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Doing Business in Ecuador

Forms of Business Organisation

In general, the Ecuadorian government will not attempt to participate in the ownership or operation of a business. This includes activities that may be considered worthy of government participation.

Joint Venture

Joint Ventures are permitted in Ecuador and are usually agreements without creating a new legal entity. Furthermore, they are usually executed for specific public works under contract with the government. A national does not have to be a participant, manager or director and has the same potential liability as any local investor. With a joint venture, there are norestrictions on capitalisation.

Limited Liability Companies

Limited Liability companies are permitted and regulated by the Companies Law. They are registered as other companies after executing a notarised public deed that has to be approved by the Office of the Superintendent of Companies and subsequently registered with the Mercantile Registry. This procedure usually takes up to one month. Costs and fees depend on the equity capital of the company.

Under the Companies Law, limited liability companies are not required to have a national as a participant, manager or director. Furthermore, a foreign investor has the same tax consequences as a local investor, and
there are no restrictions on capitalisation.

Unlimited Liability Companies

Partnerships and commandite, or joint-stock, companies usually fall into this category. Unlimited liability companies are registered and incorporated like any other company, with similar fees and a waiting
period of one month. Again, companies are not required to have a national as a participant.

General/Limited Partnerships

General and limited partnerships are recognised under the Companies Law. Companies are not required to have a national as a participant and fees vary depending on the capital amount involved. Local or foreign investors are fully liable, and there are no undisclosed partnerships under the law.

Sole Proprietorships

In Ecuador, a foreign investor can be a sole proprietor. A sole proprietorship requires a municipal registration and a chamber of commerce registration declaring the business type. It only takes a few days to register and fees are very low. There are no restrictions on capitalisation and no special tax consequences. An investor would have full liability.

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