Agreement No. 6-2022 of September 14, 2022, Modifying Article 4-A of Agreement No. 11-2005 and Article 37 of Agreement No. 6-2015

REPUBLIC OF PANAMA
SUPERINTENDENCY OF THE SECURITIES MARKET
Agreement No. 6-2022
(September 14, 2022)
"Modifying Article 4-A of Agreement No. 11-2005 of August 5, 2005, and Article 37 of Agreement No. 6-2015 of August 19, 2015"

THE BOARD OF DIRECTORS

In exercise of its legal powers, and

CONSIDERING:

That through Law 10 of April 16, 1993, incentives were established for the formation of funds or plans for retirements, pensions, and other similar benefits in the Republic of Panama, of a voluntary and complementary nature to the benefits granted by the Social Security system.

That Article 4 of Law 10 of April 16, 1993, establishes the authority of the Superintendency of the Securities Market to regulate and supervise funds or plans for retirements and pensions.

That the Board of Directors, in accordance with Articles 5, 6, 10 (item 1), 19, and 20 of the Single Text of the Securities Market Law (hereinafter: Single Text), acts as the Highest Consultative Body for regulation and the setting of general policies of the Superintendency, and among its attributes is 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 through Agreement No. 11-2005 of August 5, 2005, the provisions of Law 10 of April 16, 1993, and the activities of Investment Administrators of these funds are developed.

That Article 4 of Agreement No. 11-2005 of August 5, 2005, determines the requirements for affiliation to pension plans with these Investment Administrators and the budgets for such affiliation to become effective, as well as variations to the agreed terms.

That Law 23 of April 27, 2015, "Adopting measures to prevent money laundering, terrorist financing, and the financing of the proliferation of weapons of mass destruction, and issuing other provisions," in its Article 22, item 2, includes Pension Fund Administrators among the obligated financial subjects, supervised by the Superintendency of the Securities Market.

That Law 23 of April 27, 2015, establishes the simplified due diligence measure, which may be applied by obligated financial subjects to their clients, based on the results of the identification, evaluation, and diagnosis of risks.

That through Executive Decree 35 of September 6, 2022 (which substitutes Executive Decree No. 363 of August 13, 2015), Law 23 of April 27, 2015, is regulated. In Articles 12, 13, and 14 of Executive Decree 35 of September 6, 2022, the basic customer due diligence measures are established, both for natural persons and legal entities, which obligated subjects must apply; furthermore, it is determined that the simplified due diligence measure must be consistent with the risk identified through the documented risk assessment of the client and the ultimate beneficiary. In Article 32 of this Executive Decree 35 of September 6, 2022, it is also provided that each Supervisory Body (such as the Superintendency of the Securities Market), within the scope of its competence and fulfillment of its attributes, may establish specific criteria appropriate to its regulatory sector, attending to each of the provisions contained in the aforementioned Executive Decree; consequently, Supervisory Bodies may adopt Agreements, Resolutions, and other measures in this matter, applicable to each of the obligated subjects.

That the Superintendency of the Securities Market adopted Agreement 6-2015 of August 19, 2015, which issues provisions applicable to financial obligated subjects supervised by the Superintendency, regarding the prevention of money laundering, terrorist financing, and the financing of the proliferation of weapons of mass destruction.

That Article 37 of Agreement 6-2015 of August 19, 2015, establishes that Investment Administrators of Pension Funds and Administrators of Severance Funds must apply basic customer due diligence measures, extended or reinforced due diligence, or simplified due diligence measures, established in Law 23 of April 27, 2015, and in Executive Decree No. 363 of August 13, 2015 (currently substituted by Executive Decree 35 of September 6, 2022), for natural persons and legal entities, in accordance with the client's risk classification.

That through Agreement No. 16-2020 of December 29, 2020, provisions were modified and added to Agreement No. 11-2005 of August 5, 2005, and Agreement 6-2015 of August 19, 2015, determining conditions and requirements for Simplified Affiliation to Pension and Retirement Plans and Measures for their Due Diligence, which was directed solely to individual plans whose affiliates correspond to national natural persons or foreign residents, permanent and temporary, in the Republic of Panama.

It is worth noting that Article 323 of the Single Text establishes that when the Superintendency contemplates adopting 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 the Superintendency has evaluated the timeliness and convenience of adopting provisions that allow, in the same way, the affiliation of clients to collective plans for retirements, pensions, and other similar benefits, in a simplified manner, thereby promoting access to the pension system for more affiliates, alongside specific provisions for the simplified due diligence of these clients that, in the opinion of this Supervisory Body, allow compliance with the regime established in Law 23 of April 27, 2015.

That taking into account that the actions contemplated in this agreement represent a benefit for the involved parties, they adjust to 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," are not applicable to this agreement.

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

AGREES:

ARTICLE ONE: MODIFY Article 4-A of Agreement 11-2005 of August 5, 2005, which will read as follows:

Article 4-A. Simplified Affiliation to Pension and Retirement Plans.

Affiliation to the plans established by this Agreement may be carried out in a simplified manner, provided the following conditions are met:

1. It must be directed to: (a) individual plans where affiliates will be national natural persons or foreign residents, permanent and temporary, in the Republic of Panama; or (b) collective plans where affiliates will be national natural persons or foreign residents, permanent and temporary, in the Republic of Panama, in which Pension and Retirement Fund Administrators receive contributions solely and exclusively through the legal entity that subscribes to it (employer, association, union, guild, or collective).

2. No more than one simplified affiliation may be maintained per affiliate, with the same Pension and Retirement Fund Administrator.

3. Contributions made by the affiliate of the individual plan must not exceed twelve thousand balboas (B/.12,000.00), in the fiscal period corresponding to the same.

The Pension and Retirement Fund Administrator must ensure the proper compliance with the conditions established in the preceding items, from the simplified affiliation and during the validity of the contractual relationship.

The funds of the affiliates may be transferred to another Pension and Retirement Fund Administrator. The Pension and Retirement Fund Administrator to which the funds are transferred must verify the continuity of the conditions fixed in this article for the simplified affiliation to be carried out.

The due diligence of affiliates to these plans will be carried out under the terms established in Article 37 of Agreement 6-2015 of August 19, 2015.

ARTICLE TWO: MODIFY Article 37 of Agreement 6-2015 of August 19, 2015, which will read as follows:

Article 37. Due Diligence Measures by Pension Fund Administrators and Severance Fund Administrators.

Pension Fund Administrators and Severance Fund Administrators must apply basic customer due diligence measures, extended or reinforced due diligence, or simplified due diligence measures, established in Law 23 of April 27, 2015, and in Executive Decree 35 of September 6, 2022, for natural persons and legal entities, in accordance with the client's risk classification.

For the simplified affiliation and update contemplated in Articles 4-A to 4-D of Agreement 11-2005 of August 5, 2005, for individual or collective pension and retirement plans in which Pension and Retirement Fund Administrators receive contributions solely and exclusively through the legal entity that subscribes to it, Pension and Retirement Fund Administrators must maintain records of the information and documentation of the due diligence applied for the identification and verification of the identity of the natural person affiliate, which must contain, at a minimum, the following:

1. Full name.

2. In the case of nationals, a copy of the personal identity card; in the case of permanent or temporary residents, a document issued by competent entities that accredits their legal residence in the Republic of Panama, as applicable. The documents provided must be valid.

3. Personal or work address.

4. Profession or occupation.

5. Any other information and/or documentation that, if deemed necessary, the Administrator requests to verify the client's identity and the origin of funds.

Similarly, for the simplified affiliation contemplated in Article 4-A of Agreement 11-2005 of August 5, 2005, for collective pension and retirement plans in which Pension and Retirement Fund Administrators receive contributions solely and exclusively through the legal entity that subscribes to it, Pension and Retirement Fund Administrators must, first, apply due diligence measures for affiliation to the collective plan on the legal entity that subscribes to it (employer, association, union, guild, or collective), according to the client's risk classification established in current legal norms, as detailed in the first paragraph of this article, which in no case may be simplified.

In the event that the Administrator detects that the financial profile or transactional profile of the client (natural or legal person) has varied, it will have the obligation to update the due diligence information. The update of the due diligence of these clients must be carried out depending on the risk identified, in which case the frequency determined in Article 25 of this Agreement must be attended to.

All records of the information and documentation of these clients (natural or legal person) may be kept updated electronically, which must be compiled chronologically by client, in such a way as to allow expedited location, evaluation, and review. Such systems must be auditable and have the necessary records and backups, which must be maintained during the client's active life and for five (5) years, counted from the termination of the contractual relationship.

The Administrator will take the necessary measures so that the information and documentation are available immediately, upon request of the Superintendency of the Securities Market.

ARTICLE THREE: VALIDITY. This Agreement will enter into force from its promulgation in the Official Gazette.

PUBLISH AND COMPLY.

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Caries
President of the Board of Directors Secretary of the Board of Directors