re-domiciliation-of-ecuadorian-companies-corporate-milton-carrera

In today´s globalized economy, it is necessary for countries to provide a legal framework that allows companies to conduct their businesses in the jurisdiction that is most convenient to their interests. The re-domiciliation of a company, that is, the transfer of the registered office to a foreign country while maintaining its legal personality and therefore its assets, rights and obligations, allows it to fulfill this purpose.

In Ecuador, no legal rules have been developed that expressly regulate the process of re-domiciliation to a foreign country, so it is necessary to find alternatives that allow its implementation within the rules of the Companies Law.

The domicile of a company is not only a requirement for its constitution, but it grants it a national identity and therefore membership in a legal system. The re-domiciliation of companies is a figure currently recognized by many legislations, precisely in order to allow companies to develop their businesses with wide freedom and without affecting the rights of third parties. In order to facilitate re-domiciliation, it is necessary that the law of the country where the company intends to transfer its domicile accepts it, recognizing its pre-existence and assets acquired in the country of origin. By transferring the registered office to another country, the company adopts the nationality and legal system of the host country. Although the Companies Law does not contain specific rules that govern the re-domiciliation process, it does provide for the change of address without making a distinction whether it is carried out within or outside the country, from which it is concluded that both are allowed and are subject to similar formalities.

Once the re-domiciliation has taken place, the Superintendence of Companies, Securities and Insurance will be responsible for ordering the cancellation of its registration in the Commercial Registry without the company being liquidated, precisely because it maintains its legal personality, assets, rights and obligations, in the receiving country.

The cancellation is the registry operation that has the sole and exclusive purpose of leaving the original registration without effect and make it public.

In conclusion, we consider that under corporate law, the change of address of an Ecuadorian company to another country is valid and legal, assuming that the legislation of the receiving country allows it; therefore, the re-domiciled company will maintain its legal personality, assets, rights and obligations. However, in order to expedite this operation, the re-domiciliation process must be expressly regulated as soon as possible.

Milton Carrera
Senior Associate en CorralRosales
mcarrera@corralrosales.com