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Panama's New
Securities Law in a Nutshell

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The Law authorizes the granting of credit for the purchase of or to hold registered securities in a portfolio.16 Likewise, it is viable for broker-dealers to incur debt by pledging proprietary securities as collateral. On the other hand, it is acceptable to give or take securities in loan and repurchase of securities.17

Lastly, the Law empowers the CNV to establish rules for options, futures and other derivatives markets.

For the first time, the Law expressly allows the assignment of credits and other future incorporeal rights for purposes of securitization.


The Law foresees a complete title that rules in detail the issuance of securities represented by account writings and the creation and operation of an indirect holding regime for financial assets through custodian accounts, which conveys the dematerialization of the securities18. This registration/annotation system do not affect the possibility of constituting liens (such as pledges) over the securities.


Civil liability for any person found responsible for the loss or damage caused by the use of fraudulent or deceitful devices in connection with the sale or purchase of securities is established by the Law. Besides, insider trading, as well as the use of any fraudulent or deceitful act or market manipulation (i.e., wash sales) that may affect the purchase or sale of securities is prohibited.

A treble damage sanction is established for insider trading and the CNV is empowered to impose administrative fines for up to US$300,000.00 for violations of the Law-Decree.

As a very particular provision of the Law-Decree, a class action is recognized in favor of the CNV, which has standing to file complaints in its name to enforce the provisions of the new securities law. Any amounts recovered by the Commission through a class action shall be transferred to a trust19 which beneficiaries are the investors conforming the class.

The statute of limitations for civil remedies are up to three years.


The Law establishes a complete regime for the intervention (receivership), reorganization, dissolution and liquidation of registered entities (market agents; i.e., broker-dealers).


For income tax and dividends tax purposes, profits resulting from the alienation or disposal of securities issued or guaranteed by the State shall not be deemed as taxable and losses shall not be deductible. The same treatment applies to loss and profit derived from the transfer of securities issued or traded by persons registered in the CNV, provided that said negotiations occur:

    A. Through an exchange or an organized market; or

    B. As purchases in a public offering of the securities, or

    C. Is the result of a corporate merger, consolidation or reorganization.

On the other hand, interests paid or credited on securities or debt instruments registered in the CNV cause an income tax based on a sole 5% tariff, which must be withheld by the person paying or crediting the same. This income is not deemed as part of the investors’ (taxpayers) gross income, therefore they are not obliged to book it in their respective tax statements.

Interest accrued from securities registered in the CNV and traded in an exchange or an organized market are exempted from the payment of income tax. The underwriting of such securities does not affect these tax benefits.

Securities registered before the CNV, and any act, contract, agreement or document pertaining in any manner to said securities or their issue, sale, subscription, payment, transfer, exchange or redemption are exempted from paying stamp taxes.

As provided for by Law No. 8 of 1994, 50% of the amounts invested in the purchase of securities issued by a tourism company registered in the National Tourism Registry and authorized by the National Securities Commission are deemed as a deductible expense for income tax purposes.

Pursuant to Law No. 24 of 1992, all profits derived from bonds, shares and securities issued by companies dedicated to reforestation and related and similar activities, and profits obtained in the transfer of these securities shall be exempted from income tax.

On the other hand, according to Law No. 25 of 1992 all income derived from dividends or interests generated by shares, bonds, and other securities traded in the national or international capital markets by companies established in export processing zones authorized in Panama is tax free.

Francisco Pérez Ferreira

Patton, Moreno & Asvat

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16. Usually known as "margin".
17. "Short selling" is allowed.
18. See US Uniform Commercial Code (UCC) article 8, as amended.
19. Which trustee must be the National Bank of Panama (state-owned banking institution).