Located in South America, Ecuador is fast gaining traction as one of the favored investment spots in the region due to its competitive economy.
Investors and entrepreneurs choose to register a company in Ecuador because according to the Economic Commission for Latin America and the Caribbean (ECLAC), the economy of Ecuador is among those of favorable performance in Latin America.
If you are thinking of expanding your business to Latin America, Ecuador is your ideal destination.
Benefits of registering a company in Ecuador
The low cost of living, in addition to the reasons outlined next, are some of the many reasons why entrepreneurs and investors are now turning their eyes toward Ecuador as a potential business destination:
- there are no foreign exchange challenges in Ecuador.
- registering a company in Ecuador comes with a low minimum share capital requirement
- investors in Ecuador stand to benefit in some of the country’s private sectors where corporate tax exemption is available for up to 5 years (conditions apply)
- The Ecuadorian law assures that both local and foreign investors are treated fairly and equally before the law.
- Investors who are registering a company in Ecuador’s free zones will gain a 100% exemption on taxes.
- In Ecuador, there are no limits on royalties that may be remitted when it comes to license and franchise transactions.
- It is possible to register a company in Ecuador that will be 100% owned by foreigners.
- The process of Ecuador company registration is not complicated.
Ecuador’s economy has been on a steady rise over the past decades, and professionals believe that the growth will go on for decades to come.
Choose your legal types of companies in Ecuador
The most frequently used form of companies in Ecuador is as follows:
- Corporation (Anonymus Societies or Sociedades Anónimas or SA): corporations are the most traditional type of company in Ecuador. A corporation in Ecuador is an entity wholly based on its capital and is not established on the relationship between the shareholders. The shares of a corporation are freely transferable without any limitation. A corporation is registered by a contribution from the shareholders who have influence according to the size of their shares. The minimum required capital for Corporations in Ecuador is USD 800.
- Limited Liability Company (SRL): in Ecuador, LLC, have a minimum of two partners and a maximum of fifteen. In comparison to Corporations, LLCs are not permitted to operate in the finance system of Ecuador. Also, the modifications to their social structure are less bureaucratic than Corporations, this way they are easier to manage. It is essential to have a General Manager and a President in an LLC and the minimum required capital is USD 400.
- Simplified Shares Company (Sociedad por Acciones Simplificada or SAS): this is a company structure that can be registered with one or more shareholders. The main benefit of SAS is its flexibility to adapt to the specificities of each business. Its registration process is very flexible and its shareholders have full freedom to establish the rules of its operation in the bylaws.
A branch of a foreign company can also be set up in Ecuador.
Main steps to set up your company in Ecuador
Before registering a company in Ecuador, it is highly recommended to consider the economic activity of the business and to also appoint a credible legal representative in the country. This will allow the registration process to go on smoothly and without any difficulties.
To begin registering a company in Ecuador, here is what you have to do:
Select the right type of company
In Ecuador, there are many types of company structures to choose from. The decision must be made according to the company’s requirements, and objectives.
Sign the power of attorney
If the company shareholders are not present in Ecuador, they will have to grant a power of attorney to their legal representative, permitting him/her to set up the company in Ecuador on their behalf.
Reserve the company name
The founder must choose a company name, check for the availability of the desired company’s name and register it at the Superintendence of Companies.
Draft the company articles of incorporation and the bylaws
The articles of incorporation and the bylaws enable the constitution of the company in Ecuador. This document is going to work as the backbone of the company and decree the way it will be run. This document needs the legal advice and signature of a lawyer in Ecuador to make sure that it covers all mandatory aspects.
Register the company with the applicable authorities
The company must be registered with the Superintendence of Companies (SUPERCIA)
The SUPERCIA is the government agency in charge of the regulation and organization of all companies in Ecuador. Once the registration is finished, the company will be assigned a personal number and the annual registration fee.
It is also important to register the company at the Mercantile Registry Office (Registro Mercantil). This authorizes the legal registration of a company in Ecuador.
Obtain tax identification number
Once the company is registered, you can then apply for a Tax Identification Number at the Servicio de Rentas Internas (SRI).
Obtain the “Tasa de Habilitación”
The Tasa de Habilitación is a document that permits an office or commercial space to operate, as long as it acknowledges all safety dispositions and local regulations.
The incorporator must pay for the Commercial Patent at the local Municipality to obtain the Tasa de Habilitación.
Open a corporate bank account
To start working, companies must also open a corporate bank account in Ecuador.
It is also important to acquire the necessary Operations Permit.
Ecuador is now a nation that is becoming a favorite for investors and entrepreneurs looking to register a company. Are you looking to start your business in Ecuador?
Let’s go ahead and contact your Damalion expert now.
