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1.1.1. Main Forms of Doing Business

Ecuadorian law provides for a number of business forms for investors. These include:

Corporation

Corporations are often used in Ecuador by larger enterprises and foreign investors.

Key aspects of a Corporation include:

  • Ownership is evidenced by shares
  • Shareholder's liability for losses of a corporation is limited to their contribution (share ownership)

Limited Liability Company

The limited liability company (LLC) is the second most common business entity in Ecuador.

Key aspects of an LLC include:

  • LLCs in Ecuador are allowed to conduct most business activities except banking, insurance, or savings activities.
  • Shareholder's liability for losses of an LLC is limited to their contribution (share ownership)

Partnerships

Ecuador allows for the formation of both general partnerships (GP) and limited partnerships (LP).

GPs are formed through a written partnership agreement between 2 or more partners, each of which with unlimited liability.

LPs are formed in a similar fashion, but between at least 1 general partner and 1 limited partner. As with GPs, the general partner has unlimited liability, while the limited partner's liability for losses of the partnership are limited to their contribution.

LPs may also be formed by issuing shares.

Joint Venture

Joint ventures, while not a formal entity type, are allowed in Ecuador and typically formed via contract. They can be formed by local or foreign companies and often used to contract projects with the state.

Branch Office

Foreign companies are allowed to establish a branch office in Ecuador.

Mixed Economy Company

Ecuador allows for the formation of a mixed company whereby private investors and governments at the state, provincial, or municipal level can contribute capital and participate in management.