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Banking

Panama

The Superintendency of Banks has adopted a resolution setting out certain requirements regarding its authority over merger and acquisition transactions, as well as the transfer of bank and economic group shares.

Capital Markets

Panama

Overview
Including: National Securities Commission; Financial Entities; Registration; Investment Funds; Trading Practices; Securities Custody, Clearance and Liquidation; Prohibitions; Money Laundering; Corporate Governance; Tax Incentives.

By means of Opinion 8-2008 the National Securities Commission has issued its administrative position on the possibility of closed investment funds undertaking an increase in authorized capital pursuant to the Securities Law and applicable regulations issued by the commission.

By means of Opinion 1-2008 of January 23 2008 the National Securities Commission has confirmed its administrative position on the scope and application of Article 17 of Agreement 8-2000, which regulates the content and form of financial statements and other relevant information that must be periodically filed before the commission by listed entities; in particular, the issue of auditor rotation.

The National Securities Commission has issued an opinion regarding the internal regulations of clearing agency Central Latinoamericana de Valores SA (LATINCLEAR). The opinion clarifies to which participants LATINCLEAR's internal regulations apply, stating that they do not distinguish between the public or private nature of participant entities in LATINCLEAR.

The National Securities Commission has issued an opinion regarding the appointment of beneficiaries by clients of a broker-dealer in securities custody agreements and investment accounts. The question was whether a broker-dealer may deliver the securities to the beneficiary upon the death of the principal account holder.

By means of Agreement 01-2006 of February 6 2006, the National Securities Commission regulates the registration procedure applicable to investment companies that fulfil certain criteria. The agreement also sets out, among other things, the information that must be provided alongside the registration application.

An agreement of August 5 2005 gives the National Securities Commission the power to regulate the provisions of Law 10/1993, which created incentives for the establishment of pension and retirement plans in Panama. These plans are voluntary and complement the pensions granted by the Social Security Fund.

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Corporate Finance/M&A

Panama

In Opinion 10-2007 the National Securities Commission issued an administrative position on whether the board of directors of a company which is the subject of a hostile takeover may adopt defensive mechanisms (eg, standstill agreements, golden parachutes, porcupine provisions, white knights, lock-up options and poison pills) to counter the takeover.

The National Securities Commission has issued an administrative opinion relating to the obligation on an issuer registered with the commission to notify it of any offer made through the Panama Stock Exchange to acquire up to 25% of the issuer's outstanding shares.

Recent market practice is for offerors to make agreements with controlling shareholders of target companies prior to formal tender offer announcements. Usually, these agreements take the form of a promise to buy or sell stock in return for irrevocable acceptance of the tender offer. The NSC recently issued its formal administrative opinion as to the validity of such agreements.

This update covers the circumstances in which companies cease to exist, focussing particularly on judicial procedures for voluntary winding up and declarations of bankruptcy.

Derivatives

Panama

The National Securities Commission recently issued Opinion 13-2008, offering its administrative position on whether contracts for difference (CFDs) may be the object of a public offering in Panama. The commission has decided to re-evaluate its prior position to make it consistent with criteria that maintain that CFDs are not a 'security' under the definition in the Securities Law.

By means of Opinion 5-2008 of June 20 2008, the National Securities Commission has issued its administrative position on intermediation activities undertaken by Panamanian companies in the international foreign exchange markets. The commission has reiterated its prior position that foreign exchange investments are not considered to be ‘securities’ for the purposes of Panamanian law.

The National Securities Commission recently issued an opinion offering its administrative position on the issue of whether foreign economic agents that operate in Panama or abroad and exclusively engage in investing in contracts for difference in the market are subject to regulation.

The National Securities Commission has issued its administrative position on the activities of a company engaged exclusively in the purchase and sale of currency in the international markets, with or without financing schemes, and clarified whether such a company requires a licence under the Securities Law and its regulations.

Offshore Services

Panama

Overview
Including: Economy; Government; Taxation Duties; Corporation Law; Trust Law; Private Interest Foundations.

The National Securities Commission was established under Decree 1, dated July 8 1999. Among other things, it is the official institution in charge of securities trading and granting licences to the different financial market agents or participants. This update examines the detail of Decree 1 and looks at the commission's role.

Panama was included in the list of Non-cooperative Countries or Territories issued by the OECD’s Financial Action Task Force in June. This update looks at whether or not this decision should be taken at face value.

Securitisation & Structured Finance

Panama

The National Securities Commission has issued Opinion 13-2006 in connection with securities issued as financial structures. In particular, the opinion focused on whether, for the purposes of an investment portfolio, these should be considered as a risk of the issuer or an underlying risk, and whether the maximum investment limits are applicable to the issuer or to the underlying entity.

Shipping & Transport

Panama

The enrolment of vessels in Panama involves several government authorities. Applicable legal provisions are contained in various laws, cabinet and executive decrees and resolutions, and the commercial, labour and fiscal codes.

The arrest or attachment of vessels offers creditors an effective way of collecting their claims. Domestic legislation provides for petitions of arrest, general procedures, suspension and waiver of arrest, and the relevance of arrest orders decreed by foreign courts.

The International Safety Management Code covers all aspects of safety at sea and efforts are being made to ensure that all ship-owners implement its measures and standards. The Panamanian Ship Registry welcomes strict enforcement of the code and 75% of Panamanian vessels already comply with its requirements.