Agreement 07-2017 Exempting Securities Offerings by Financial Entities in Reorganization from Public Offering Registration

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REPUBLIC OF PANAMA
SUPERINTENDENCY OF THE SECURITIES MARKET
Agreement 07-2017
(of September 20, 2017)
“Granting an exemption from the registration of Public Offering of Securities to securities offerings carried out by entities in the financial sector that are in the process of reorganization.”
The Board of Directors in the exercise of its legal powers, and CONSIDERING That through Law 67 of September 1, 2011, the Superintendency of the Securities Market (hereinafter the “Superintendency”) was created as an autonomous entity of the State, with legal personality, its own assets, and administrative, budgetary, and financial independence, with exclusive competence to regulate and supervise issuers, investment companies, intermediaries, and other participants in the securities market in the Republic of Panama. That pursuant to Article 121 of Law 67 of 2011, the National Assembly issued the Single Text comprising Decree-Law 1 of 1999 and its reforming laws and Title II of Law 67 of 2011, reformed by Law 12 of April 3, 2012, Law 56 of October 2, 2012, Law 23 of April 27, 2015, and Law 66 of December 9, 2016 (hereinafter the “Securities Market Law”). That the general objective of the Superintendency is the regulation, supervision, and oversight of securities market activities developed in or from the Republic of Panama, promoting legal certainty for all market participants and guaranteeing transparency, with special protection of investors' rights. That Article 10 of the Securities Market Law empowers the Board of Directors to “adopt, reform, and revoke agreements that develop the provisions of the Securities Market Law.” That Article 129 “Exempt Offerings” of Title V “Public Offering of Securities” of the Securities Market Law establishes in numeral 6 that the following shall be exempt from registration with the Superintendency: “…any other offers, sales, or transactions in securities that the Superintendency, through agreement, excepts from the registration requirement established in this Title, within the parameters it issues for the protection of the investing public.” That in working meetings of this Superintendency, the need has been highlighted to have an exemption from the registration of Public Offering of Securities for offerings carried out by entities in the financial sector that are in the process of reorganization, duly decreed by their Superintendency, and for securities offerings carried out by an affiliated entity, the controlling entity, or the prospective buyer of the entity in the process of reorganization; since these offerings could be an alternative to provide the investing public or general public with securities in exchange or consideration for obligations that entities in the process of reorganization have with them. That Article 326 “Exemption” of Title XIV “Administrative Procedure for the Adoption of Agreements” of the Securities Market Law establishes that “[T]he provisions of this Title shall not apply to actions that grant an exemption or eliminate a restriction, nor to the opinions issued by the Superintendency regarding this Decree-Law and its regulations.” That in view of the foregoing, the Board of Directors of the Superintendency of the Securities Market, in the exercise of its legal powers; AGREES
ARTICLE ONE: ESTABLISH an exemption from the registration of Public Offering of Securities to securities offerings carried out by entities in the financial sector that are in the process of reorganization, duly decreed by their Superintendency, and to securities offerings carried out by an affiliated entity, the controlling entity, or the prospective buyer of the entity in the process of reorganization.
Article 1 (Scope of Application)
This Agreement shall apply to securities offerings carried out by entities in the financial sector that are in the process of reorganization, duly decreed by their Superintendency, and to securities offerings carried out by an affiliated entity, the controlling entity, or the prospective buyer of the entity in the process of reorganization, provided that they comply with what is established in this Agreement.
Article 2 (Exemption)
Securities offerings carried out by entities in the financial sector that are in the process of reorganization, duly decreed by their Superintendency, and securities offerings carried out by an affiliated entity, the controlling entity, or the prospective buyer of the entity in the process of reorganization, shall be exempt from the registration of Public Offering of Securities established in the Securities Market Law, provided that the securities offerings comply with the following conditions:

1. That the securities offerings are part of the reorganization process of the entity.
2. That the securities subject to the offerings are offered and issued solely in exchange or consideration for a clear, liquid, and exigible obligation that the entity in the process of reorganization has with the natural or legal persons acquiring the securities.
3. That a prospectus containing the following legend in uppercase letters on its cover be delivered to the natural or legal persons acquiring the securities subject to the offering:
   “THE ISSUER OF THESE SECURITIES IS AN ENTITY IN THE PROCESS OF REORGANIZATION DULY DECREED BY THE SUPERINTENDENCY OF ________________________________________ BY RESOLUTION NO. __ OF ______ OF ______________ OF ____ AND/OR AN AFFILIATED ENTITY, THE CONTROLLING ENTITY, OR THE PROSPECTIVE BUYER OF THE ENTITY IN THE PROCESS OF REORGANIZATION”. THE OFFERING OF THESE SECURITIES HAS NOT BEEN AUTHORIZED OR REGISTERED WITH THE SUPERINTENDENCY OF THE SECURITIES MARKET. THIS OFFERING IS CARRIED OUT THROUGH AN EXEMPTION FROM REGISTRATION ESTABLISHED IN NUMERAL 6 OF ARTICLE 129 OF THE SECURITIES MARKET LAW AND IN AGREEMENT 07-2017 OF SEPTEMBER 20, 2017. THESE SECURITIES ARE NOT UNDER THE SUPERVISION OF THE SUPERINTENDENCY OF THE SECURITIES MARKET; AND THE ACQUIRERS OF THESE SECURITIES CANNOT INVOCATE THE PROTECTION GRANTED BY THE SECURITIES MARKET LAW. BEING SECURITIES EXEMPT FROM REGISTRATION, THE FISCAL TREATMENT ESTABLISHED IN ARTICLES 334 TO 336 OF THE SECURITIES MARKET LAW IS ALSO NOT APPLICABLE TO THEM.”
   Article 3 (Communication)
   Within fifteen days following the date on which the securities offering was carried out, the reorganizer of the entity in the process of reorganization must communicate to this Superintendency regarding the carrying out of the offering under this exemption, through a note indicating the following:
4. That the offering complies with the requirements established in Article 2 of this Agreement.
5. Information about the issuer of the securities:

3 a. Corporate name, date and registration data of the issuer, jurisdiction in which it was constituted, trade name –if any–. b. General information about the Directors, Officers, and Key Executives of the issuer.
c. Description of the reorganization process and indication of the resolutions by means of which it was decreed (even if the issuer is an affiliated entity, the controlling entity, or the prospective buyer of the entity in the process of reorganization).
3. Information about the offering:
a. Type of the security(ies) offered. b. Amount of the security(ies) offered.
For the purposes of this communication, it is irrelevant whether acceptances resulted from the offering carried out under the exemption established in this Agreement. The communication established in this article must be carried out even if there were no acceptances of the offering.
A simple copy of the prospectus must be attached to this communication.
Article 4 (Investor Protection)
It is expressly understood that investors who acquire securities under the exemption established in this Agreement cannot invoke the protection granted by the Securities Market Law, and that any request or claim regarding the securities thus acquired shall be subject to general commercial rules; unless after the offering of the securities under the exemption established in this Agreement, they are registered with this Superintendency in accordance with the provisions of Agreement 2-2010.
ARTICLE TWO: (VALIDITY) This agreement shall enter into force the day following its promulgation in the Official Gazette of the Republic of Panama.
Given in the city of Panama, on the twentieth (20) day of the month of September of two thousand seventeen (2017).
PUBLISH AND COMPLY
THE PRESIDENT THE SECRETARY
LAMBERTO MANTOVANI JOSÉ RAMÓN GARCÍA DE PAREDES