Company Registration in Ecuador
                     
COMPANY 
REGISTRATION IN  
ECUADOR
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ECUADOR
Ecuador is located in Western South 
America, bordering the Pacific Ocean at the 
Equator, between Colombia and Peru. 
Ecuador is greatly dependent on its 
petroleum resources, which have 
accounted for more than half of the 
country’s export earnings and 
approximately two-fifths of public sector 
revenues in recent years. Record oil 
revenues in Ecuador are sparking new 
infrastructure projects throughout the 
country. Access this exciting country by 
setting up a company in Ecuador. 
Licensehub.in can assist you in the 
company formation process, providing you 
with an efficient and professional service.
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ADVANTAGE OF INVESTMENT IN ECUADOR
Ecuador  presents  an  attractive  alternative  for  Foreign  
Investment  in  sectors   that   count   with   possibilities   in 
  technological   applications,   generating  value  added  
and  important  resources  as:  bio-technology,  based in 
the bio-diversity emphasized that has our country.Ecuador   
is   one   of   the   few   countries   on   the   planet   named 
  as   “Megadiverse”,  with  18,250  species  of  plants,  706 
 species  of  fresh  water  fishes,  1,559  species  of  birds,  
374  species  reptiles  and  402  of  amphibious. Both  bio-
commerce  and  bio-business  are  important  subjects  in  
the  National  Strategy  of  Bio-diversity,  an  instrument  
that  Ecuador  has  to  pursue  economic  advantage  of  its  
bio-diversity,  generating  wealth  without destructing the 
natural base.A  rich  variety  of  microclimates,  four  
natural  regions,  permanent  solar  luminosity  and  the  
impressive  fertility  of  our  land;  are  some  of  the  
factors  that  make  Ecuador  a  suitable  place  to  develop  
any  type  of  productive and commercial activity.
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MAIN FEATURES
•     Ecuador company formation is cost-
effective, with low government registration 
costs and a minimum capital requirement 
of US$800
•     100% foreign ownership is permitted
•     An Ecuadorean company is subject to a 
corporate tax rate of 25%. Capital gains 
are taxed at 10%
•     An annual tax return and financial 
statement must be submitted to the 
Superintendency of Companies following 
Ecuador company formation
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Types of Business Structures
The  main  business  structures  
used  in  Ecuador  are  
companies  and  partnerships,  
which  mostly  include  stock  
companies  (often  referred  to  
as   “corporations”),   limited   
liability   companies   and   
public-privatepartnerships 
(often called “mixed-capital 
companies”).
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Companies
Every  company  should  register  with  the  
Commercial  Registry  and  will  be  subordinated  
to  the  Superintendence  of  Companies,  or  with 
 theSuperintendence   of   Banks,   Financial   
Institutions   and   Insurance   Companies.   These 
  institutions   control   and   supervise   business   
operations according to the Ecuadorian Law.In  
stock  companies,  shareholders,  who  own  
negotiable  shares,  areresponsible only for the 
capital they contributed, must have at least two 
shareholders at all times and hold one 
shareholders meeting per year.Limited  liability  
companies  are  made-up  of  partners,  with  
liabilities  or  participation according to their 
capital contribution. Contrary from stock 
companies, limited liability companies’ shares are 
not freely negotiable. At least one yearly 
shareholders meeting is mandatory.
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Forming a Company
Specific  requirements  apply  to  incorporate  a  
company,  depending  of  its business structure. 
Minimum capital requirements are the following:
•  Stock companies: US$800.00
•  Limited liability companies: US$400.00
•  Public-private partnerships: US$800.00
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FOREIGN COMPANY
Any  foreign  company  intending  to  conduct  economic  and  business  activities in 
Ecuador, must be established locally as a branch. To establish a branch of any foreign 
company in Ecuador, the following should  be  presented  to  the  Superintendence  of  
Companies,  to  obtain  the respective authorization to operate:
•  Head  Office’s  Deed  of  Incorporation  (including  its  statutes),  noting  that  it  can  
legally  establish  branches  and  conduct  economic  and  business  activities  abroad.  
These  documentation  must  be  certified  by  the Ecuadorian consul whereas the Head 
Office is established;
•  Power  of  attorney  appointing  an  agent  as  legal  representative  in  Ecuador.  
Whether  this  agent  is  foreign,  must  be  a  legal  resident  in  Ecuador;
•  A certification of the Head Office’s resolution to establish a branch in Ecuador, stating 
a capital of at least US$2,000.00;
Whether the branch intends to offer public services or perform activities related to the 
exploitation of natural resources, or the establishment of a  branch  is  required  by  
law,  the  minimum  capital  referred  above  may  be different.
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Partnership
Partnerships  cannot  participate  in  activities  
such  as  banking,  finance,  insurance and savings 
operations.
Joint Ventures
The  joint  venture  agreement  defines  each  
participant’s  proportionate  share  in  venture  
assets,  liabilities  and  results.  There  are  no  
special  regulations governing the establishment of 
joint ventures.
Trusts
Trusts  must  be  incorporated  as  stock  
companies,  and  may  manage  investment   
funds   and   fiduciary   businesses,   issue   
securities   and   represent international 
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INCENTIVE
Production,   Business   and   Investment   Code   includes   incentives   
intended to promote the economic development. Main general incentives 
are the following:
•  Annual  progressive  reduction  of  one  percentage  point  for  the  next 
 three years in income tax.
•  Exemption  from  paying  the  tax  for  the  outflow  of  currency  for  
operations of foreign financing.
•  New investments are exempted from paying income tax advances for 
the next five years.
•  Reform of the method for calculating income tax advances.New  
investments  contributing  with  the  replacement  of  current  energy  
sources, the strategic replacement of imports, the promotion of exports 
and  the  rural  development  around  the  country,  are  exempted  from  
paying income tax for the next five years.
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 Sole  proprietorship  (proprietario)
Legislation  regulating  sole  
proprietorship  of  businesses  with  
limitedliability is expected to be 
enacted by Congress during the initial 
months of2006.  These  regulations  will 
 establish  the  requirements  to  be  
fulfilled  byindividuals  interesting  in  
setting  up  a  limited-liability  one-
personenterprise  in  terms  of  purpose, 
 duration,  capital  
requirements,incorporation  procedures, 
 administration  and  legal  
representation
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Capital  structure
The  basic  requirements  for  the  
organization  of  a  corporation  are 
 as  follows.
1.    Capital  must  be  not  less  
than  800  US  dollars.
2.    Capital  must  be  fully  
subscribed.
3.    Twenty-five percent of 
subscribed capital must be paid in
4.    The  minimum  number  of  
stockholders  is  two;  there  is  
nomaximum  number.
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Incorporation  procedures
A limited liability company is formed under the provisions of the CompanyLaw by the execution of a 
public deed or agreement, to which all of thecompany’s  shareholders  must  be  parties.  This  deed  
requires  approval  by  theSuperintendence  of  Companies  and  must  include  the  following  
minimumin formation.
1.    Names,  addresses,  nationalities,  and  civil  status  of  theshareholders  (individuals  or  legal  
entities).
2.    Name, purpose, domicile, and term of the company (the term cannot beindefinite).
3.    Amount of total capital, number and value of individualcontributions  to  capital,  and  amounts  
paid  toward  contributionssubscribed  by  each  shareholder.
4.    Form  of  the  company’s  administration  and  financial  control;  positions  ofexecutives  who  
will  serve  as  the  company’s  legal  representatives.
5.    Procedures  for  calling  and  conducting  shareholders’  meetings,  andmanner  of  arriving  at  
decisions.After  approval  from  the  Superintendence,  the  agreement  must  be  inscribed  inthe  
Mercantile  Register  and  an  extract  published  in  a  newspaper  circulating  inthe  region  where  
the  company  has  its  domicile PricewaterhouseCoopers        97Individuals  and  legal  entities,  
either  foreign  or  national  (except  banks,insurance  companies  and  other  financial  enterprises  
and  foreigncorporations),  may  be  shareholders  of  a  company.  Companies  can  beorganized to do 
business in all areas of commerce and industry, exceptbanking,  insurance  and  savings  institutions.  
In  all  cases,  the  company’sname  must  include  the  designation  Compania  Limitada  or  the  
abbreviationCia. Ltda.Cost  and  time  requirements  for  the  incorporation  of  a  company  are  
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Limited  partnership
A  sociedad  en  comandita  simple  and  a  
sociedad  en  comandita  por  acciones(limited  
partnerships)  are  organized  according  to  the  
procedures  describedfor  a  general  partnership. 
 These  types  of  limited  partnership  include  at  
leasttwo partners who have unlimited and joint 
liability and other partners withlimited  liability.  
The  partners  who  contribute  only  capital  
(comanditarios)  areliable only up to the amount 
of their contributions, which may be in stock, as 
isthe case with the sociedad en comandita por 
acciones. In this case, stockmay amount to 90 
percent of total capital. The partnership’s name 
mustinclude  the  names  of  the  partners  having 
 unlimited  liability  and  the  words  
“encomandita.” This form of entity is not common
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Joint  venture
Two or more parties may enter into a contract to carry 
out a particularbusiness activity; these joint ventures 
have to be registered at theSuperintendence  of  
Companies.  In  accordance  with  the  provisions  of  
theCompany Law, a joint venture may be considered 
as an association or aparticipation  account  
(asociación  o  cuenta  en  participación).Under  the  
applicable  regulations  of  the  Company  Law,  a  
business  entity  maygive to others (associates) the 
right to participate in its business, but theassociates  
do  not  acquire  rights  to  the  assets  of  the  
business.  Associates’rights  are  limited  to  obtaining  
information  regarding  the  funds  contributed  andthe 
 profits  obtained  or  losses  incurred.  Associates  are  
not  liable  to  third parties and, if the business enters 
bankruptcy, they are liable only for their share of the 
investment. All other matters are regulated by the 
terms of thecontract  of  association
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THANK   YOU
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