Dear friends and clients: please be advised that as of january 15, 2012, we will be located at our new address where we have the best technical infrastructure and human resources to provide you tour best services.

New Address: Av. 12 de Octubre N24-739 y Av. Colon, Edf. TORRE BOREAL, Torre A, Piso 6to, Ofic. 605
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Web: www.expertiselaw.com

 

In Ecuador, organizing a stock company is recommended for the shareholders, versus others like a limited liability company since, as a capital company, the shareholders can freely transfer their shares to third parties by endorsing the titles (share transfer.)

In its turn, in a limited liability company, which is established according to the persons who compose it, shares are not freely negotiable and depend on the unanimous agreement of the other partners.

Both types of companies are recommended in case the company is established with the aim of having a respectable image before private and public institutions.

a) GENERAL INFORMATION AND DATA TO ESTABLISH A STOCK COMPANY AND LIMITED LIABILITY COMPANY

Designation: The corporate name shall be an objective, original, and peculiar designation not subject to being confused with another pre-existing company in Ecuadorean territory. To this end, we need you to send us three designation options for the Superintendence of Companies to approve or reject them (in case there are equal or similar names already in the country.)

BYLAWS: Both companies need their own bylaws , for which the following information is required:

1. Shareholders (stock company) or Partners (limited liability company). Two is the minimum number of persons to establish both a stock company and a limited liability company. The partners or shareholders cannot be married to each other; however, share transfers on behalf of the spouse or a partner are legally permitted once the company is already organized. You shall define each shareholder’s or partner’s percentage in the company. We must mention that the shareholders can also be juridical persons with legal representation.

2. Corporate Purpose: The corporate purpose may be broad, provided the main activities are specified.

3. Term: The bylaws must state the company’s duration, up to 100 years.

4. Administration: The Company’s administration is mainly conducted by the articles of association as approved in due time by the shareholders or partners. They shall state the administrative bodies which are typically General Shareholders' Meetings, Manager, President, inter alia.

The Manager and President can be expatriates or Ecuadorians and, pursuant to the Company Law, may remain up to 5 years in their positions, from the registration of their appointments in the Mercantile Registry of the corresponding canton.

The stock company may have a board of directors which will be the controlling body, under the supervision of the General Shareholders' Meetings – our legislation does not provide the Board of Directors as mandatory.

5. Corporate Capital:

5.1. Stock Company

The minimum capital required to establish stock companies is USD 800 (eight hundred dollars of the United States of America.)

5.2. Limited-Liability Company:

The minimum capital required to establish limited-liability companies is USD 400 (four hundred dollars of the United States of America.)

At the time of organizing the company, a higher amount of capital may be required as an endorsement at the time of executing important contracts or requesting loans from bank institutions. This shall be decided by the future company’s shareholders.

5.3 Capital Contributions

In the case of both types of companies, in accordance with the Companies Law, the shareholders or partners shall be authorized to make contributions in cash (money) or in kind (property or real estate.)

b) EXPENSES

The following payments shall be made to organize a company:

a) Notary, which includes the organization deed, the whereas reasons on the margin and protocolizations; b) Publication in a national newspaper; c) Affiliation to one of the production chambers according to its corporate purpose (optional); d) Obtainment and payment of the municipal patent; e) Registration of the Company and appointments of the administrators in the Mercantile Registry; f) Registration and obtainment of the Single Taxpayers’ Registry Number (RUC); g) Administrative expenses and judicial agent.

c)  TIME FOR INCORPORATION

The time required to organize a company is approximately 20 business days starting from the time in our hands all the documents and information in order to complete the deeds in the notary public.

 

The Ecuadorian Law provides the following requirements to establish a foreign company branch:

a. Company’s organization documents (articles of association) duly notarized by a public notary and duly apostilled. We must note that the by laws  must contain the possibility of opening branches out of the main office’s country.

b. Resolution by the Board of Directors (notarized and apostilled) issued by the entity authorizing to open the branch in Ecuador. This resolution shall also determine that the company shall keep a minimum capital investment of US$ 2,000 to establish and maintain its domicile in Ecuador. The resolution shall also include a clause stipulating the appointment of a general representative  ( Ecuadorian or foreign)

c. Power of attorney (notarized and apostilled) granting the Company’s legal representative the necessary powers to execute acts, contracts, and reply to demands filed by third parties. Additionally, you must send a color copy of the agent’s passport.

As we mentioned before, the general power of attorney must be granted to an Ecuadorean citizen or foreiner  residing in Ecuador. If you decide to appoint an expatriate as the company’s representative, such person must seek for the resident visa (the procedure takes from two to three weeks more, for the visa process)

d. Certification of the company’s legal capacity issued by the Ecuadorean Consulate, stating that the company (main office) is legally                   established in the country and authorized to operate abroad.