How To Set Up a Company in Ecuador

Starting a business in Ecuador involves a series of clear steps, beginning with granting the power of attorney with a trusted legal representative. With the right expertise, the process to set up a company in Ecuador is straightforward and achieve success across various sectors. Biz Latin Hub offers expert guidance and back-office services to simplify the process, ensuring compliance and supporting your business growth.

Key Takeaways

The 5 Steps to Set Up Your Business in Ecuador

These are the 5 steps that describe the process to set up a business in Ecuador:

• Step 1: Grant power of attorney to the legal representative.
• Step 2: Reserve the company name and complete documentation.
• Step 3: Submit all the enabling documents to the authorities.
• Step 4: Send the deeds and documents to the Commercial Registry.
• Step 5: The tax authority will grant the company its tax identification number.

1. Grant power of attorney to the legal representative.

Ensure that the shareholders grant power of attorney to their legal representative, permitting them to set up the company in Ecuador on their behalf.

2. Reserve the company name and complete documentation.

The legal representative, will then start the setup process before the Superintendency of Companies, Securities, and Insurance. If completing the process online, the legal representative will reserve the company name, and fill out documentation with all the required information about the company. This includes fiscal/legal address, president, general manager, name of the shareholders, and how much each shareholder holds in the company.

3. Submit all the enabling documents to the authorities.

Once the application is ready, it must be submitted with all the enabling documents to the Superintendency of Companies, Securities and Insurance for approval. For certain types of companies, once the company formation is approved, it is also necessary to register with the Mercantile Registry to complete the process.

4. Send the deeds and documents to the Commercial Registry.

The notary will send the deeds, documents and all the necessary information to the Commercial Registry.

5. The tax authority will grant the company its tax identification number.

If approved, the company will be registered. The tax authority will grant the company its tax identification number (RUC). At this point, the company is legally incorporated.

Business Formation: Decide on the entity type in Ecuador

After deciding to start the company formation in the Ecuador process, the first step involves selecting the best type of legal entity to suit your business needs and goals. The most common types of legal entities are outlined below:

• Simplified Stock Company (Sociedad por Acciones Simplificadas S.A.S): This type of company facilitates the incorporation of a company by simplifying procedures, costs and allowing for a flexible corporate structure. It is designed to help smaller businesses enter the market quickly and bypass heavy bureaucracy. The S.A.S are companies where the ownership can be by a sole person. It requires a legal representative to be appointed within the company bylaws, a fiscal address, and no minimum capital. 
  
• Limited Liability Company (S.R.L): Suitable for small and medium-sized businesses. The purpose of an S.R.L is to protect the personal assets of its members. The members of the company are only liable for the amount of their contributions. This type of company is usually created for a specific purpose of commercial or civil economic activity, with no banking, insurance, capitalization, or savings operations allowed. It can be incorporated with a minimum of 2 and a maximum of 15 shareholders and requires a minimum capital of USD$400.
  
• Branch (Sucursal): In Ecuador, a foreign entity may be domiciled in the country as a secondary establishment or branch. In this case, it will continue to be dependent on the parent entity, but will have legal presence in the country, including a tax domicile and an attorney-in-fact who will act as representative of the foreign branch.

What are the minimum requirements to incorporate a S.A.S in Ecuador? 

The minimum requirements to incorporate an SAS in Ecuador are:

• Minimum of 1 shareholder, which can be either natural (i.e. people) or legal (i.e. entities) persons.
• The S.A.S. allows 100% foreign ownership.
• No minimum capital is required to establish an S.A.S. However, in our experience, we strongly recommend a minimum capital of USD$ 400. 
• Appoint a legal representative within the company by-laws, who must be resident in Ecuador.
• Register a fiscal address which must be within the country and used for official correspondence.

What documents do you need to set up a company in Ecuador? 

To begin incorporating your new subsidiary company in Ecuador, you will need to provide the following documents:

• A name for your legal entity. We recommend two alternatives in case your first choice is taken.
• Shareholders’ identification documents. 
• Confirm the business activities, corporate purpose, and primary operations.
• Minimum initial capital contribution.
• Appointment of general proxy for foreign shareholders, who must be a local national. 

Once you have the legal documentation in order, you can start the process of company incorporation. It’s good practice to keep this information handy to aide in annual legal compliance in Ecuador.

Additional Obligations to Set Up a Company in Ecuador

At this point, the company is legally incorporated in Ecuador. However, before you begin commercial activities, you must meet these obligations:

• Open a corporate bank account and deposit the company’s minimum capital.
• Create an account with the ‘Superintendencia de Compañías’.
• Register the company with the Social Security Agency (IESS). 
• Pay the municipal patent and get the license for economic activities.

By meeting all of these obligations, it will ensure that you remain compliant in Ecuador and mitigate running into any unforseen challenges due to a lack of foresight.

FAQ When Forming a Company in Ecuador

Answers to some of the most common questions we get asked by our clients.

Why Choose to Incorporate a Company in Ecuador?

In 2024, Ecuador’s Gross Domestic Product (GDP) is valued at approximately USD$115.05 billion. This represents an increase from the $109.167 billion reported in 2022. In terms of Foreign Direct Investment (FDI), the latest available data is from September 2023, which shows that Ecuador received an increase of USD$155 million in FDI.

The incorporation process usually takes around one to two weeks, depending on various factors such as the complexity of the company structure and the efficiency of the registration authorities.

Investors seeking to set up a company in Ecuador can choose to establish both limited liability and unlimited liability companies. This can be done online or by following the normal offline process. We recommend using the online process because it is a lot easier and faster, and transfers a significant amount of the workload to the authorities.

Do You Want to Form a Company in Ecuador?

If you have any questions or inquiries about how to set up a company in Ecuador, our local Ecuadorian business experts have created a company formation presentation.

If you have any more questions about how to incorporate your company in Ecuador, please do not hesitate to contact us now. Our Biz Latin Hub team in Ecuador includes local and expat professionals who have the knowledge and expertise to support you throughout the process.