Appointing a legal representative in Ecuador is required if you are planning to establish a company in the country. That representative will be responsible for acting on your behalf and undertaking all regulatory procedures. The country is growing and an exciting place in which to invest.
Your legal representative in Ecuador will be the face of your organization in the local business community, so it pays to choose wisely.
Biz Latin Hub can act as your legal representative in Ecuador to make sure you stay fully legally compliant. Our array of market leading back-office services is designed to take all the complication out of international expansion, from company formation in Ecuador through to ongoing accounting and legal compliance.
What will a legal representative in Ecuador do?
Ecuador’s labor legislation recognizes legal representatives as agents appointed by legally established companies. That means they are not considered workers and, therefore, they do not have the right to receive the same labor benefits as most employees in Ecuador.
However, a legal representative will still have to contribute to the National Social Security Institute — Ecuador’s compulsory public insurance. This contribution equates to 17.6% of the payee’s income tax.
Your legal representative will represent your organization before local authorities. They will fulfill all legal requirements, attend all appointments and respond to any demands on your behalf — a particularly useful service for anyone who doesn’t speak the local language.
Some of the most essential duties of a legal representative in Ecuador include:
- Signing contracts
- Hiring new staff
- Acting as a representative in company trials and lawsuits.
- Agreeing or conclude commercial agreements
- Signing any obligation authorized by the shareholders
- Acting as a representative in banking arrangements
When do you need a legal representative in Ecuador?
You will need a legal representative:
- At the point of company formation in Ecuador. This legal representative will serve until a permanent one is appointed by shareholders
- At any time that the shareholders decide to remove the incumbent legal representative, or accept their resignation
- When the incumbent legal representative’s statutory period expires
Choosing a legal representative in Ecuador
Any person of legal age and sufficient capacity to fulfill statutory obligations can be appointed as a legal representative in Ecuador. A company can also act as a legal representative.
In either case they will ideally:
- Have technical knowledge related to the administration of a company
- Understand the markets where they are operating — both the country and the sector
- Have a proven track record fulfilling legal compliance requirements
FAQs on legal representation in Latin America and the Caribbean
Yes. Even if you don’t appoint a specialist, someone in the company will have to be designated as the legal representative.
This is not the case, but it will require residency at the very least.
It is crucial to ensure that the powers granted are adequate to allow them to complete their required professional functions, and on the other hand, are adequately restricted to ensure the risk is minimized.
This means they will typically be responsible for signing off on official accounting documents such as corporate registration and compliancy requirements. They will sign contracts on behalf of the company – with employees and other businesses alike. They are likely to be ultimately accountable for any legal actions against the organization.
Simply put, they act for the company in the eyes of the law. These means they have a great deal of responsibility and is therefore an incredibly serious role. You will need someone dependable and trustworthy to fill this position, as they are essentially the company embodied in a single legal point.
We have encountered instances where the legal representative has acted without the prior approval of the shareholders and have completed actions such as to sell company assets, sign contracts without permission and/or to grant company resources to help friends and/or family.
Thus it is important that much consideration is given to confirming what powers are granted and ensure that the person selected is a trusted partner, employee, and/or contact of the companies owners.
Biz Latin Hub can provide a legal representative in Ecuador
At Biz Latin Hub, our team of accounting and legal specialists have broad experience supporting foreign companies and multinationals expand into Ecuador and the rest of Latin America.
With our full suite of market entry and back-office services, we are equipped to help you navigate your business entry into Ecuador.
Get in touch with us today to discuss the assistance that you need.
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