Distinguishing the Roles: Legal Representative vs. General Manager in Ecuador

Navigating Ecuadorian corporate law presents unique challenges, particularly for foreign investors whose common-law concepts often misalign with Ecuador's civil-law framework. Among the most critical distinctions to master are the roles of the Legal Representative (Representante Legal) and the General Manager (Gerente General). Understanding their separate legal standings and responsibilities is not an academic exercise—it is essential for legal compliance, operational efficiency, and the protection of your investment.

This guide provides an expert breakdown of these roles, their legal basis, and the practical implications for your business in Ecuador.

The Foundation of Authority: The Legal Representative (Representante Legal)

In Ecuador, the Legal Representative is the individual statutorily empowered to act on behalf of a company in all legal and official matters. This is the company's legal face to the state, its clients, and its creditors. The role is not merely managerial; it is a legal function mandated by and defined within the Ley Orgánica de Compañías (Organic Law of Companies) and the Código Civil (Civil Code).

Key Characteristics of a Legal Representative:

Statutory Mandate: The appointment of a Legal Representative is a legal requirement for a company's existence. Artículo 10 of the Ley de Compañías specifies that the company's founding documents must name the administrators, including the Legal Representative.
Formal Appointment & Registration: The appointment is made by the company's highest governing body (e.g., Shareholders' Meeting). This decision is formalized in a notarized public deed called a nombramiento. Crucially, this nombramiento must be approved online by the Superintendencia de Compañías, Valores y Seguros (SUPERCIAS) and then physically inscribed in the Registro Mercantil (Mercantile Registry) of the canton where the company is domiciled. Expert Tip: Many foreigners mistakenly believe the SUPERCIAS approval is the final step. Without inscription in the Registro Mercantil, the appointment is not legally enforceable against third parties, potentially invalidating contracts or legal actions.
Binding Authority: The Legal Representative possesses the authority to sign contracts, represent the company in lawsuits, open and manage bank accounts, and deal with government agencies like the SRI (tax authority) and IESS (social security). Their powers are defined in the company bylaws and can be broad or limited.
Personal Liability: This role carries significant personal liability. Under Artículo 257 of the Ley de Compañías, administrators are jointly and severally liable to the company and third parties for damages arising from non-compliance with laws, bylaws, or resolutions of the governing body.

The Operational Leader: The General Manager (Gerente General)

The General Manager is primarily an operational and executive role, responsible for the day-to-day management of the business. While the same person often holds both titles, the roles are legally distinct. A company can have a General Manager who is not the Legal Representative.

Key Characteristics of a General Manager:

Operational Focus: Their mandate is to execute the business strategy, manage personnel, oversee production or services, and achieve financial targets. Their authority is typically defined within an employment contract and the company's internal policies.
Appointment: The General Manager is usually appointed by the Board of Directors or Legal Representative. While their appointment is recorded in internal company minutes, it does not always require the same stringent public registration process as the Legal Representative unless they are also being named as such.
Delegated Authority: If the General Manager is not also the Legal Representative, their power to legally bind the company (e.g., sign major contracts, take out loans) must be explicitly delegated by the Legal Representative through a specific power of attorney (poder especial).
Common Overlap: In most small and medium-sized enterprises (SMEs) in Ecuador, the founder or primary shareholder is appointed as both Presidente (President) and/or Gerente General, and is also designated as the Representante Legal. This streamlines decision-making but concentrates legal liability.

Key Differences and Critical Pitfalls for Expats

Feature	Legal Representative (Representante Legal)	General Manager (Gerente General)
Source of Authority	Statutory (Ley de Compañías, Código Civil)	Contractual (Employment Agreement, Bylaws)
Primary Function	Legally represent and bind the company externally.	Manage internal operations and execute strategy.
Registration	Mandatory: Notarization, SUPERCIAS approval, and inscription in the Registro Mercantil.	Internal appointment; public registration only if also the Legal Representative.
Liability	High. Potential for direct personal liability for corporate acts.	Primarily operational liability; legal liability is limited unless actions exceed authority.
Requirement	Legally mandatory for all companies.	Optional, depends on company structure.

Hyper-Specific Pitfalls:

The Non-Resident Trap: While legally possible to appoint a non-resident foreigner as Legal Representative, it is a practical impossibility for running a business. Key institutions, including banks and the SRI, require the Legal Representative to have an Ecuadorian identity card (cédula) for in-person procedures and online portal access. This effectively requires the appointee to hold a residency visa. This is a crucial detail often overlooked in the initial setup phase.
The "Inscripción" Delay: In Cuenca, the Registro Mercantil can be particular. Expert Tip: Arrive with a freshly printed, notarized copy of the SUPERCIAS appointment resolution (resolución de nombramiento). Simply providing the online approval number is often insufficient and will lead to rejection and delays.
Power of Attorney Confusion: A foreign parent company cannot simply assume its CEO can sign documents in Ecuador. A formal, apostilled, and protocolized Power of Attorney is required to appoint a local Legal Representative or to grant specific powers. This process takes time and must be budgeted for.

Navigating the Appointment Process in Ecuador

Correctly appointing your company's representation involves a clear, sequential process:

Shareholders' Resolution: The Shareholders' Meeting (Junta General de Accionistas) must pass a resolution to appoint the individual, specifying their title (e.g., Gerente General y Representante Legal) and the term of their appointment.
Notarization: The minutes of the meeting and the formal appointment document (nombramiento) must be prepared and signed before a Notary Public (Notario Público). Approximate Cost: Notarization fees for a nombramiento typically range from $60 to $100.
SUPERCIAS Registration: Your attorney submits the notarized documents to SUPERCIAS through their online portal for review and approval.
Registro Mercantil Inscription: Once approved by SUPERCIAS, the nombramiento must be physically taken to the Registro Mercantil for official inscription. Approximate Cost: The registration fee is generally fixed by canton, often around $30-$50.
SRI Update: With the inscribed nombramiento, you must update the company's tax registration (RUC) at the SRI to reflect the new Legal Representative. This step is mandatory for tax and invoicing purposes.

Legal Checklist for Your Business in Cuenca

Registered Representative: Is your Legal Representative’s appointment correctly inscribed at the Registro Mercantil del Cantón Cuenca?
SRI & IESS Compliance: Are the SRI and IESS records updated with the current Legal Representative’s details? Failure to do so can result in fines and legal notices being sent to the wrong person.
Visa Status: If your Legal Representative or General Manager is a foreigner, do they hold a valid residency visa that permits them to work and hold an administrative position, compliant with the Ley Orgánica de Movilidad Humana?
Municipal License (Patente Municipal): Is your annual municipal operating license in Cuenca up-to-date? The Legal Representative is responsible for ensuring this is paid on time.
Clear Bylaws: Do your company bylaws (estatutos) clearly define the powers and limitations of your Legal Representative and General Manager to avoid internal disputes?

⚠️ Legal Alert: When to Consult an Attorney Immediately

You must seek qualified legal counsel if:

You receive any official notification (notificación) from SUPERCIAS, the SRI, IESS, or a court addressed to the company or its Legal Representative.
The company needs to execute a transaction that may fall outside the defined powers of its current Legal Representative (e.g., selling real estate, securing a large loan).
You are considering changing your Legal Representative, as a formal process of removal and replacement must be strictly followed.
The Legal Representative is a foreign national, and their immigration status is changing.

Distinguishing between these roles is foundational to mitigating risk and ensuring your company operates on solid legal ground in Ecuador. While they can be held by the same person, their legal origins and responsibilities are fundamentally different.

Disclaimer: This article is for informational purposes only and does not constitute legal advice.

Need to ensure your company's governance is structured correctly in Ecuador? As a legal professional with extensive experience assisting foreign investors, I provide precise guidance on corporate compliance. Contact my office for a consultation to address your specific needs and secure your business operations.