PANAMA Law and Practice Contributed by: Kharla Aizpurúa Olmos, Mónica Moreno and Eduardo Oteiza, Morgan & Morgan
It is customary to request a certification from an authorised representative of the company whose shares or quotas are transferred, which certifies that the transfer was annotated in the corresponding share/quota registry. The private trust agreement is subject to stamp tax at a rate of USD0.10 for each USD100 of the value of the document. Trusts established under public deeds that involve real estate assets as part of the trust assets pay a registration fee equal to USD3.00 for each USD1,000.00 of the secured obligations, plus a stamp tax of USD8.00 per page. Pledges The pledge agreement is regulated by Article 814 and subsequent articles of the Panamanian Commercial Code, which establish that (i) the pledge agreement must be established under the same formalities as the agreement it serves to guarantee; (ii) there must be “delivery” of the pledged asset to the creditor or to a depository chosen by the creditor and the debtor (i.e., for purposes of a pledge over shares or quotas, the share/quota certificate must be actually delivered to the creditor or depositary, to be held in custody); and (iii) the agreement must be in writing. Foreclosure of pledges can be (i) judicial or (ii) extra- judicial. In the latter case, the procedure to follow will be established in the pledge agreement, while in the former, it will be necessary to resort to the courts, which may take longer than the extrajudicial process. A judicial pledge enforcement process before the courts can last between one and three years or even longer depending on the acts of the foreclosed party. The extrajudicial process must comply with Articles 820 to 822 of the Panamanian Commercial Code, which establish, among other things, that the meth- od to be used to determine the value of the pledged assets must be agreed upon to ensure their fair mar- ket value. In the absence of an agreement, the rules of the Panamanian Commercial Code would apply, which require the pledged asset to be appraised by two experts appointed one by each party or by a third party appointed by them in case of disagreement, or by the judicial authority in the absence of experts.
The pledge agreement is valid between the executing parties from its date of execution, but it is advisable and customary to authenticate the signatures before a public notary. Additionally, for purposes of a pledge over shares/quotas: • A blank endorsement of the share/quota cer- tificates in the name of the trustee is commonly delivered, although it is not a requirement for the validity of the pledge. The blank endorsement is a risk mitigation tool that would assist the judicial or extrajudicial foreclosure process. • An annotation in the share/quote registry book is made, to reflect the pledge. • Similar to the transfer of shares/quotas in favour of the trustee, it is customary to request a certification from an authorised representative of the company whose shares/quotas are pledged, certifying that the pledge was annotated in the corresponding registry book. In the case of sociedad de responsabilidad limitada , the pledge of quotas is viable if the articles of incor- poration do not provide otherwise. The pledge can be established through either a private document or a public deed, with the option to register it in the Public Registry at the discretion of the company’s partners. From the lenders’ perspective, the usual practice is to request that it be recorded in a public deed and registered in the Public Registry. This ensures that the partners are aware of the pledge and will recognise the adjudicated party in the event of a foreclosure. The pledge agreement is subject to stamp tax at a rate of USD0.10 for each USD100 of the value of the document. Assignment Agreement Under the assignment agreement, specific rights (usu- ally, accounts payable or rights to be paid under cer- tain contracts) can be unconditionally assigned, and specific agreements (lease agreements, power pur- chase agreements and other agreements that provide cash flow to the borrower) are conditionally assigned either to the lender(s), administrative agent or the trustee (in the latter case, depending on whether the security package includes a trust).
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