ECUADOR Law and Practice Contributed by: Randy Arévalo, Diego F. Amen, Darío Vicuña and Sandra Touma Faytong, VIVANCO & VIVANCO
5.3 REITs While the term “REIT” is not explicitly used in Ecuado - rian statutes, its functional equivalent is the real estate securitisation trust, widely used for managing income- generating assets like industrial parks and Class A offices. These vehicles exist in both public and private forms; public trusts are registered with the SCVS and traded on local stock exchanges to provide liquid - ity, while private versions cater to closed groups of sophisticated investors. They are fully accessible to foreign investors and offer significant tax efficiency, as distributions are often exempt from further income tax if the trust fulfils its obligations at the source. To qualify as a public vehicle under the Securities Mar - ket Law, the trust must obtain formal authorisation from the SCVS, secure a risk rating and comply with periodic financial disclosure requirements. Statutorily, the trust’s assets must be segregated from the man - ager’s balance sheet to ensure investor protection. To attract institutional capital, such as pension funds, the trust must demonstrate stable projected cash flows and maintain a diversified tenant base, adhering to the investment limits established by the Monetary and Financial Regulatory Board. 5.4 Minimum Capital Requirement The financial requirements for establishing an invest - ment vehicle in Ecuador vary significantly depending on the chosen legal structure, following a trend towards reducing barriers to entry for new capital. Under the current regulatory framework, the SAS stands out as the most accessible option, as it requires no statutory minimum capital. This characteristic, coupled with the ability to form the entity through a private document, has positioned the SAS as the primary choice for SPVs and real estate holding companies. In contrast, tradi - tional corporate structures maintain specific capital thresholds: the SA requires a minimum initial capital of USD800, while the Cía Ltda requires USD400. In both cases, at least a portion of the capital must be paid in at the time of constitution, and the contribu - tions can be made in cash or through the appraisal of real estate assets. Regarding more sophisticated structures, such as the mercantile trust, the concept of “minimum capital” is replaced by the initial contribution of assets to the
autonomous patrimony. There is no legally mandated minimum amount to establish a trust; however, the viability of the vehicle is determined by the value of the real estate or the liquid funds transferred by the settlor to fulfil the trust’s specific purpose. For public investment vehicles, such as real estate securitisation trusts, the fund and trust manager responsible for its oversight must comply with substantial equity require - ments set by the SCVS to ensure institutional stability and investor protection. 5.5 Applicable Governance Requirements Ecuadorian real estate governance is overseen by the SCVS and SRI. While traditional corporations require a formal management structure, the SAS offers flex - ibility, allowing investors to customise by-laws. A cornerstone of this regime is the mandatory ultimate beneficial owner (UBO) disclosure for all entities and trusts to ensure fiscal transparency. For US investors, these requirements intersect with the Corporate Transparency Act (CTA). American entities investing in Ecuador must report beneficial ownership to FinCEN, creating a dual-layer obliga - tion. Investors must satisfy both local UBO filings and US federal duties to avoid penalties, ensuring capital flows remain under rigorous cross-border scrutiny. 5.6 Annual Entity Maintenance and Accounting Compliance The annual cost of maintaining a real estate vehicle in Ecuador varies by structure and transaction volume. For standard entities like a SAS or SA, maintenance costs typically range from USD2,500 to USD5,000 USD. This covers accounting, tax filings and man - datory reporting to the SCVS and SRI, including the UBO annex. Additionally, all companies pay an annual supervisory fee to the SCVS, which generally does not exceed 0.1% of total assets. In contrast, a real estate mercantile trust involves higher costs, with annual management fees between USD4,000 and USD12,000 for a licensed institutional manager. This premium is justified for large-scale pro - jects by the fiduciary’s responsibility for asset segre - gation and enhanced financial transparency. For enti - ties or trusts involved in the stock exchange, investors must also budget for specialised external audits and
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