Oliver Muñoz Esquivel | Partner

The Official Gazette No. 28,848 of the 28^th of August, 2019 enacted the new simplified procedure adopted by the Superintendence of the Securities Market (SMV) for the registration of securities issued by entities that acquire the status of “recurrent registered issuer” under its Regulation 1-2019 of the 7^th of August, 2019.

1- Requirements for obtaining the status of “recurrent registered issuer”.

A legal entity shall become a “recurrent registered issuer” upon complying with the following requirements:

a. To have kept outstanding securities registered with the SMV during the previous five (5) fiscal periods when the application for registration as a recurrent registered issuer is submitted; the application for registration as a recurrent registered issuer may also be submitted during twelve (12) months after all of its outstanding securities have been redeemed, provided always that it has kept sending the information in respect of the IN-A and the IN-T. 

b. To have fulfilled five (5) years of fiscal periods, i.e., to have issued audited financial statements covering five (5) fiscal periods completely.  In the event that financial statements are submitted without an opinion or with an adverse opinion, the status of “recurrent registered issuer” shall not be taken into consideration.

c. To have kept complying with filing financial information and reports to be delivered to the investors, to the SMV and to self-regulated organizations, and has not been penalized for any failure to comply therewith.  The issuer shall lose its status as “recurrent registered issuer” for any repetitive sanctions due to late delivery of financial information, in which case the applicable repetitive sanction shall be for two (2) trimesters within a one (1) year period.

d. To have not failed to comply any payment of capital and/or interests on any securities issuance registered with the SMV or with any other regulator in the securities market.

e. To have settled all dues and fees established by the Panama Securities Law, including surcharges for default, fines and/or sanctions imposed.

f. Not to have been sanctioned for any serious infringement of the Panama Securities Law.

2- Consequences of any failure to comply with the requirements.

In the event of any failure to comply with any of the above-mentioned requirements, the issuer shall forfeit its “recurrent financial issuer” status, with no requirement of any prior pronouncement by the SMV, and shall have to fulfill the procedure for the registration of securities stipulated under Regulation 2-2010 of April, 2010 for future application for the registration of securities.

3- List of issuers in the register of “recurrent registered issuer”.  

The SMV shall publish a list of issuers with this status in its official website, which will be updated according to the quarterly reports received.  Said publication shall be made within a term of fifteen (15) calendar days to be counted as from the date of the enactment of Regulation 1-2019 in the Official Gazette, i.e., by the 12^th of September, 2019.

The status of “recurrent registered issuer” is not to be considered a recommendation of the issuer’s registered securities and does not represent a favorable or unfavorable opinion about the expectations of the issuer’s business, and it should not be considered either as an assurance of repayment of the securities issuance.

4- Documentation to be submitted by the “recurrent registered issuer”.

Applications for the registration of securities of the “recurrent registered issuer” to be the subject matter of a public offer must be accompanied by a minimum of information and an “abbreviated prospectus” containing information more concisely than the information leaflets usually submitted for the registration of securities in the SMV.

For instance, it is stipulated that the “abbreviated prospectus” is only required to include the risk factors of the securities issuance and the issuer, and there is no obligation to include any other risk factor or updated risk factors in the industry, which may have been previously revealed in prospectuses or relevant facts or previous updated (IN-A) or IN-T) reports. 

5- Expediting the process of reviewing applications submitted by a“recurrent registered issuer”.

The new regulation established by the SMV provides that upon submission of the application for the registration of securities, if there are no remarks to be made to the documentation submitted, within a term of five (5) business days, the date of the offer of the issue is to be requested.  If any observations have been made, the SMV shall attach priority to the applications submitted by a “recurrent registered issuer”.

Conclusion

The new Regulation 1-2019 is an important regulatory initiative of the SMV to meet requirements of recurrent registered issuers in the Panamanian securities market because it establishes a brief process which will simplify and streamline the procedures for the registration of securities for public offerings in the SMV.