Panama: Offering securities to institutional investors
Maria Alejandra Cargiulo of Alfaro Ferrer & Ramírez writes about the registration requirements for public offerings or sales of securities made in Panama
Public offerings or sales of securities made in the Republic of Panama are subject to registration before the Superintendence of the Securities Market of Panama (the SMV). Nonetheless, the offer and sale of securities to institutional investors is exempted from the registration requirement. This exemption is based on the premise that institutional investors are experienced and sophisticated investors with enough knowledge of the securities markets which allows them to assess the risks associated with these types of investments without the need of the protection of Law Decree 1 of 1999 (the Securities Law).
Entities such as banks, insurance companies, investment funds, brokerage houses, corporations with equity of no less than US$1,000,000, sovereign states, and government entities qualify as institutional investors.
Although not subject to registration, offerings of securities to institutional investors in Panama are subject to the filing of form OE-3 with the SMV within the 15 days following the offer. Form OE-3, which is fairly simple, involves disclosing general information on the issuer and the securities being offered.
This filing is applicable to the offers, sales or transactions of unregistered securities made by issuers domiciled in Panama or abroad to institutional investors in Panama, regardless of the object of the transaction, the number of institutional investors being targeted, or of the amount of securities being offered, and is not subject to special considerations or limitations. Aside from form OE-3, the SMV may require additional information from the issuer such as incorporation documents, offering memorandum, and corporate authorisations, among others.
It is important to note that this registration exemption assumes that the institutional investor does not intend to act as underwriter of the securities, therefore in order for the exemption to be applicable to subsequent sales of such securities, such sales shall only be made to other institutional investors within a period of one year from the date of its initial acquisition, when not made publicly. Otherwise, the securities will require registration before the SMV for their offering in Panama.
Maria Alejandra Cargiulo