How to Establish a Business in Ecuador

Establishing an enterprise in Ecuador is a relatively simple process, though it is typically entrusted to local lawyers who are familiar with Ecuadorian laws and have clout with local bureaucrats.

Foreign companies that restrict their activities to importing Ecuadorian goods or exporting directly to Ecuadorian customers or to intermediaries, such as distributors, generally elect not to set up a local office, and, therefore, need not concern themselves with the legal requirements related to establishing a business in Ecuador. On the other hand, foreign enterprises that own a local facility, are engaged in a joint venture with an Ecuadorian company, or that ship to a local agent, who does not take title to their goods, must establish a local office.

Foreigners may own up to 100 percent of an Ecuadorian business in most sectors, and a business' legal representative may either be Ecuadorian or a foreign national.

Most people, who form a business in Ecuador, prefer corporations to the other forms of legal business structures, and, in the case of foreign companies, branch offices. Nevertheless, the business structure that a company eventually chooses will, of course, depend upon its particular needs. Additional possible business structures include: 1)The limited liability corporation; 2)The partnership; and 3)The mixed economy company. The joint venture, though not recognized as a legal business structure by Ecuadorian law, is also worth discussing.

Corporations, branches, limited liability companies, and mixed economy companies are registered with and controlled by the Superintendency of Companies and governed by the Companies Law. While forming these business structures is not complex, it still may take several months, due, among other things, to slow moving bureaucrats. The documents that must be submitted to the Superintendency of Companies vary according to the type of business structure but typically include a deed of incorporation, company by-laws, and other documents that prove the payment of the required taxes.

Once incorporated, public companies must file an annual return with the Superintendency of Companies. The annual return must contain financial statements and other relevant information, such as reports filed by the legal representative, the corporate comptroller, and the company's external auditors. Public companies must also publish their June and December financial statements in a local newspaper.

The business' name must not be similar to that of an existing company. Ecuador's Law on Intellectual Property, adopted in 1998, offers protection from copyright, patent, and trademark infringement, and the Ecuadorian Intellectual Property Institute (known by its Spanish acronym IEPI) was established in January 1999 to handle copyright, patent, and trademark registrations.

Costs for setting up a business in Ecuador vary substantially, depending upon the size of the company (i.e. how much capital it has). These costs are detailed within each business-structure section.

For more information regarding Ecuadorian business structures, please see the following links:

Corporations

Branches

Limited Liability Companies

Mixed Economy Companies

Joint Ventures