Negotiable commercial invoices in Ecuador


The most frequent criticisms to the Commercial Code (C. Com.) might be over-regulation, lack of dissemination and discussion. Composed of 1348 articles, 3 general provisions, 1 transitional provision, 5 derogatory provisions and 1 final provision, the Commercial Code (C. Com.) entered into force on May 29, 2019. This was the awakening of a new set of norms that regulate a significant portion of the commercial activity in Ecuador. However, the legislator, irresponsibly, failed to grant a transition period prior to its entry into force, as done with other regulatory bodies. This, in one way or another, prevented traders and businessmen from having a reasonable period of time to inform themselves adequately about the new contract types and to anticipate the impact that it could generate in the development of their business.

Negotiable commercial invoices (FCN, for their acronym in Spanish) are not new. Article 201 of the 1960 Commercial Code, as subsequently amended, provided that: “Commercial invoices containing an unconditional payment order, acceptance of which is signed by the purchaser of goods or his delegate, with the express statement that these have been received satisfactorily, shall be called “negotiable commercial invoices” and shall have the nature and character of securities.”

But, in market practice, few traders issued FCNs, possibly out of ignorance, because they considered them to be too stringent (in terms of their issuance requirements) or impractical.

In recent years, some traders have used the issuance of FCNs as a mechanism to obtain liquidity, including for trading through the country’s stock exchanges. Reports from the Quito Stock Exchange show that FCNs have acquired importance in the local market. According to the information of said institution, in 2018, US$271,777,234 FCNs were traded, as of June 2019 this amounted to US$184,297,068 and in January 2020 US$115,066.25.

Currently, FCNs are (i) sales vouchers, (ii) negotiable and executive securities when they contain an unconditional payment order, acceptance of which is signed by the purchaser of goods, interests or services or his delegate, with the express statement that these have been received satisfactorily, or that have been tacitly accepted” (Art. 203 C. Com.)

FCNs can be issued in physical, electronic or dematerialized form. If in physical form, 3 copies must be produced, namely, the original for the buyer or purchaser, and two copies for the issuer. Only the first copy is negotiable; the others contain the phrase “NON-NEGOTIABLE”.

For electronic issuance, the issuer shall mandatorily “send or make the electronic voucher available to buyers or purchasers under the conditions, in the timing and by the means established by the country’s internal tax administration entity. Not sending these vouchers, their unavailability or inaccessibility are equivalent to withholding them.” (Art. 204 C. Com.)  The dematerialization of FCNs must be done in accordance with the provisions and regulations of the securities market. This implies a book entry in a system for the registration or booking of the securities. In other words, there is no cardboard representation of the document, as it will be supported by electronic accounting records.

Please note that physical and electronic invoices are traded by endorsement, while for dematerialized invoices the transfer is perfected with registration in the respective bookkeeping system and that, in addition to the requirements determined in the tax regulations, the FCNs must compulsorily contain the following:

  • The payment date and place. If payment by installments is established, the number of installments, the due date and the amount to be paid for each of them, as well as the unpaid balance, shall be indicated. The term of payment may not exceed 360 days from the issue of the invoice. (short term security)
  • The unconditional order to pay a certain amount of money
  • The clear specification, in figures and in writing, of the amount to be paid and the currency in which it will be done
  • The express statement by the buyer or purchaser to receive the goods, interests or services to his or her full satisfaction
  • The physical or electronic signature of the issuer of the invoice or of the respective delegates
  • The physical or electronic signature of the buyer or purchaser of the goods, interests or service or their respective delegates
  • The signature of the acceptor contained in the invoice or attached document, except in the case of tacit acceptance, which we will review later.
  • In the case of a physical commercial invoice, information on the endorsements with the identification requirements will be incorporated on the back of the document or attachment

With regard to the acceptance, the Commercial Code will facilitate claims, providing that the buyer-purchaser, his delegate or agent must expressly accept the contents in writing, either in the same document or in a physical or electronic attachment, which must include the date of receipt. In accordance with the provisions of the previous Code, the FCNs will be considered to have been tacitly accepted if, within 8 days of the date of receipt, no claim has been made regarding its contents.

What is important and new is that the Commercial Code recognizes 3 complaint procedures, which must be proven by whoever intends to benefit from this:

  1. The possibility of returning the invoice without acceptance, with the text “cancelled” or with the acceptance tested.
  2. Expressly claim its contents by letter, together with the return of the invoice without acceptance or with the acceptance tested or with the request for the issue of a credit note.
  3. In case of an electronic or dematerialized invoice, the claim will be made through the request for issuance of a credit note or cancellation of the invoice.

On the other hand, in the case of a legal collection action for non-payment events, a claim must be filed in executive proceedings provided that the following requirements are met:

  1. The invoice has not been returned or claimed by any of the mechanisms referred to above.
  2. Its payment is currently due, and the executive collection action has not prescribed.
  3. The obligation is clear, pure, determined and liquid.

In conclusion, the contribution of the Code of Commerce is valuable regarding the regulations that govern FCNs, as it benefits commercial practice and inserts dynamism into businesses. This has become an attractive business strategy to obtain greater liquidity and to have highly liquid securities.


Ramón Paz y Miño
Senior Associate at CorralRosales