PANAMA Law and Practice Contributed by: Kharla Aizpurúa Olmos, Mónica Moreno and Eduardo Oteiza, Morgan & Morgan
Lastly, the Ministry of Commerce acts as the regula- tor of local financial companies that grant personal loans and financial leasing activities, which may not otherwise be supervised by the banking or securities regulators. It is worth mentioning that there can be different tax implications for non-banks granting local credits. 3. Structuring and Documentation 3.1 Restrictions on Foreign Lenders Providing Loans There are no restrictions on foreign lenders providing loans. 3.2 Restrictions on Foreign Lenders Receiving Security Foreign lenders face no restrictions in receiving secu- rities or guarantees. However, in the case of trust agreements, they will require a trustee that holds a trust licence issued by the Superintendency of Banks of Panama, in accordance with Law 21 of 2017. 3.3 Restrictions and Controls on Foreign Currency Exchange There are no restrictions or controls regarding foreign currency exchange. 3.4 Restrictions on the Borrower’s Use of Proceeds There are no restrictions on a borrower’s use of pro- ceeds from loans or debt securities other than those imposed by the terms and conditions agreed among the parties in each financing, which would include, in general terms, restrictions such as payment of divi- dends. 3.5 Agent and Trust Concepts Agent and trust concepts are recognised in Panama. Agency structures, primarily regulated contractually, are commonly used through administrative agent or paying agent roles. Trusts, on the other hand, are regulated locally by the Superintendency of Banks, in accordance with the fiduciary regime established by Law 21 of 2017. Trustees have to hold a licence issued
by the Superintendency of Banks in order to act as such in any type of administrative or guarantee trust. 3.6 Loan Transfer Mechanisms Loan transfer mechanisms, including the transfer of associated security packages, exist in Panama. These mechanisms are generally embedded in the financ- ing agreement and security package documentation, allowing lenders to freely transfer their position sub- ject to an agreed-upon process and the execution of assignment agreements. While this has been the general practice, borrowers with leverage are increas- ingly negotiating assignment clauses to require their consent or provide them with the option to veto or There are no restrictions on debt buyback, with the understanding that any debt repurchased by the bor- rower is cancelled. 3.8 Public Acquisition Finance Currently, there are no specific regulations govern- ing public acquisition finance transactions, and such transactions are typically structured on a case-by- case basis under general contractual and public pro- curement frameworks. 3.9 Recent Legal and Commercial Developments Recent legal and commercial developments necessi- tating changes to our legal documents primarily relate to AML covenants, representation and guarantees, ESG provisions, and data protection requirements. Additionally, despite the insolvency law being enacted in 2016, insolvency provisions have gained renewed focus due to recent case law. These particular clauses are typically subject to detailed scrutiny by the par- ties involved. Consumer protection and transparency rules for financial products have also been recently strengthened by the Superintendency of Banks, requiring more detailed pre-contractual disclosures and stricter rules for product changes. 3.10 Usury Laws As of now, there are no usury laws applicable to com- mercial contracts. However, since the COVID-19 pan- demic, there have been attempts to introduce legis- choose the assignee. 3.7 Debt Buyback
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