Agreement No. 10 (2018) Modifying Agreement No. 04-2015 on the Registration Procedure for Custodians of Bearer Shares

Republic of Panama
Superintendency of Banks
AGREEMENT No. 004-2015
(of May 11, 2015)
“By which the procedure for the registration of custodians of bearer shares is established”

THE BOARD OF DIRECTORS

In exercise of its legal powers, and

CONSIDERING:

That through Law No. 47 of August 6, 2013, a custody regime applicable to shares issued as bearer shares is adopted, and through Article 3, it is provided that every owner of shares issued as bearer shares must designate an authorized custodian to keep the bearer share certificates in custody.

That Article 6 of Law No. 47 of August 6, 2013 establishes that general license banks and trusts established in the Republic of Panama may act as authorized local custodians of bearer share certificates.

That Article 6 of the aforementioned Law establishes that the Superintendency of Banks must certify, upon request of the competent authority, the registration of authorized local custodians.

That Article 7 of Law No. 47 of August 6, 2013 establishes that banks, trusts, and financial intermediaries that hold a license to exercise their activities, established in jurisdictions that are members of the Financial Action Task Force (FATF) or its associated members, may act as authorized foreign custodians, provided they are registered with the Superintendency of Banks in a special registry kept for this purpose.

That in accordance with the provisions established in Law No. 47 of August 6, 2013, it will be the responsibility of the Superintendency of Banks to grant the respective certifications of authorized custodians to banks, trust companies, and financial intermediaries, and it must maintain on its website an updated list of authorized custodians registered to act as such.

That through Law No. 18 of April 23, 2015, Article 28 of Law 47 of 2013 is modified, advancing the effective date of the law to May 4, 2015.

That Article 23 of the Banking Law establishes that the Superintendency will count, among other resources, with the amount of inspection fees and other special services, which will be paid by banks and other supervised entities.

That in working sessions of this Board of Directors, the need and convenience of establishing a procedure for the registration of local and foreign custodians of bearer shares has been made evident.

AGREES:

ARTICLE 1. SCOPE OF APPLICATION. The provisions of this Agreement shall apply to the following entities:

1. General license banks and trusts established in the Republic of Panama regulated and supervised by the Superintendency of Banks of Panama.
2. Banks, trusts, and financial intermediaries that hold a license to exercise their activities, established in jurisdictions that are members of the Financial Action Task Force (FATF) on Money Laundering or its associated members.

ARTICLE 2. DEFINITIONS. For the purposes of this Agreement, the following concepts shall be understood as follows:

1. Authorized local custodian: any general license bank or trust established in the Republic of Panama that holds the respective license and is authorized by the Superintendency of Banks to maintain custody of bearer share certificates.
2. Authorized foreign custodian: any bank, trust, and financial intermediary established that holds the respective license in jurisdictions that are members of the Financial Action Task Force (FATF) on Money Laundering, authorized by the Superintendency of Banks to maintain custody of bearer share certificates.
3. Custody: service provided for the physical conservation of bearer shares and the documentation related to the provision of the service.
4. Bearer shares: certificate that establishes that the holder of said document is the owner of the share.
5. Law 47 of August 6, 2013: Law through which a custody regime applicable to shares issued as bearer shares is adopted.

ARTICLE 3. REGISTRATION OF LOCAL CUSTODIANS. General license banks and trust companies interested in obtaining certification as authorized local custodians must meet the following requirements:

1. Have suitable facilities, systems, and security and compliance procedures to maintain the physical integrity of documents under their custody.
2. Have qualified operational staff for the tasks inherent to the custody activity.
3. Guarantee the segregation of functions of operational staff, so that no employee of the entity has absolute control over the custody processes.
4. Ensure that their custody system allows for the effective identification of the ownership of bearer shares held in custody, as well as any other information related to the owner of the bearer shares.
5. Due diligence procedures and policies regarding the identification of the beneficial owner of the bearer shares.

Those banks that, on the date of entry into force of this Agreement, provide the service of Custodians of Bearer Shares, must prove compliance with the requirements established in this Article in order to obtain registration as authorized custodians from this Superintendency of Banks.

ARTICLE 4. REQUIREMENTS FOR APPROVAL OF AUTHORIZED FOREIGN CUSTODIANS. In accordance with the power granted to this Superintendency in Article 7 of Law No. 47 of 2013, entities interested in obtaining certification as authorized foreign custodians must meet the requirements established in Article 3 of this Agreement and additionally comply with the following requirements as established in Law No. 47 of August 6, 2013:

1. General data of incorporation, name, physical address, telephone number, and email address or fax number.
2. Certification issued by the supervisory body accrediting that they are under their supervision, including the name, physical address, telephone number, and email address or fax number of this body, legalized and, if necessary, translated.
3. Certificate of appointment of a notification agent, including full name, physical address, telephone number, and email address or fax number, translated, if necessary.
4. Sworn declaration expressing the following:
   a. That they implement customer due diligence measures no less than those required in Law 2 of 2011, which regulates customer due diligence measures for resident agents of existing legal entities according to the laws of the Republic of Panama. b. That they commit to providing the resident agent of the issuing company with the full name, nationality or country of incorporation, ID number or valid passport number or incorporation data, physical address, telephone number, and email address or fax number of the owners of the shares issued as bearer shares whose certificates they will keep in custody. Unless the custodian avails itself of the exception established in Article 11 of Law 47 of 2013, consigning the bond stipulated therein.

ARTICLE 5. AUTHORIZATION OF THE SUPERINTENDENCY OF BANKS. Banks, trust companies, and financial intermediaries, as applicable, to accredit themselves as local or foreign custodians of bearer shares, must request prior authorization from this Superintendency. The application must be submitted accompanied by the following:

1. Name and general details of the bank, trust company, or financial intermediary, as applicable.
2. Operational scheme that the entity will use to offer the custody service.
3. Security, control, and compliance procedures in custody matters duly approved by the corresponding instances.
4. Description of the registration and information storage systems.
5. Any other document, information, or requirement that the Superintendent of Banks deems pertinent for the corresponding analysis of the application.

Once the application has been analyzed and evaluated, the Superintendency will proceed to issue a resolution through which the application of the respective entity to provide the authorized custody service will be authorized or rejected.

ARTICLE 6. UPDATE OF AUTHORIZED CUSTODIANS OF BEARER SHARES. The Superintendency of Banks will maintain on its website an updated list of local and foreign custodians registered to act as such, in which the resolution number and the effective date of their authorization by the Superintendency of Banks will be recorded.

In accordance with what is provided in Law No. 47 of 2013, the Superintendency will certify, upon request of the competent authorities, the registration of authorized local and foreign custodians.

ARTICLE 7. OBTAINING AUTHORIZATION AND CERTIFICATION OF AUTHORIZED CUSTODY. Applicant entities must bear the expenses of issuance, investigation, and analysis incurred by the Superintendency when evaluating the documentation required to provide bearer share custody services:

1. For the application for authorization of authorized local custodian, the sum of two thousand five hundred balboas (B/.2,500.00).
2. For the application for certification of authorized local custodian, the sum of two hundred fifty balboas (B/.250.00).
3. For the application for authorization of authorized foreign custodian, the sum of five thousand balboas (B/.5,000.00).
4. For the application for certification of authorized foreign custodian, the sum of two hundred fifty balboas (B/.250.00).

Payment must be made in full upon presenting the respective application, through certified check, manager's check, or bank transfer in the name of the Superintendency of Banks.

Payments made pursuant to the applications described in this Agreement will not be refundable.

ARTICLE 8. OBLIGATIONS OF THE AUTHORIZED LOCAL CUSTODIAN. In accordance with what is provided in Article 10 of Law No. 47 of August 6, 2013, authorized local custodians will have the following obligations:

1. Maintain all documentation related to the provision of the custody service at their established headquarters in the Republic of Panama. Records related to the provision of the custody service must be maintained for a period of five years after the conclusion of the service.
2. Maintain physical custody of the bearer share certificates while the exercise of their function as authorized custodian lasts at their established headquarters in the Republic of Panama.
3. Keep received information in strict confidence.
4. Provide information when required by competent authorities.
   The provision of information at the request of the competent authority will not be considered as a breach of their obligation to keep information in strict confidence nor as a violation of the duty of confidentiality or the right to privacy.
5. Issue certifications stating the identity of the owner of the shares issued as bearer shares when required by judicial order, by the owner, or the pledgee thereof.

ARTICLE 9. OBLIGATIONS OF THE AUTHORIZED FOREIGN CUSTODIAN. In accordance with what is provided in Article 11 of Law No. 47 of August 6, 2013, authorized foreign custodians will have the following obligations:

1. Maintain all documentation related to the provision of the custody service at the physical address that they have provided to the resident agent of the issuing company at the time of notifying them of their status as custodian. Records related to the provision of the custody service must be maintained for a period of five years after the conclusion of the service.
2. Maintain physical custody of the certificates of shares issued as bearer shares while the exercise of their function as authorized custodian lasts at the physical address that they have provided to the resident agent of the issuing company at the time of notifying them of their status as custodian.
3. Keep received information in strict confidence.
4. Provide to the resident agent of the issuing company, along with the notification of their appointment, the full name, nationality or country of incorporation, ID number or valid passport number or incorporation data, physical address, telephone number, and email address or fax number of the owners of the shares issued as bearer shares whose certificates they keep in custody. The provision of information to the resident agent will not be considered as a breach of their obligation to keep information in strict confidence nor as a violation of the duty of confidentiality or the right to privacy. Compliance with this obligation will be exempted according to what is established in Article 11 of Law 47 of 2013, consigning the bond stipulated therein.
5. Issue certifications stating the identity of the owner of the shares issued as bearer shares when required by judicial order, by the owner, or the pledgee thereof.

ARTICLE 10. CANCELLATION OF AUTHORIZED CUSTODY AUTHORIZATION. If during inspections carried out by the Superintendency of Banks it is determined that the internal policies, controls, and procedures established for the provision of the authorized custody service have not been met or that there are deficiencies in the provision of the service, a period of thirty (30) days or any other period established by the Superintendency will be granted to remedy the findings; otherwise, the Superintendency may cancel the granted authorization and proceed with their exclusion from the registry of registered custodians listed on the website.

ARTICLE 11. SUPERVISION OF FOREIGN CUSTODIANS. Once authorization to provide the authorized foreign custody service is granted, the Superintendency may, when it deems appropriate, conduct supervision of these custodians to determine that they have the minimum controls and procedures established in this Agreement.

The costs of inspections and supervision carried out on authorized foreign custodians will be borne by them.

ARTICLE 12. VALIDITY. This Agreement will come into effect from its promulgation. However, entities authorized to be local or foreign custodians of bearer shares will begin providing their services once the respective authorization has been issued by this Superintendency and they are duly registered as such.

Given in the city of Panama, on the eleventh (11) day of the month of May of two thousand fifteen (2015).

NOTIFY, PUBLISH, AND COMPLY.

THE PRESIDENT THE SECRETARY
L.J. Montague Belanger Luis La Rocca