PANAMA Law and Practice Contributed by: Kharla Aizpurúa Olmos, Mónica Moreno and Eduardo Oteiza, Morgan & Morgan
USD20,000, the contract may be made in a private document. In order to have effects against third par- ties, depending on the type of movable property, the chattel mortgage must be registered in the relevant registry or the Public Registry. One of the main advantages of Law 129 is that it allows foreclosure to be either judicial or extrajudicial. However, in the case of extrajudicial foreclosure, the procedure established in Law 129 to initiate the extra- judicial foreclosure process requires that a foreclosure form be presented to the Public Registry, the purpose of which is to notify third parties of the commence- ment of the foreclosure. However, to date, the Public Registry has not issued the form to be presented in these cases, which could cause delays in the fore- closure. Chattel mortgages registered in the Public Registry pay a registration fee equal to USD10.00 per property, plus USD3.00 for each USD1,000.00 of the secured amount of the mortgage. Chattel mortgages also pay a stamp tax of USD8.00 per page, if they are in a pub- lic deed, regardless of whether registered or not. In the case of private chattel mortgaged, the applicable stamp tax would be payable at a rate of USD0.10 for each USD100 of the value of the document. 5.2 Floating Charges and/or Similar Security Interests Although Panamanian law does not permit universal charges over local assets (except for a pledge over all assets located outside of Panama regulated by the Commercial Code, which has its complexities for enforcement), pledges could be a mechanism, but it is Law 129 that provides for the creation of chat- tel mortgages over inventory (although they are not common). Law 129 defines “inventory” as “goods or chattels available for sale within the ordinary course of the guarantor’s business that may be mortgaged, pro- vided that the contract establishes the mechanisms for substituting the good or goods that are part of the inventory and are alienated by new chattels that enter said inventory”. Furthermore, Law 129 establishes that in the case of a chattel mortgage over inventories or any other changing assets, the initial inventory will be generally
determined, and the mortgage shall indicate the way the inventory or changing assets may be conveyed and substituted. The chattel mortgage over inventory or changing assets, its establishment, registration, replacement of mortgaged goods, and enforcement will be regulated by what the parties establish in the respective contract and, in the absence of an agree- ment, by the provisions of Law 129. 5.3 Downstream, Upstream and Cross- Stream Guarantees It is possible for entities in Panama to give down- stream, upstream and cross-stream guarantees, and there are no general limitations or restrictions for doing so to the extent that the necessary corporate authori- sations are obtained and no limitation or restrictions A target being acquired is not restricted from grant- ing guarantees or security or financial assistance for the acquisition of its own shares, provided that such provisions do not contravene its by-laws or articles of incorporation. 5.5 Other Restrictions exist in the corporate documents. 5.4 Restrictions on the Target There are no other restrictions or significant costs associated with, or consents required to approve, the grant of security or guarantees, other than the neces- sary corporate authorisations. 5.6 Release of Typical Forms of Security The process of releasing security interests varies depending on the specific type of document used to establish the security in the first place. Usually, par- ties to a trust, a pledge and an assignment agree- ment execute a termination agreement, agreeing to terminate the respective documents. Trust termina- tion agreements usually include a clause releasing the trustee from any claims related to its handling of the trust property. If the trust is registered in the Public Registry, the termination is also registered. In a pledge termination, the pledged shares are returned to the shareholder that pledged them, and the correspond- ing annotations are made in the share/quota registry book. In assignment agreement terminations, third- party payors are notified of the termination, so that payments to the assignee cease.
475 CHAMBERS.COM
Powered by FlippingBook