The Superintendency of Companies, Securities and Insurance has issued the Regulations for the qualification and registration of companies specializing in intangible asset valuation[1]. The main provisions of the Regulations are:
For a company specializing in intangible asset valuation to enter into contracts in this matter, it must first obtain qualification and register with the National Register of Intangible Asset Valuation Companies.
Intangible Assets
Intangible assets are considered to be trademarks, patents, industrial designs, plant varieties, trade secrets, copyright, trade names, franchises, radio spectrum and similar which, in general, are assets of no physical substance or appearance but which are identifiable. They are expected to provide future economic benefits and are protected in the Ecuadorian legal system.
Qualification and Registration
- For qualification and registration, the company must submit an application to the Superintendency and demonstrate, among other things, that:
- The valuation of intangible assets is part of its corporate purpose;
- It is up-to-date with its obligations, with no impediments; and
- The company has at least five years of specific experience in intangible asset valuation. If the company does not meet this requirement, it may qualify and register provided that it shows that its legal representative or professionals who will perform the valuation of intangibles do have the requisite experience.
- The following cannot qualify and register:
- Companies which are partners, shareholders, external auditors or members of administration or audit bodies of one or more companies which are qualified to valuate intangible assets, or of companies which request their services, or that are in any way linked with these.
- If any partner or shareholder of the valuating company is related as a spouse or by domestic partnership or related up to the fourth degree of consanguinity or second degree of affinity to the members of administrative entities or attorneys-in-fact, auditors or internal auditors of one or more of the companies which are qualified to valuate intangible assets, or companies which request their services.
- If the company or any of its partners or shareholders, or professional appraisers of intangibles, have or have had an employment or contractual relationship in the prior year with the compa that requests the intangible asset valuation service.
- If the professional intangibles appraiser, partners, administrators or attorneys-in-fact of the company have been declared to be responsible for irregularities due to poor performance of their duties at public and private institutions, provided that such declaration is recorded in a final judgment.
- The intangible asset valuation company must renew its qualification and registration every five years.
- Intangible asset appraisers have at least the following obligations:
- Present a report describing the valuation method which was used, and the technical criteria which were applied.
- Be accountable to the hiring companies and the Superintendency of Companies, Securities and Insurance for the results of the valuation made.
- Keep working papers, calculation sheets and other documents which support the valuation of intangibles available to the Superintendency of Companies, Securities and Insurance.
Contracting and Reports
- Contracting for intangible asset valuation services will require the authorization of the general shareholders’ meeting of the hiring company, and the participation of the legal representative of the intangible asset valuation company.
- Reports on the valuation of intangible assets which are presented by the intangible asset valuation companies must contain at least the following:
- A description of the valuation system which was used.
- Description of the technical criteria which were applied.
- Identification of the type of intangibles.
- Asset area of use.
- Initial cost of the asset.
- Valuation methodology.
- List of appraised assets, stating their new value.
- Signature of the professional appraiser, stating the company’s registration number in the National Register of Intangible Asset Valuation Companies.
- Date of issuance.
[1] Resolution No. SCVS-INC-DNCDN-2020-0020, published in Official Register No. 395 of February 22, 2021.
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