The role of a corporate secretary is essential in any corporation. These professionals are multi-talented and wear many hats, but their most important job is to ensure the organization they work for is complying with the entity annual compliance in Ecuador and statutory requirements of a particular country or jurisdiction.
They are present at all top-level meetings, and are tasked with executing all the decisions, resolutions and changes put forth by the corporation’s Board of Directors. What’s more, they are integral in matters of entity annual compliance in Ecuador.
SEE ALSO: An SAS Corporation in Ecuador: Benefits & Considerations
Corporate secretaries are trained professionals and knowledgeable of the rules and regulations that must be followed in a given jurisdiction such as Ecuador. It falls on them to observe the running of the business to safeguard against infractions of the rules and regulations. If irregular or illicit activity is found to be taking place with the organization, result could be fines in the tens of thousands, or even millions of dollars. One way corporate secretaries can fend against such regulatory infraction is by conducting an entity annual compliance review.
Ecuador has always had stringent compliance rules for companies operating in its territory. Each industry (oil and gas, mining, banking, corporate finance, etc.) will have their own set of rules, regulations, and statutory requirements to which companies must comply.
Entity annual compliance in Ecuador: What compliance regulations must companies follow?
Generally, all companies – regardless of industry – are required to be in compliance with the following set of rules and regulations.
Financial Compliance Requirements
Presentation of annual financial statements. The presentation of the financial statements is important for shareholders, so they understand the economic activity the company is engaged in. Details about how much the company made in overall profit, gross vs. net revenues, operating expenses and the like need also be communicated to shareholders at annual shareholders meetings. Financial information must also be sent to the Ecuadorian tax authority every year.
Corporate Compliance Requirements
Entity annual compliance in Ecuador requires that the following issues be discussed and resolved in a corporation’s annual shareholder meeting:
Annual strategy report:
Company management has the obligation to present to the shareholders an annual report of their activities, and how they relate to the financial statements of the company.
In other words, they must explain in detail what the financial strategy has been throughout the year, in all aspects of the company (labor, marketing, sales, etc.) This report is a compulsory part of the annual shareholders meeting. Afterward, shareholders must approve the report.
Profit and loss report:
Shareholders must be made aware of the company’s financial performance for the past year. Shareholders must be informed about any profit level (as in, was it higher or lower than forecasts predicted?) or why the company suffered a quarterly loss.
Entity annual compliance in Ecuador: Disclosing foreign shareholders
Compliance regulations stipulate that the number of foreign shareholders be reported, as well as how much of the company’s stock they own.
Each year, a company must provide the names, nationalities, and contact information of foreign shareholders to the appropriate government authorities. In case a shareholder is a foreign company and not an individual, the name, nationality and contact information of the representative of the institutional shareholder must be reported.
Reports to regulatory bodies must be carried out for entity annual compliance
Compliance rules and regulations also stipulate that a company needs to carry out the following actions:
- Make available a report detailing the discussions and decisions ratified at the annual shareholder meeting
- Send all relevant compliance documents to the Superintendence
Depending on the type of structure of the company (be it public, limited liability, SAS, etc.) there are additional requirements that must be met. This is where the corporate secretary again becomes essential, as it will be her/his duty to inform company management about the additional items/actions that will be needed to ensure corporate compliance.
Biz Latin Hub can help you with entity annual compliance in Ecuador
At Biz Latin Hub, we provide integrated market entry and back-office services throughout Latin America and the Caribbean, with offices in Bogota and Cartagena, as well as over a dozen other major cities in the region. We also have trusted partners in many other markets.
Our unrivalled reach means we are ideally placed to support multi-jurisdiction market entries and cross border operations.
As well as knowledge about entity annual compliance in Ecuador, our portfolio of services includes hiring & PEO accounting & taxation, company formation, bank account opening, and corporate legal services.
Contact us today to find out more about how we can assist you in finding top talent, or otherwise do business in Latin America and the Caribbean. If this article on entity annual compliance in Ecuador was of interest to you, check out the rest of our coverage of the region. Or read about our team and expert authors.