Discusses the legal requirements/options for joint venture/licensing in this market.
Last Published: 8/1/2016

Joint Ventures

Two or more parties may enter into a contract to carry out a particular business activity. No obligation exists to record this contract in the Mercantile Register. According to the Companies Law, a joint venture may be considered as an association or a participation agreement.

Under the Companies Law, a business entity may give others (associates) the right to participate in its business, but these rights are limited to obtaining information on the funds contributed, the profits made, or losses incurred. Associates are not liable to third parties. If the business enters bankruptcy, the associates are liable only for their share of the investment. All other matters are regulated by the terms of the contract of association.

In Ecuador this type of joint venture occurs primarily when foreign corporations are contracted as associates to carry out specific projects with government entities. It is normal for foreign corporations entering into this type of agreement to establish a local branch.

Licenses

In Ecuador, the Intellectual Property Rights Law governs licenses, patents, and trademarks. Decision 486 of the Andean Community and the Patents, Trademarks, and Licenses Law also govern licenses. Contracts for license of trademarks, patents, patterns of usage, industrial designs, and commercial names and logos must be registered at the Ecuadorian Intellectual Property Institute (IEPI) (http://www.iepi.gob.ec/). Contracts for the transfer of technology must be registered at IEPI, but when they are considered to be a foreign investment they must also be registered at the Ecuadorian Central Bank (BCE) (http://www.bce.fin.ec/). Licenses are usually granted within six months of their request. To register the use of specific brands, a notarized contract permitting brand use and a request signed by a lawyer must be presented to IEPI.

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