PANAMA Law and Practice Contributed by: Nadya Price and Joaquín De Obarrio, Patton Moreno & Asvat
1.7 Ship Ownership and Mortgages Registry The records related to ship ownerships and mortgages kept at the Ships Registry are available on the public website of the PMA, and any third party may access these in order to obtain information about ownership titles and encumbrances registered over Panamanian vessels.
A vessel registered under this special type of regis - tration will be considered a Panamanian-registered vessel and will only be allowed to fly the Panamanian flag. Likewise, it will be subject to all regular applicable taxes, fees and duties in accordance with Panamanian law. Payment in respect of these applicable during the whole period of registration must be made in advance upon enrolment. 1.6 Registration of Mortgages Ship mortgages are required to be registered at the Ships Registry in order to provide legal and binding effects against third parties. A Panamanian mortgage may be executed in any language and must be notarised by way of acknowl - edgement of the legal capacity of the signatories and the authenticity of the signatures thereof. The notary’s signature must then be legalised by a Panamanian consul or via apostille. Registration may be effected preliminarily via the fil - ing of an application form containing the description of the essential terms of a mortgage. This preliminary registration is completed during the course of one business day and has full legal effect for a period of six months, within which period the interested party must file for permanent registration. Upon completion of permanent registration, the effects are retroactive up to the time and date of the preliminary registration. Permanent registration may be effected via two alter - native procedures: • by way of a full translation of the mortgage into the Spanish language and protocolisation before a Panamanian notary public into a public deed, which is filed for registration with the Ships Regis - try; or • if the mortgage is executed in English, it can be registered in its original English version, provided a short mortgage extract is executed in respect of the mortgage and that extract is translated into Spanish for permanent registration, together with the original mortgage and any relevant attachments in English.
2. Ship Finance and Leasing 2.1 Ship Loan Finance
Ship finance transactions involving Panama are typi - cally structured as cross-border secured loan financ - ings, with the underlying loan documentation usu - ally governed by English or New York law, while ship mortgages and local security interests are governed by Panamanian law, primarily under Law 57 of 2008 (Merchant Marine) and Law 55 of 2008 (Maritime Commerce). Debt financing most commonly takes the form of bilateral or syndicated term loan facilities for vessel acquisition, construction or refinancing, as well as fleet facilities, revolving credit lines and sale-and- leaseback-backed financings. Key operative provi - sions are in line with international market standards and include drawdown mechanics, interest and fees, amortisation and prepayment structures, financial and operational covenants, insurance and classification requirements, sanctions and compliance undertak - ings and customary events of default. Equity financing is generally provided at the level of a Panamanian ship-owning SPV through paid-in capital, shareholder loans or subordinated instruments. Pan - ama does not impose specific equity or capitalisation requirements for ship-owners beyond general cor - porate law, so capital structure is typically driven by lender expectations and commercial considerations. The Panamanian ship mortgage is the central security instrument in transactions involving Panama-flagged vessels. It may secure present and future obligations, including revolving and multi-currency facilities, pro - vided that a maximum secured amount is specified in the mortgage agreement. Mortgages may be execut -
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