General Resolution SMV No. JD-4-20: Special Temporary Measures for Notarial Requirements and Report Deadlines Amid COVID-19 Emergency

Promulgated in Official Gazette No. 29011 on April 27, 2020.

REPUBLIC OF PANAMA BOARD OF DIRECTORS SECURITIES MARKET SUPERINTENDENCE

General Resolution SMV No. JD-4-20 Of April 23, 2020

"That establishes special and temporary considerations for regulated entities to comply with the notarial requirements established in the Agreements adopted by the Securities Market Superintendence, in the documentation accompanying or forming part of the periodic reporting of reports, and extends the deadline for the delivery of certain reports, as part of the temporary measures adopted in response to the National Emergency State declared by the Cabinet Council as a consequence of COVID-19"

The Board of Directors of the Securities Market Superintendence,

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 Securities Market Superintendence 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 (numerals 1, 5, and 20), 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 Superintendence, and among its attributes are: to adopt, reform, and revoke agreements that develop the provisions of the Securities Market Law, as well as to issue resolutions of general application, which must be published in the Official Gazette and will enter into force from their promulgation, unless the Board of Directors establishes another date.

That the Superintendence, 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 for the supervision of securities market activities, the Single Text establishes the duty to report information to the Superintendence by its regulated entities, whether licensed or registered; additionally, it attributes to the Superintendence the determination of the form and periodicity in which such reports will be made, for which various Agreements have been adopted.

That, in this sense and through various Agreements adopted by this Board of Directors, the Superintendence implemented the Electronic System for the Submission of Information (SERI) as a means to comply with the periodic reporting of a series of reports by regulated entities.

That it is public knowledge the National Emergency State declared by the Cabinet Council, as well as the sanitary and security measures that have been adopted to prevent and control the spread of the COVID-19 disease.

That in Executive Decree No. 507 of March 24, 2020, the curfew was exempted for the personnel of the Securities Market Superintendence and financial institutions, so that they continue to provide their services, but in any case, strictly complying with the instructions issued in that sense by the health authority, in particular: maintaining physical distance and the number of people allowed in each physical space.

That this Superintendence has been adopting measures to mitigate the risk of possible contagion, which preserve at all times the health and safety of its officials and users, but which also allow guaranteeing the continuity of its administrative functions in this National Emergency State and, therefore, the provision of services in the securities market.

That Law 51 of July 22, 2008 establishes the regulatory framework for the creation, use, and storage of electronic documents and electronic signatures.

1 Modified by Law 82 of November 9, 2012.

That Law 51, in its article 2 (numerals 3, 17, 20, 21, 43, and 44), gives us important definitions regarding: qualified electronic certificate, electronic document, electronic signature, qualified electronic signature, digitized or scanned electronic signature, and data message, as follows:

"Article 2. Definitions. For the purposes of this Law, the following terms are defined as follows: ... 3. Qualified electronic certificate. Electronic certificate issued by the Public Registry of Panama or by a service provider registered with the Public Registry, which meets the requirements established in this Law regarding the verification of the identity of signatories and the reliability and guarantees of the certification services offered by the certification service provider that generates it. … 17. Electronic document. Any electronic representation that testifies to a fact, image, sound, or idea, regardless of the medium used for its fixation. ... 20. Electronic signature. Technical method to identify a person and to indicate that that person approves the information contained in a data message or electronic document. 21. Qualified electronic signature. Electronic signature whose validity is backed by a qualified electronic certificate that: a. Allows identifying the signatory and detecting any subsequent changes to the signed data. b. Is uniquely linked to the signatory and to the data to which it refers. c. Has been created using secure electronic signature creation devices, which the signatory maintains under their exclusive control. d. Has been created through the infrastructure of a service provider registered with the National Directorate of Electronic Signature. ... 43. Digitized or scanned signature. Image of the trace of the handwritten signature, that is, the result of its scanning. This type of signature is in no case a qualified electronic signature. 44. Data message. Any information generated, sent, or received by electronic means. ..." (We highlight the underlined text)

That Law 51, in its article 2 (numeral 42), defines functional equivalence in the sense that actions, procedures, or documents carried out through physical or traditional means can be developed through electronic means, with the same legal and evidentiary consequences.

That Law 51, in its article 4, determines that when the law requires that information be recorded in a written document, validity, legal effects, and binding force will be recognized for acts, powers, contracts, and any document that has been granted or received through data messages, in accordance with this Law and its regulations, provided that the information it contains is accessible for subsequent consultation.

That Law 51, in its article 5, also determines that when the law requires that information be presented and preserved in its original form, that requirement will be satisfied with a data message if, when the information is required to be presented, it can be shown to the person to whom it must be presented.

That Law 51, in its article 9, establishes, on the one hand, (i) that if a legal provision requires that a signature related to a document or transaction be recognized or made under oath, that requirement will be satisfied in an electronic document if the grantor uses the qualified electronic signature; on the other hand, (ii) that if a legal provision requires that a signature related to a document or transaction be notarized, endorsed, or made under oath before a notary or public official, that requirement will be satisfied in an electronic document if the qualified electronic signature of the grantor is added to the qualified electronic signature of the official authorized to give public faith.

That Law 51, in its article 13, determines that The State will use electronic signatures in its internal scope and in its relationship with individuals, in accordance with what is established in said Law and with the conditions of use that are set regulationally in each of its powers.

That taking into account the current and unprecedented situation facing the country, and the duty and responsibility to stay home to avoid contagion and the spread of COVID-19, this Superintendence has decided to establish special and temporary considerations for the compliance with those reporting requirements adopted in the Agreements, referring to authenticating signatures in a report or granting sworn declarations before a notary as part of said reports, for which the use of electronic documents and electronic signatures will be contemplated, in accordance with the conditions established in this general resolution and in adherence to the precepts contained in Law 51 of July 22, 2008.

That these considerations also take into account the concern expressed by regulated entities to comply timely and in the manner with the duty to report information to this Superintendence, which is why we will also consider relaxing the deadlines for the delivery of certain reports, in line with what was previously established through General Resolution SMV No. JD-2-20 of March 16, 2020.

That it is important to keep in mind what is established in article 251 of the Single Text, regarding the prohibition of making, or causing to be made, false or misleading statements in a report or in any other document presented to the Superintendence; without prejudice to the fact that this constitutes a very serious offense in light of article 269 (numeral 1, letter e) of the Single Text.

In merit of the above, the Board of Directors of the Securities Market Superintendence, in the exercise of its legal powers,

RESOLVES:

ARTICLE FIRST: ESTABLISH, in a special and temporary manner, that regulated entities, with a license issued by the Superintendence or registered with it, can comply with the requirement to authenticate signatures or grant sworn declarations before a Public Notary, which are currently required by the Agreements in force as part of the reports they must report periodically, through the sending of the respective electronic document, in PDF format and with the qualified electronic signature of the grantor.

Those regulated entities that do not have a qualified electronic signature, in the terms established by Law 51 of July 22, 2008, must send such documents with the handwritten signatures of the grantors, scanned and in PDF format, but will be subject to subsequently present, when required by the Superintendence, the documents with authenticated signatures and sworn declarations granted before a Public Notary.

Regardless of the form in which they send these documents, the information or declaration registered therein will be considered made under oath by those who intervene on behalf of the regulated entity, and therefore they will be subject to comply with what is established in article 251 of the Single Text of the Securities Market Law, regarding the prohibition of making, or causing to be made, false or misleading statements to the Superintendence.

ARTICLE SECOND: ESTABLISH that for the sending of the documents mentioned in the previous article, as well as any other periodic report that must be presented to the Superintendence, the following means must be used:

1. Sent electronically to the Electronic System for the Submission of Information (SERI), those documents or reports that the current Agreements or Circulars determine this means of presentation.
2. Sent electronically to the email address: tramites_smv@supervalores.gob.pa, those documents or reports that the current Agreements or Circulars determine their physical presentation in the offices of the Superintendence.

ARTICLE THIRD: EXTEND the deadline for the delivery of the following reports from registered issuers and registered investment companies to the Superintendence, as follows:

1. Until June 1, 2020, for the delivery of audited annual financial statements and the annual update report (IN-A) of those investment companies and registered issuers, respectively, whose original delivery date had been extended until April 30, 2020, in accordance with General Resolution SMV No. JD-2-20 of March 16, 2020. This extension also applies to the sworn declaration that forms part of the IN-A or accompanies the audited annual financial statements, which must be delivered in the form and by the means established in articles first and second of this resolution; in addition, it must bear the joint signature of at least two (2) of the persons provided for in article 3 of Agreement No. 8-2000 of May 22, 2000, understood as: one (1) representative of the Board of Directors, either the president or the treasurer, and one (1) representative of the administration, either: the general manager, the financial director, or the comptroller, to fulfill this duty.

2. Until June 1, 2020, for the delivery of interim financial statements and the quarterly update report (IN-T) of those registered issuers whose original delivery date expires on April 30, 2020.

3. Until June 30, 2020, for the delivery of interim financial statements and the quarterly update report (IN-T) of those registered issuers whose original delivery date expires on May 31, 2020.

ARTICLE FOURTH: EXTEND the deadline for the delivery of the following reports from entities with a license issued by the Superintendence or registered with it, as follows:

1. Until May 8, 2020, for the delivery of the sworn declaration accompanying the audited annual financial statements of those entities whose original delivery date had been extended until April 30, 2020, in accordance with General Resolution SMV No. JD-2-20 of March 16, 2020. This sworn declaration must be delivered in the form and by the means established in articles first and second of this resolution; in addition, it must bear the joint signature of at least two (2) of the persons provided for in article 3 of Agreement No. 8-2000 of May 22, 2000, understood as: one (1) representative of the Board of Directors, either the president or the treasurer, and one (1) representative of the administration, either: the general manager, the financial director, or the comptroller, to fulfill this duty.

2. Until June 30, 2020, for the delivery of interim financial statements of those entities whose reporting periodicity is quarterly or semi-annual and whose original delivery date expires on May 31, 2020.

3. Until June 1, 2020, for the delivery of monthly reports of those entities whose original delivery date expires within the month of May 2020.

4. Until July 1, 2020, for the delivery of monthly reports of those entities whose original delivery date expires within the month of June 2020.

ARTICLE FIFTH: CLARIFY that what is established in articles third and fourth of this resolution does not exempt regulated entities from the duty to immediately inform the Securities Market Superintendence of any important fact or relevant circumstance that affects or may affect the development or continuity of their operations or the interests or rights of investors or the requirements established by the Securities Market Law for the development of their activities, respectively.

ARTICLE SIXTH: CLARIFY that what is established in articles first, second, third, and fifth of this resolution also applies to registered issuers, understood as: any issuer that has registered securities and registered investment company in the Securities Market Superintendence.

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

LEGAL BASIS: articles 3, 5, 6, 10 (numerals 18 and 20), 19, 20, 251, 269 (numeral 1, letter e) and concordant of the Single Text of the Securities Market Law. Articles 2 (numerals 3, 17, 20, 21, 42, 43, and 44), 4, 5, 9, 13 and concordant of Law 51 of July 22, 2008.

LET IT BE COMMUNICATED, PUBLISHED, AND COMPLIED WITH,

(signed) (signed) Eduardo Lee Luis Chalhoub President of the Board of Directors Secretary of the Board of Directors. /aatencio.