ECUADOR Law and Practice Contributed by: Sebastian Corral Guevara, Miguel Pizarro Páez, María Fernanda Mencías Pérez, José Cisneros Pazmiño, Roque Bustamante Espinosa and Jorge Pizarro Páez, Flor Bustamante Pizarro & Hurtado
apostilled or legalised (where applicable), translated where necessary and submitted in a timely manner. In practice, the electronic incorporation system imple - mented by the SCVS has significantly reduced the time required to incorporate SAS companies, making them the preferred legal form for most new businesses in Ecuador. However, the most appropriate corporate structure should be determined on a case-by-case basis, taking into account the specific needs, objec - tives and regulatory considerations of each business. 3.3 Ongoing Reporting and Disclosure Obligations Private companies incorporated in Ecuador are sub - ject to a number of ongoing corporate, financial and disclosure obligations before the SCVS, the SRI and, where applicable, other regulatory authorities. The principal reporting and compliance obligations include the following. Corporate Filings These involve: • reporting the appointment, removal or replacement of directors, managers, legal representatives and other corporate officers; • registering amendments to the company’s by-laws with the Commercial Registry or the Companies Registry maintained by the SCVS, as applicable; • obtaining prior authorisation from the SCVS for those corporate acts that require regulatory approval under the Companies Act or applicable SCVS regulations; and • maintaining updated corporate information before the SCVS, including the company’s registered office, electronic notification address and other relevant corporate information. Financial Reporting Companies subject to the control of the SCVS must annually file their financial statements during the first quarter of the following fiscal year. Depending on the statutory thresholds established by the SCVS, the financial statements must be accompanied by an external audit report issued by an audit firm duly qualified before the SCVS. Companies are also required to file the shareholders’ or partners’ resolu -
tions approving the management report, annual finan - cial statements and, where applicable, distribution of dividends. Shareholding Transparency Companies must keep the SCVS and the SRI informed of changes in their shareholding structure and comply with the applicable beneficial ownership and corpo - rate transparency reporting requirements. Where a shareholder is a foreign legal entity, the Ecuadorian company must report the ownership chain up to the ultimate beneficial owner, together with the support - ing corporate documentation required by the SCVS. Tax and Regulatory Compliance Companies must comply with the shareholder and beneficial ownership reporting obligations established by the SRI, in addition to the ordinary tax filing obliga - tions applicable under Ecuadorian tax legislation. Companies must also maintain in force the municipal operating permits, licences and registrations required by the municipality where they conduct business. In addition, depending on the nature of their activities, companies may be subject to ongoing reporting obli - gations and periodic renewals before the competent sector-specific authorities. These may include, among others, environmental, mining, hydrocarbons, finan - cial, telecommunications, health, food safety, trans - portation, customs or other regulatory authorities, each of which may require periodic filings, operational reports, inspections or licence renewals. Failure to comply with these corporate, tax or regula - tory reporting obligations may result in administrative fines, suspension or revocation of permits or licences, restrictions on the company’s operations and other sanctions. 3.4 Management Structures Ecuador follows a one-tier management system, under which there is no formal distinction between a supervisory board and a management board. Subject to the mandatory provisions applicable to each type of company, Ecuadorian corporate law grants share - holders and partners broad flexibility to determine the company’s governance structure in the by-laws, including the number of directors or legal representa -
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