paid at incorporation time with
at least the 50% of said capital. Remaining capital must be paid in
no more than 1 year.
A shareholder is not able to transfer shares unless there is the
approval of the other partners in the general meeting of
shareholders. Once the authorization is granted, the transfer of
shares is to be done in a public deed before a Notary Public, and
the transfer documents should be sent to commercial register for
Local branch for foreign company
In order to obtain the authorization to establish a foreign
company branch, the foreign company must provide to Ecuador
Companies Agency adequate support of the Board of
Shareholders/Directors decision. Minimum capital assigned to a
branch is USD 2,000. The company has to appoint a local
representative with full powers. The POA has to be approved by the
Ecuador Companies agency and duly registered.
Foreign companies are able to appear as shareholders. Anyway,
there are new regulations from Ecuador IRS, and also Companies
Agency, when a foreign company is the shareholder of a Ecuador
Company. When this happens, the local company must report to these
organisms information regarding the foreign shareholder company
(shareholders and Directors of said company). The regulation
includes to provide necessary information in order to find at the
end the natural person who is the beneficial owner of the shares.
This is in order to cut the corporate veil in the ownership of an
Ecuador company. Every foreign company which owns shares in
Ecuadorian companies shall appoint a representative in Ecuador,
with authority to appear in court. The representative must be an
Ecuador citizen or a foreign citizen with a resident visa (which
can be in process).
Registration of Foreign Investment:
Registration of these investments before the Central Bank of
Ecuador must be done in 40 days upon the investment is registered
in the company book.
Domicile and reports:
In order to obtain the tax number RUC from Ecuador IRS, the
company must have a registered address previously inspected by IRS.
Once incorporated, the company must file monthly VAT reports, and
annual income tax report, along with specific information. The
company has also to report financial statements to the Ecuador
Regulations on Visa processing:
One of the options to obtain visa in Ecuador is to be a full
representative via Power of Attorney of an Ecuadorian Corporation,
or Ecuador branch of an foreign corporation. In either ways there
are specific regulations in regard to the minimum capital of the
companies and the number of representatives that are able to apply
for a visa.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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