Companies incorporated in other countries can now change their nationality and may be domiciled in our country in accordance with Ecuadorian laws. The Law on Companies was amended by the Law on Reactivation of the Economy1 and a new corporate action was created allowing companies to become domesticated as Ecuadorian.
Strictly speaking, it is not always necessary to open a branch or to establish a company as a shareholder in order to do business in this country. According to the new provisions, a company incorporated abroad may change its nationality and operate in Ecuador preserving its legal status and adapting itself to the corporate system it decides to assume in this country.
This change may be very useful for companies wishing to enter into contracts with the State because they will be able to maintain their financial requirements and their experience; for companies domiciled in tax havens that must be domesticated as Ecuadorian; or for any company moving from its country of origin and wishing to invest and begin to operate here according to this regime.
The company must completely move away from its country in order to assume its new nationality. To do so, the Law states that it is necessary to cancel the company, provided that the laws of its country do not prohibit it. The company's decision must be compatible with the local regulations and it must comply with a number of formalities so that it may become operative.
Foreign investors now have a new corporate tool that will facilitate their coming to this country. Although there is still much to be done regarding corporate matters in order to adapt our rules to international standards, the foregoing is an interesting breakthrough.
Footnotes
1 The Law on Reactivation of the Economy, Strengthening of Dollarization and Financial Management Modernization was published in the Second Supplement of Official Register No. 150 dated December 29, 2017.
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