Agreement 10-2023 of December 27, 2023 on the Dissolution and Voluntary Liquidation of Institutions Registered with the Securities Market Superintendency

REPUBLIC OF PANAMA BOARD OF DIRECTORS SECURITIES MARKET SUPERINTENDENCY Agreement No. 10-2023 (December 27, 2023) "By which certain provisions contained in Chapter II of Title XIV, regarding the Dissolution and Voluntary Liquidation of Institutions Registered with the Securities Market Superintendency are developed, and other provisions are issued."

The Board of Directors of the Securities Market Superintendency, using its legal powers and CONSIDERING:

That Law 67 of September 1, 2011, reformed Decree-Law 1 of July 8, 1999, and created the Securities Market Superintendency (hereinafter: the Superintendency), as an autonomous state body, 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 this Superintendency has identified the need to develop certain provisions of Chapter II of Title XIV of the Single Text titled "Dissolution and Voluntary Liquidation," in order to have a tool that contemplates provisions that complement and develop those already established in the Securities Market Law, specifically regarding the transfer of liquid sums from unclaimed assets and values to the National Bank of Panama, as well as the management of the registered institution's documentation once a voluntary liquidation has concluded. Likewise, these same provisions were reviewed in Agreements No. 12-2001 of October 17, 2001, and No. 1-2013 of January 23, 2013, regarding Risk Rating Entities and Price Providing Entities respectively, as well as in Agreement No. 1-2016 of January 13, 2016, regarding forced liquidations, and it was deemed appropriate to harmonize them with the provisions contained in this Agreement.

That this Agreement has been submitted to the Public Consultation Procedure established in Title XV of the Single Text of the Securities Market Law, specifically in articles 323 et seq., whose term was from November 14 to December 15, 2023, as evidenced by the public access file held by the Superintendency.

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

AGREES:

ARTICLE ONE: ADOPT provisions related to the Procedure on Dissolution and Voluntary Liquidation of Institutions Registered with the Securities Market Superintendency, in accordance with what is provided in Chapter II of Title XIV of the Single Text.

Article 1. (Object). The purpose of this Agreement is to regulate and establish provisions related to the Voluntary Liquidation Procedure of Institutions established in article 2 of this Agreement.

Article 2. (Scope of Application). The provisions established in this Agreement are applicable to: securities houses that are not banks, stock exchanges, markets, securities clearinghouses, investment companies, administrators of investment companies, administrators of severance funds, administrators of pension and retirement funds, and central counterparty entities.

Article 3. (Unclaimed Assets, Securities, and Other Financial Assets). The assets, securities, financial instruments, and other financial assets unclaimed by a holder shall be sold by the Liquidator, for which prior approval from the Securities Market Superintendency must be obtained, once the first year has elapsed from the date the registered institution submits the Notice of Liquidation, for which the following parameters must be attended to:

1. The Liquidator shall take as the sale price the one indicated on a technological financial information platform that reflects the prices of a stock exchange or organized securities market, whether local or international, that has liquidity.
2. In the event that they are not traded on a securities market or stock exchange, or are traded on a securities market or stock exchange that lacks liquidity, the Liquidator shall take as the sale price the one determined using a reasonable valuation methodology, which may be provided by a price-providing entity or another specialist in the matter, or based on internally performed calculations, provided that the reasonable valuation methodology is used.
3. In the event that the sale is not carried out within thirty (30) calendar days in accordance with the above parameters, the methodology applied in determining the fair value shall be reviewed in order to determine a new sale price. This procedure shall be carried out as many times as necessary until the sale of the instrument or instruments is completed.

Under no circumstances may the Liquidator initiate the sale process of the aforementioned assets until prior approval from the Securities Market Superintendency is obtained, as established in article 283 of the Single Text of the Securities Market Law in conjunction with this article.

PARAGRAPH 1. (Prior Approval). When requesting prior approval from the Securities Market Superintendency, the Liquidator must submit a report with respective supporting documents, verifying the actions taken by the entity in voluntary liquidation that corroborate that the account holders could indeed not be located to: i) receive the corresponding orders and/or ii) deliver the financial assets.

The verification and prior approval procedure established in this paragraph shall be carried out in accordance with what is provided in the Superintendency's internal procedure for voluntary liquidations.

PARAGRAPH 2. (Report on the sale of unclaimed assets). Likewise, once the sale of the unclaimed assets, securities, financial instruments, and other financial assets is completed, the Liquidator must deliver to the Securities Market Superintendency a report that explains in detail, with respective support, the entire process of selling the aforementioned assets.

PARAGRAPH 3. (Communication to clients regarding the liquidation of unclaimed financial assets). Registered institutions, where applicable, must communicate to their clients that, by virtue of what is provided in article 283 of the Single Text of the Securities Market Law, unclaimed assets and securities within a voluntary liquidation will be sold, for which the parameters established in this Agreement will apply, and the proceeds from the sale will be deposited in the National Bank of Panama. The aforementioned communication must be included in the new contracts that registered institutions sign with their clients.

In the case of existing contracts, this communication may be sent to clients through a physical or electronic means, provided that there is a record of its sending by the registered institution. This communication must be verifiable by the Securities Market Superintendency.

(Compliance Period). Registered institutions will have a period of six (6) months, counted from the entry into force of this Agreement, to comply with what is established in this paragraph.

Article 4. (Transfers to the National Bank of Panama). The Liquidator of a registered institution undergoing the voluntary liquidation procedure, if upon concluding the aforementioned procedure there are credits or liquid sums that have not been claimed by the holder, must proceed with the transfer of these to the National Bank of Panama, complying with the following formalities:

1. It must send a formal note to the National Bank of Panama through which the registered institution formalizes the delivery of the credits or liquid sums that have not been claimed by their holders.
2. Bank check payable to the National Bank of Panama.
3. Detail of the monies or liquid sums to be transferred, with the names and other contact and identity data of the account holders (ultimate beneficiary), as they appear in the registered institution's files.
4. Simple copy of the report presented to the Superintendency, which establishes the detail of the unclaimed monies or liquid sums, with the detail of the names and other identity data of the holders, contact data, as they appear in the registered institution's files.
5. Simple copy of the communication issued by the Securities Market Superintendency stating its agreement with the stage of transferring the liquid sums to the National Bank of Panama. Such communication shall not be understood as an endorsement of the content of the report on unclaimed liquid sums presented by the Liquidator.
6. The Liquidator must communicate to the National Bank of Panama about any particular situation maintained by the holders of the delivered liquid sums, relating to anti-money laundering prevention, orders, measures, and/or judicial processes, among others.

The amount of the bank check issued in favor of the National Bank of Panama must match the total figure of the detail of the liquid funds to be transferred to the Bank, as well as the figures in the report presented before the Securities Market Superintendency.

The National Bank of Panama constitutes itself as a mere custodian of the unclaimed liquid assets. The National Bank of Panama will proceed with the transfer of the funds thus deposited to the State of the Republic of Panama if they have not been claimed after five (5) years, under the same formality described herein, informing the Securities Market Superintendency of the detail of the credits or liquid sums unclaimed by their holders or owners.

The State will be obligated to restore to their owner all funds covered by this article, provided they are claimed within ten (10) years following the date they were transferred to it, but the restoration will be made without interest.

Article 5. (Conservation of Documentation). The entity in voluntary liquidation must manage the conservation of documentation applying what is provided in article 29 of Law 23 of April 27, 2015, and in article 93 of the Commercial Code, so that whoever holds the legal representation of the registered institution, or in their absence, whoever legally substitutes them, assumes responsibility for the conservation of the documentation.

The Liquidator must indicate to the Securities Market Superintendency before concluding the voluntary liquidation, the actions taken for the conservation of the registered institution's documentation once the voluntary liquidation concludes, in accordance with the preceding paragraph, for which it must detail the name of the company where the documents will be stored, as well as their location and contact data. The registered institution, once liquidated, is obligated to update the aforementioned information in the event of any change in the information provided to the Securities Market Superintendency, while the legal obligation to conserve the documentation remains.

In the event that the Securities Market Superintendency requires any type of information or documentation from the registered institution once liquidated, it must manage its obtaining through the designated Liquidator, the legal representative, or the person who legally substitutes them, which must be duly communicated to the Superintendency along with their contact information before concluding the liquidation of the registered institution. The registered institution or, in its defect, the designated Liquidator, the legal representative, or the person who legally substitutes them, is obligated to update the aforementioned information in the event of any change in the designated person, while the legal obligation to conserve the documentation remains.

When a local administrative or judicial authority requires any type of information or documentation from a registered institution once liquidated, the Securities Market Superintendency will provide them with the contact of the person designated by the registered institution so that they can directly make the corresponding request. The same treatment will be provided to clients of the registered institution once liquidated, who request any type of information specific to the entity from the Superintendency.

ARTICLE TWO: MODIFY article 26 of Agreement No. 1-2016 of January 13, 2016, which shall read as follows:

Article 26. (Unclaimed Assets, Securities, and Other Financial Assets). The assets, securities, financial instruments, and other financial assets unclaimed by a holder shall be sold by the Liquidator, for which prior approval from the Securities Market Superintendency must be obtained.

The sale shall be carried out attending to the following parameters:

1. The Liquidator shall take as the sale price the one indicated on a technological financial information platform that reflects the prices of a stock exchange or organized securities market, whether local or international, that has liquidity.
2. In the event that they are not traded on a securities market or stock exchange, or are traded on a securities market or stock exchange that lacks liquidity, the Liquidator shall take as the sale price the one determined using a reasonable valuation methodology, which may be provided by a price-providing entity or another specialist in the matter, or based on internally performed calculations, provided that the reasonable valuation methodology is used.
3. In the event that the sale is not carried out within thirty (30) calendar days in accordance with the above parameters, the methodology applied in determining the fair value shall be reviewed in order to determine a new sale price. This procedure shall be carried out as many times as necessary until the sale of the instrument or instruments is completed.

PARAGRAPH 1. (Sale of Unclaimed Financial Assets). The sale of these assets shall be carried out once ninety (90) calendar days have elapsed from the date the resolution with the list of assets and financial assets excluded from the liquidation mass becomes final, which establishes article 309 of the Single Text of the Securities Market Law, from which date they will formally be considered unclaimed financial assets, for the purposes of administrative forced liquidation.

From the date established in the preceding paragraph, the Liquidator must request prior approval from the Securities Market Superintendency for the sale of these unclaimed financial assets, complying with the rules established in the following paragraph.

PARAGRAPH 2. (Prior Approval). When requesting prior approval from the Securities Market Superintendency, the Liquidator must submit a report with respective supporting documents, verifying the actions taken by the entity in forced liquidation that corroborate that the account holders could indeed not be located to: i) receive the corresponding orders and/or ii) deliver the financial assets. Likewise, the Liquidator must present to the Superintendency the records demonstrating that these unclaimed financial assets are excluded or are not subject to challenges before the Third Chamber of the Supreme Court of Justice, if applicable.

Under no circumstances may the Liquidator sell financial assets that are directly or indirectly subject to any challenge before the Third Chamber of the Supreme Court of Justice, until its pronouncement has been obtained.

The verification and prior approval procedure established in this paragraph shall be carried out in accordance with what is provided in the Superintendency's internal procedure for forced liquidations.

PARAGRAPH 3. (Report on the sale of unclaimed assets). Likewise, once the sale of the unclaimed assets, securities, financial instruments, and other financial assets is completed, the Liquidator must deliver to the Securities Market Superintendency a report that explains in detail, with respective support, the entire process of selling the aforementioned assets.

ARTICLE THREE: ADD article 26-A to Agreement No. 1-2016 of January 13, 2016, which shall read as follows:

Article 26-A. (Transfers to the National Bank of Panama) The Liquidator of a registered institution undergoing the forced liquidation procedure, if upon concluding the aforementioned procedure there are credits or liquid sums that have not been claimed by the holder, must proceed with the transfer of these to the National Bank of Panama, complying with the following formalities:

1. It must send a formal note to the National Bank of Panama through which the registered institution formalizes the delivery of the credits or liquid sums that have not been claimed by their holders.
2. Bank check payable to the National Bank of Panama.
3. Detail of the monies or liquid sums to be transferred, with the names and other contact and identity data of the account holders (ultimate beneficiary), as they appear in the registered institution's files.
4. Simple copy of the report presented to the Superintendency, which establishes the detail of the unclaimed monies or liquid sums, with the detail of the names and other identity data of the holders, contact data, as they appear in the registered institution's files.
5. Simple copy of the communication issued by the Securities Market Superintendency stating its agreement with the stage of transferring the liquid sums to the National Bank of Panama. Such communication shall not be understood as an endorsement of the content of the report on unclaimed liquid sums presented by the Liquidator.
6. The Liquidator must communicate to the National Bank of Panama about any particular situation maintained by the holders of the delivered liquid sums, relating to anti-money laundering prevention, orders, measures, and/or judicial processes, among others.

The amount of the bank check issued in favor of the National Bank of Panama must match the total figure of the detail of the liquid funds to be transferred to the Bank, as well as the figures in the report presented before the Securities Market Superintendency.

The National Bank of Panama constitutes itself as a mere custodian of the unclaimed liquid assets. The National Bank of Panama will proceed with the transfer of the funds thus deposited to the State of the Republic of Panama if they have not been claimed after five (5) years, under the same formality described herein, informing the Securities Market Superintendency of the detail of the credits or liquid sums unclaimed by their holders or owners.

The State will be obligated to restore to their owner all funds covered by this article, provided they are claimed within ten (10) years following the date they were transferred to it, but the restoration will be made without interest.

ARTICLE FOUR: MODIFY article 27 of Agreement No. 1-2016 of January 13, 2016, which shall read as follows:

Article 27. (Custody, Storage, and Conservation of Documentation). The Liquidator must send all physical files and other original documentation of the registered institution subject to forced liquidation, including all documentation related to the administrative forced liquidation process, to an entity or storage company that guarantees the security, confidentiality, and proper conservation of the custodied documentation.

The physical custody of the registered institution's documentation must be maintained for a period of five (5) years counted from its delivery by the Liquidator, and the cost of conservation and custody of the documentation must be assumed and paid in full by the institution in liquidation.

The Liquidator must include in the contract or in some other document signed with the storage company, instructions establishing that the Securities Market Superintendency constitutes itself as the custodian of the delivered documentation and in this sense will maintain unique and exclusive access to all documentation of the registered institution (liquidated), which must be immediate and unlimited, during the entire period that its physical custody is maintained, when the Superintendency so requires for consultation, reproduction, or obtaining of the documentation.

The Securities Market Superintendency may maintain the physical custody of the liquidated registered institution's documentation beyond the period established in the second paragraph of this article, provided that for exceptional reasons it is required to conserve the documentation for an additional period of time, in which case the Superintendency must cover the cost of conservation and custody.

Likewise, the Liquidator must manage the contracting of a company for the destruction and final disposal of stored documents, once the established period for its physical custody concludes, guaranteeing during its management the confidentiality of the information held there. Likewise, this service must be assumed and paid in full by the institution in liquidation.

The Liquidator must deliver to the Securities Market Superintendency a report with the detail of the documentation that will be delivered in custody to the storage company or entity, with proper identification through an index of the content of the documentation maintained in each box or storage medium used. Likewise, the Liquidator must deliver to the Securities Market Superintendency a copy of all files of the registered institution in digital format.

Once the Superintendency