Corporate Law in Ecuador

Our team of experts will be in charge of establishing and registering your company or organization, as well as providing with advice on corporate management as needed.

I. Formation of companies
II. Fusions
III. Scission
IV. Increases and decreases of capital
  •    – Reform of company laws, change of corporate purpose
       – Transformation of companies
       – Transfer of shares and sales of shares
       – Purchase of shares and assets
V. Operations carried out by foreign companies in Ecuador
   – Intervention
VI. Inactivity, dissolution, liquidation of companies
VII. Obligation for companies with foreign shareholders

I. Formation of companies

The formation of companies in the Republic of Ecuador has two main modes of formation: limited companies and Limited Liability Companies.
The limited company is a company whose capital is open, regardless of the identity of shareholders. But they must cover the entire issued share capital, which can be paid 25% upon incorporation, the balance to be paid within two years. This type of company requires a minimum of two shareholders, there is no maximum number.

The Limited Liability Company is a partnership. Thus, the approval of all partners is necessary for the transfer of shares of a partner. The minimum capital must be paid up to 50% at the time of incorporation, the balance to be paid in the year. This type of company requires a minimum of two and a maximum of 15 members.

II. Fusions of companies

A fusion of society occurs: a) when two companies (or more) form a new company which will subrogate those in their rights and obligations b) when a company (or more) is absorbed by another company which will continue to exist.

III. Scissions

The division of a company in a limited number of companies must be the result of a decision adopted by the general meeting of the members or shareholders. The company that makes possible the operation will keep its nature. However, companies created by the split may be of a different form.

IV. Increases and decreases of capital

Increases and decreases of capital of companies incorporated in Ecuador have to be done through an act, subject to certain legal requirements.

• Reform of company laws, change of corporate purpose: Depending of the company and individual needs, it is possible to make a change of the corporate purpose of a company.

• Transformation of companies: Companies can adopt a new legal form. Thus, public companies can be transformed into limited liability companies, and vice versa. It is not necessary to operate a dissolution. Thus, after a transformation performed in accordance with the law, the company will continue to exist in its new form.

• Transfer of shares and sales of shares: The shareholders and partners who wish to transfer their shares have to carry a letter with certain formal requirements, or an act approved by the General Assembly, legalized and communicated to the “Direction of Companies”.

• Purchase of shares and assets: Development of contracts in which the values for the shares and assets of companies will be represented. We also advise you about the effects in corporate and tax law for these transactions.

V. Operations carried out by foreign companies in Ecuador

Foreign companies which become established in Ecuador must satisfy certain requirements and formalities Therefore, we provide advice on the documents to be submitted in Ecuador, the need to allocate capital to develop the business, and the obligation to have a representative in the country with wide powers.

  • Intervention: Advices, analysis and representation for companies in case of conflict with shareholders or partners.


VI. Inactivity, dissolution, liquidation of companies

Analysis and advices about the effects of a “declaration of Inactivity” on a company, how to deal with such a declaration, or how to accelerate the liquidation of a company.

Legal advices to the directors or partners of a company that would have decided to end their activity; explanation and implementation of the process of dissolution, liquidation of companies.

VII. Obligation for companies with foreign shareholders

Companies incorporated in Ecuador, and holding as partners, members or shareholders a foreigner person, must present to the “Direction of companies”, at the 31 of January, information about partners, shareholders and foreign members. To provide these informations is an obligation for the legal representative of the company. He has until February 5 of each year to do it. In case the foreign shareholder does not submit the required information, he can not attend or vote at the annual general meeting of shareholders. Foreign persons failing to execute this obligation, for two consecutive years, may be isolated or excluded from the Ecuadorian society.

Problems about stock market, such as the securitization process, the issuance of bonds, the establishment of trusts, etc.
Administrative administration of the company management, advices related to the stock market, etc.
Preparation, monitoring, advices on «business books,» in order to allow the administration to unclog its activities. In the case of foreign shareholders, foreign investments must be registered in the Central Bank of Ecuador.
Legal advice and management, allowing a legal monitoring, compliance with various obligations, and the provision of a «legal record» with documentation accessible and structured in different topics:
• Nomination of Directors
• Register of Taxpayers
• Certifications
• License to operate, etc.