Agreement 10-2022 of December 7, 2022 Modifying Articles 11, 13, and 14 of Agreement 05-2014

REPUBLIC OF PANAMA
BOARD OF DIRECTORS
SUPERINTENDENCY OF THE SECURITIES MARKET
Agreement No. 10-2022
(of December 7, 2022)
"By which Articles 11, 13, and 14 of Agreement 05-2014 of October 1, 2014 are modified"

THE BOARD OF DIRECTORS in the exercise of its legal powers and

CONSIDERING:

That Law 67 of September 1, 2011 reformed Decree Law 1 of July 8, 1999 and created the Superintendency of the Securities Market as an autonomous entity of the State, with legal personality, own assets, and administrative, budgetary, and financial independence.

That the Board of Directors, in accordance with Articles 5, 6, 10 (numeral 1), 19, and 20 of the Single Text of the Securities Market Law (hereinafter: Single Text), acts as the Highest Consultative, Regulatory, and Policy-Setting Body of the Superintendency and has among its attributes the power to adopt, reform, and revoke agreements that develop the provisions of the Securities Market Law.

That the Superintendency, by virtue of Article 3 of the Single Text, has the general objective of regulating, supervising, and auditing the activities of the securities market developed in the Republic of Panama or from it, promoting legal certainty for all market participants and guaranteeing transparency, with special protection of investors' rights.

That by Agreement 05-2014 of October 1, 2014, the rules applicable to the procedure to obtain and maintain the license for securities broker and analyst, chief executive, and chief executive of investment administrator were adopted, as well as the responsibilities that persons holding such positions and exercising the functions of the respective license must fulfill.

That Article 11 of Agreement 05-2014 of October 1, 2014 provides, among the requirements for the license application for securities broker and analyst, chief executive, or chief executive of investment administrator, that the license application must be accompanied, among other documents, by the authenticated copy of the work permit for cases that apply.

That Article 13 of Agreement 05-2014 of October 1, 2014 provides, among the requirements to be presented along with the notification to the Superintendency for the change of status of the license for securities broker and analyst domiciled outside the Republic of Panama, the authenticated copy of the work permit for cases that apply.

That, in working sessions, the Board of Directors has considered the convenience of eliminating numeral 3 of Article 11 and numeral 2 of Article 13 of Agreement 05-2014 of October 1, 2014, relating to the requirement to provide an authenticated copy of the work permit, for license applications for natural persons, as well as for the change of status of the license for securities broker and analyst domiciled outside the Republic of Panama, taking into consideration that this requirement has its own regulatory and supervisory legal framework. Likewise, the provisions regarding the expiration of licenses, adopted during the National State of Emergency declared by the Cabinet Council through Cabinet Resolution No. 11 of March 13, 2020, are being modified to allow their renewal as long as the requirements and times fixed for such purpose are met.

That, in this sense, it is worth noting that Article 323 of the Single Text establishes that when the Superintendency contemplates reforming an agreement, it must consider to determine if the action is necessary and appropriate: (a) the public interest, (b) the protection of investors, and (c) if the action promotes efficiency, market competition, and capital formation.

That taking into account that the modifications contemplated in this agreement represent a benefit for the involved parties, it corresponds to apply what is established in Article 326 of the Single Text, regarding actions that grant an exemption or eliminate a restriction, so the provisions contained in Title XV, regarding the "Administrative Procedure for the Adoption of Agreements," will not be applicable to this agreement.

That, by virtue of the foregoing, the Board of Directors of the Superintendency of the Securities Market, in the exercise of its legal powers,

AGREES:

ARTICLE FIRST: MODIFY Article 11 of Agreement 05-2014 of October 1, 2014, which will read as follows:

Article 11. (License Application)
Any natural person who wishes to obtain a license for securities broker and analyst, chief executive, or chief executive of investment administrator, in compliance with what is provided in Article 76 of the Securities Market Law, must present a license application accompanied by the following documentation:

1. Form DRA-1.
2. In the case of being Panamanian or foreigner with permanent residence in the Republic of Panama, a simple copy of the valid ID card.
   In the case that their migratory status is foreigner with temporary residence in the Republic of Panama, an authenticated or apostilled copy of the complete passport.
3. Letter of intent issued by the entity licensed for which the applicant will work, issued in favor of the Superintendency. This letter will be signed by the chief executive or by the person exercising legal representation of the entity and must indicate the position for which they will be hired and the functions to be performed.
4. Sworn declaration certifying that the applicant has not incurred in the causes of incapacity established in Article 79 of the Securities Market Law, for which they must fill out form DRA-4 contained in Annex 3, which forms an integral part of this Agreement.
5. Copy of the payment receipt for the registration fee established in the Securities Market Law, duly issued by the Superintendency of the Securities Market.
   The Superintendency is authorized to request any additional or clarifying documentation it considers necessary for the issuance of the respective license within its competencies and powers in order to protect the investing public.
   The notification of the resolution granting the license is conditioned to the delivery by the applicant of the copy of the employment or professional services contract that documents their labor relationship with the entity.

PARAGRAPH: For cases where the license for securities broker and analyst is desired to be obtained with permanent domicile outside the Republic of Panama, without prejudice to the requirements that the jurisdiction of the applicant's permanent domicile requires for the exercise of the position of securities broker or analyst, the applicant must, in addition to complying with the requirements provided in this article, submit Form DRA-5 contained in Annex 4, which forms an integral part of this Agreement, duly completed by the securities firm or investment advisor for which they will perform these services abroad. This document must be signed by the person exercising legal representation of the entity and by the applicant. In this case, the notification of the resolution granting the license is conditioned to the delivery by the applicant of the copy of the employment or professional services contract with the securities firm or investment advisor, which must contain a clause establishing joint liability between the entity and the securities broker or analyst. It must also establish a clause where they commit to not exercise functions in or from the Republic of Panama.

ARTICLE SECOND: MODIFY Article 13 of Agreement 05-2014 of October 1, 2014, which will read as follows:

Article 13. (Change of status of the license for securities broker and analyst domiciled outside the Republic of Panama)
Persons with permanent domicile outside the Republic of Panama, who have obtained the license for securities broker and analyst required by the Superintendency to occupy said position and perform the functions proper to this license abroad, who decide to change their status to perform functions in or from the Republic of Panama, must notify in writing to the Superintendency and present the following requirements:

1. Updated Forms DRA-1 and DRA-4.
2. Copy of the employment or professional services contract with the securities firm or investment advisor.
   The change of status will not take effect if the notification does not meet the previously listed requirements, without prejudice to the administrative measures that the Superintendency may adopt.

ARTICLE THIRD: MODIFY Article 14 of Agreement 05-2014 of October 1, 2014, which will read as follows:

Article 14. (Expiration of the license)
The licenses for securities broker and analyst, chief executive, and chief executive of investment administrator will automatically expire after two (2) years, counted from the effective date on which their holder ceased to occupy the position and perform the functions of the respective license, without the need for pronouncement from the Superintendency.

However, those persons who possess one or more licenses, and continue to hold public or private positions in sectors related to banking and/or securities, as long as they comply with their obligation to pay the corresponding fee to the Superintendency, will not be considered to have their respective license(s) expired.

The natural person holding the respective license may present a document proving that they remain active holding public or private positions in sectors related to banking and/or securities. Such proofs may consist of, without limitation: labor or service contracts, appointment resolution, consulting work developed, where it is stated that they have remained active in the banking industry and/or in the securities market, with the objective that necessary corrections are made.

Without prejudice to the notification obligations of the licensed entity issued by the Superintendency through its Chief Executive, the natural person holder of the license must notify the Superintendency of the start and end dates in the position they hold, whether as securities broker, analyst, chief executive, or chief executive of investment administrator.

Licenses that are expired on the date of entry into force of this Agreement, by virtue of what is enshrined in Article 76 of the Securities Market Law, will be published on the Superintendency's website, without the need for prior pronouncement.
The Superintendency will publish on its website an updated informational table where it will classify the status of licenses as: active, inactive, suspended, expired, cancelled, or revoked.

TRANSITIONAL PARAGRAPH (1): It is established, in a special manner, the suspension of the computation of the expiration time of licenses for natural persons issued by the Superintendency of the Securities Market, from March 13, 2020, due to the National State of Emergency declared by the Cabinet Council through Cabinet Resolution No. 11 of March 13, 2020, as a consequence of the effects generated by the infectious disease COVID-19, as long as persons who possess one or more licenses, comply with their obligation to pay the corresponding fee to the Superintendency, their respective license(s) will not be considered expired. This transitional paragraph will be valid until January 3, 2023. The computation of the expiration time of licenses for natural persons will start running again, from January 4, 2023.

TRANSITIONAL PARAGRAPH (2): The Superintendency of the Securities Market may renew the licenses for securities broker and analyst, chief executive, and chief executive of investment administrator, that have expired since March 13, 2020, due to not having complied with their obligation to pay the corresponding fees, for which any person wishing to request the renewal of their license(s) must present a formal application and comply with the following requirements:

1. Present evidence proving to the Superintendency that the applicant remains holding public or private positions in sectors related to banking and/or securities; or present evidence proving to the Superintendency that the applicant will be starting a labor relationship with an entity regulated by the Superintendency of the Securities Market.
2. Updated Form DRA-1; and
3. Cancellation of pending balances in concept of supervision fee, the corresponding surcharges of their license(s), and the renewal fee established in the Securities Market Law.
   For cases where the applicant is starting a labor relationship with an entity regulated by the Superintendency of the Securities Market, they must submit with the application, a letter of intent issued by the licensed entity for which the applicant will work, issued in favor of the Superintendency. This letter will be signed by the chief executive or by the person exercising legal representation of the entity and must indicate the position for which they will be hired and the functions to be performed. The notification of the resolution renewing the license is conditioned to the delivery by the applicant of the copy of the employment or professional services contract that documents their labor relationship with the entity. This transitional paragraph will be valid for applications submitted to the Superintendency until March 31, 2023.

ARTICLE FOURTH: VALIDITY. This Agreement will enter into force from the day of its promulgation in the Official Gazette of the Republic of Panama.

PUBLISH AND COMPLY,

Luis Chalhoub
President of the Board of Directors

L. E. Vásquez Brown
Secretary of the Board of Directors, Ad Hoc