In Framorco, S.A. we can help you to consolidate your real state investment into a turn key operation from beginning to end, or in any of the development stages where you might need assistance. Our extensive experience and knowledge in the field, allows us easy access to the required financial institutions, insurance and professional personnel necessary to successfully complete any previously mentioned type of investment.
As an investment option, Framorco, S.A. offers its clients Investment Groups. These Groups can be specialized in each field of investment individually, or in the Investment Group, depending of what the client requires.
The Investment Groups are a smart way to invest for our clients who want to minimize the risk of real state investment. Those interested please contact Francisco J. Morales G. via e-mail at framorco@hotmail.com or by calling (507) 6612-4132 in order to send an application.
Legal Aspects of Investment Funds in Panama
I. Concept
Investment Funds are regulated by Decree Law 1 of 1999, which refers to such type of investment structure as “Sociedades de Inversion” (Investment Corporations).
It is defined as a legal entity, trust or contractual arrangement that, through the issuance and sale of its own participation quotas, its dedicated to the business of getting money from the investing public, by single or periodic payments, with the purpose of investing and negotiating, directly or through investment administrators, in values, currencies, metals and commodities, immovable property or any other assets determined by the National Securities Commission.
II. Obligation to Register
The following investment funds have the obligation to be registered before the national Securities Commission:
- Those that offer their participation quotas to the public in the Republic of Panama.
- Those that are managed within the Republic of Panama, unless they are considered private investment funds.
III. Private Investment Funds
We wish to focus on private investment funds since they are more flexible and are not required to undergo the generally complicated and costly process of getting registered before the National Securities Commission. Being, perhaps more interesting for both managers and investors due to the limitation in the number of investors and minimum investment requirement.
Private Investment Funds are not required to be registered before the national Securities Commission and, therefore, not subject to the same regulatory framework as registered investment funds.
Private Investment Funds are those managed in or from the Republic of Panama, but which participation quotas are not offered in Panama, and that has within its constitutive documents some of the following characteristics:
- A disposition limiting the number of owners of quotas or investors to a maximum of fifty (50) and obligates that any offer be made only through private communications.
- A disposition establishing that quotas can only be offered to qualified investors and with minimum investment amounts of US$100,000.
Institutional investors or persons with a net worth of over one million dollars are considered Qualified investors.
IV. Appointment of Representative
Private investment funds must appoint a representative in Panama, which may be:
- a brokerage firm;
- an investment advisor;
- a duly licensed Bank;
- an accounting firm; or,
- a law firm.
Said representative must have a power of attorney with enough faculties to represent the private investment fund before the National Securities Commission, other administrative authorities and judicial authorities.
V. Required documents
The private investment fund must have and file with its representative the following documents:
- Constitutive documents. (Articles of incorporation, trust deed, investment agreement)
- Copy of informative prospectus used to offer quotas in the investment fund.
- Audited financial statements for the last fiscal year.
- Certificate of good standing.
- Documents of appointment of the local representative.
- Documents which evidence the investment fund complies with the requirements to be considered a private investment fund.
- Name and domicile of the private investment fund, its investment manager, its offeror, custodian, and directors and principal executives of said companies.
Said documents may be inspected at any time by the national Securities Commission.
VI. Notice to the National Securities Commission
Before initiating operations in Panama, the private investment funds must notify the National Securities Commission, though a law firm or lawyer, that all the requirements to be considered a private fund have been fulfilled.
Also, the prospectus and other similar documents must include notice indicating that the investment fund is not registered with the National Securities Commission.
VII. Self managed investment funds
It is allowed that investment funds assume their own administration without the need for an investment manager. However, this possibility is subject to a number of requirements to guarantee the appropriate management and development of the collective investment.
- A board of directors with at least 3 members, all of which should be people of professional or business honorability.
- At least one third of the members of the board of directors should have knowledge and experience related to stock exchange markets or financial sector in general.
- Have a good administrative and accounting organization with enough technical and human resources.
- Internal conduct regulations in accordance to Acuerdo No. 5-2003 of the National Securities Commission, in which it is expressly stated a regime of personal operations for officers, directors, executives, employees and attorneys-in-fact, including control mechanisms.
- Appoint a compliance officer who will be responsible to oversee that the investment fund, its officers, directors and other employees comply with the law and regulations.
VIII. Investment funds instrumented through trusts
Buying residential or commercial property for personal use. This investment capitalizes throughout the mortgaged years. 