Panama, September 19, 2018. Jose Carrizo, partner and head of the Litigation and Dispute Resolution practice group of the firm, contributed with the Panama chapter of The Arbitration Review of the Americas 2019, a publication that summarizes relevant issues that help general counsel, arbitrators and private practitioners to avoid the pitfalls and seize the opportunities of international arbitration.

Mr. Carrizo provided a comprehensive analysis of the arbitration system in Panama, its legislation and every aspect that confirms the country as an international and regional center for the resolution of arbitral disputes.

Jose Carrizo is an experienced attorney with ample knowledge in both domestic and international arbitration processes. He has served as arbitrator in the National Arbitration and Mediation (NAM), based in New York.  Mr. Carrizo is also a member of the Panama Chapter of the International Arbitration Court of the International Chamber of Commerce.

The guide is available here.

Morgan & Morgan advised the Hitachi, Ltd., Mitsubishi Corporation, and Ansaldo STS, S.p.A., in connection with an Agreement signed with Metro de Panamá, S.A., a corporation 100% owned by the Republic of Panama, regarding the participation of this  group of companies that, led by Hitachi, Ltd., shall perform the works of the Nominated Subcontractor under the turn-key contract for the Monorail type Line 3 of the Metro of Panama Project (the Line 3 Project), which will be signed with a Main Contractor selected through a public bidding process under the laws of the Republic of Panama.

The Nominated Subcontractor will be responsible for the design, supply, and putting into operation of the Integrated Operating Systems (SIO) of the Line 3 Project, including Monorail type of Rolling Stock, signaling system, train control based on CBTC technology and communication system, control center, traction power system and low-voltage transformation system, track switches and automatic platform doors, among other responsibilities.

This transaction’s complexity was mainly that the contractual terms and conditions of the Nominated Subcontractor’s contract had to be agreed with Metro de Panama, S.A. as the Project’s Owner, but not as a party of the said contract between the Nominated subcontractor and the Main Contractor. Such terms and conditions, which had to

anticipate the contractual relationship with the resulting Main Contractor of the Line 3 Project bidding process, are to be reflected as part of said bidding process’ bid documents.

The Metro of Panama is the most important public infrastructure project under development in the Republic of Panama and the first of its class in Central America.

Partner Inocencio Galindo and senior associate Aristides Anguizola, participated in this transaction.

BVI: Commitment, solidarity and teamwork

BVI, September 11, 2018. One year ago to date, the city of Tortola in the British Virgin Islands (BVI) was hit by hurricane Irma. The winds of said hurricane flattened the infrastructure and public services of the city, including Morgan & Morgan’s offices in this Island. Sadly, some of coworkers and teammates lost their homes.

Despite that, our organization never stopped providing services to our internal and external clients. Creativity, willingness, the organization and commitment of our people in the BVI took a central role at such difficult times. Our group contributed with a donation of US$15,000, through the International Lawyer’s Association for restoration of electricity; we also contributed with direct donations to our coworkers to help reestablish normalcy in their lives. Our offices were rebuilt almost completely and while the works were ongoing, work was carried on from the house of some of our coworkers and other offices temporarily established. The leadership of Jorge Yu, Kaylinda Richardson and Fanny Evans was invaluable.

Today, our CEO, Dr. Juan David Morgan G., together with other partners and lawyers of Morgan & Morgan, visited them to tell all, “Thank you for the exemplary commitment, solidarity and teamwork!”

Alvaro Tomas, partner and Vice President of Operations of the Fiduciary Unit of Morgan & Morgan

Morgan & Morgan opened its first offices in The Bahamas since 1991. We created MMG (Bahamas) Ltd. as a corporate service and later on, in 1996, founded MMG Bank & Trust Ltd., which started our financial unit´s successful path into the financial service industry.

Our board of directors decide in the mid-90s that The Bahamas was going to be one of our prominent jurisdictions because this sovereign country has become a well-recognized and reputable international financial center, with a modern and robust legislation, governmental supervision oriented towards facilitating business ventures and has an enviable workforce of seasoned and educated professionals.

We have seen its democratically elected governments navigate successfully through the tough times the smaller international financial centers have had to deal with given the shame and blame attitude of certain multinational organizations and communities. The Bahamas has been wise and steadfast in their positions and negotiations fully aware of the negative impact on the financial services industry as a whole a wrong decision might have. We value that at Morgan & Morgan. Also, the fact that we can fly directly several times a week to Nassau, from our headquarters located in Panama City, is also a big reason we feel comfortable with his jurisdiction.

But, what and why do we offer services and products to our clients from The Bahamas?

For myriad of good reasons apart from the gorgeous weather and waters. The Bahamian governments has always been investor friendly and have created a series of incentives that make the island a good venue for a variety of industries such as tourism, financial services, corporate services, insurance, marinas, real estate, among others. The friendly tax environment includes no income tax, no capital gains tax, no estate tax, no withholding tax, no dividend tax and no payroll tax to those who work in the Bahamas. But for a Value Added Tax of 7.5% on some goods and services, tax benefits abound.

We have also seen the creativity and the also the want to fill the markets needs attitude of the regulators. What better example of this is the creation of the SMART Fund legislation. In these times of fiscal compliancy and an international effort to exchange of information, clients must be happy to mitigate their tax burden. Therefore, cost efficient vehicles, that protect assets, help with estate planning and reduce the effective tax rate will be well viewed by clients.

The Bahamas SMART Fund

We´ve recently activated our SMART (Specific Mandate Alternative Regulatory Test) fund license provider MMG Fund Services Ltd. For wealth and tax planning in Brazil, SMART Funds have become a very useful and efficient tool. This vehicle has been promoted with certain success in Brazil by the Bahamian authorities. Brazilian residents are taxed globally, that is on their income anywhere in the world. Most of the financial income obtained outside Brazil is taxed at a rate of 15% except for dividends, which may be taxed at up to 27.5%. For a Brazilian client with a portfolio of ordinary or preferred shares paying dividends frequently, current taxes would reduce investment return dramatically. SMART Funds are an alternative that, on one hand, differ payment of taxes over dividends by capitalizing them and, on the other, upon redemption of the shares from the SMART fund, said income would be taxable at 15% only, producing a 12.5% savings.

There are seven “models” of the SMART fund that investors can choose, but for a private individual or family, the most common model is the SMART fund 4 Model. The features of this SMART fund are:

  • No offering memorandum is required – a term sheet is optional, but not mandatory.
  • No more than five individual investors.
  • Operates as a private investment company.
  • Subject to an annual certification to the Securities Commission or Unrestricted Fund Administrator.
  • Investors can waive requirement for an annual audit.
  • Can have an ISIN Number and Bloomberg Ticker.

As you can see, we at Morgan & Morgan are very comfortable offering products and services and we have a range of seasoned professionals that can help you choose the correct fund structure for your family. Finally, let us congratulate the Bahamas Financial Services Board on their 20th anniversary and thank them for making our job a little bit easier

Panama, August 25, 2018. With the topic “Panamanian Fiscal Regulatory Framework in International Securitization”, Mr. Francisco Arias G., partner in charge of the Securities and Capital Markets practice group of Morgan & Morgan, participated as a speaker in the conference Latest Trends in Asset Securitization: Applications to the Panamanian Market. The event was organized by Flex Funds, a firm specializing in vehicles for worldwide investment.

The seminar was held at the Hilton Hotel in Panama City, and was attended by representatives of financial institutions, investment advisors, asset managers, family businesses, among other local and international professionals.

Other topics were discussed in the activity, such as Perspectives and triggering factors in the mergers and acquisitions sector in Central America, the securitization of assets and their applications and the experiences in the securitization of assets in securities firms in Panama.

About Morgan & Morgan

In the sector of capital markets in Panama, Morgan & Morgan focuses on public and private offerings, some with cross border components.  The Securities and Capital Markets team of the firm has been involved in numerous transactions involving several billions of dollars. The firm also have assisted many clients in obtaining various licenses from the Superintendence of Securities Markets, including securities brokerage and investment fund administration.

Partners Roberto Lewis, Raul Castro, Luis Manzanares and Fernando Boyd contributed with the Panama chapter of Chambers & Partners Private Wealth Guide 2019.

The guide provides expert legal commentary on the key issues for high net worth individuals and covers the important developments in twenty-seven jurisdictions, including Panama.

The complete guide is available here.

Law 40 of August 14, 2018 has, among other, some provisions that affect the workplace, such as the following:

Obligations and prohibitions for employers:

  • Any discrimination and stigmatizing or segregating act is prohibited to the detriment of those affected, as well as against their relatives and friends.
  • Every employer is obliged to implement practical ILO recommendations on STI and HIV, and must take all necessary measures to effectively protect the life and health of its affected workers.
  • The worker is not obliged to inform his employer or his co-workers about his condition as an affected person. If he does, the employer must keep strict confidentiality of the case and seek, if necessary, to make adjustments in their work environment according to medical criteria, for the best performance of their duties.
  • No employer can deny affected workers the economic benefits to which they are entitled by law, such as deprive them of advancement in rank or promotion within the company.
  • The health condition of the affected worker can not be a reason for exclusion in relation to bonuses, awards, training, work trips, recreational activities and any other benefit or activities in the company.

Work permits for appointments or treatments:

  • Individuals affected will be granted work permits when required to take care of their health and medical treatments. Additionally, they will be granted up to a maximum of 144 hours, as long as their condition causes a disability.

Labor protection:

  • Workers affected with STIs or HIV can only be dismissed from their jobs for just cause, with prior authorization from the Ministry of Labor.

This Law repeals Law 3 of January 5, 2000.

The Executive Body, through the Ministry of Health, must regulate Law 40, in a period of 180 days as of August 14, 2018.

Gender Quotas on Corporate Boards

Ana Carolina Castillo Solís, associate, Morgan & Morgan

Last year Panama joined the list of countries that have established quotas as a mean for reducing the gender gap. Law 56 of 2017 creates a women quota of 30% on corporate boards of public entities and certain private entities. The Law was recently regulated through Executive Decree 241-A of 2018.

This Law applies to Central Government entities, Decentralized Government entities, state enterprises and mixed capital companies, as well as to companies regulated by the Superintendency of Banks, the Superintendency of Insurance and Reinsurance, the Superintendency of Capital Markets (SMV for its initials in Spanish) and the Panamanian Autonomous Cooperative Institute.

According to the regulatory decree, the purpose of the quota is to give priority to the candidate of the less represented gender if they have the same qualification as the candidate of the other gender in terms of experience, merit, competence and professional performance.

Mixed capital companies

Regarding mixed capital companies, although the Executive Body is in charge of appointing women to meet the quota -taking into consideration aspects such as their preparation and professional experience- the representatives of private equity shall also seek the participation of women on corporate boards.

Regulated entities

In compliance with Law 56, regulated entities shall provide in their corporate governance manuals, good practices related to the designation of board members based on criteria of gender equity, merit, experience and in accordance with the requirements of each industry.

To verify compliance with the law, the regulated entity must submit an annual questionnaire to its respective regulator and publish this information on its website as well. It is important to highlight that the law does not provide sanctions for not complying with the quota, but the regulatory decree provides that in case of non-compliance, the company shall give the explanations thereof.

It should also be noted that Law 56 does not affect the current composition of corporate boards, instead it applies gradually to new designations of members being required to meet a 10% quota in July 2018, a 20% quota in July 2019, until reaching a 30% quota in July 2020.

According to information from the SMV, in 2014 out of 744 positions of companies’ boards listed on the Panama Stock Exchange, only 75 were occupied by women, and the percentage of women in boards of Panamanian capital companies in the banking sector is only 4%. It was not until 2014, after 110 years of existence, that the National Bank of Panama elected a woman for the first time as a member of its board of directors.

According to the Global Gender Gap Report 2017 of the World Economic Forum, with 0 representing disparity and 1 representing parity, Iceland leads the list with 0.878, Nicaragua is in the sixth place with 0.814 and Panama is at number 43 with 0.722, above the United States in the 49th place with 0.718. These statistics show that Panama is no stranger to this challenge. Gender equality is precisely one of the sustainable development goals of the United Nations, a commitment undertaken by Panama.

According to Klaus Schwab, Founder of the World Economic Forum, “Gender inequality deprives the world of a huge resource of untapped talent at a time when it is so important to address the enormous challenges and the disruptive forces we face”.

Gender quotas

Faced with this situation, various measures such as gender quotas have emerged. Panama has joined the list of countries that have established quotas, such as Iceland, Norway and Finland (leaders in gender parity). In Latin America, countries such as Argentina, Bolivia, Brazil, Colombia, Costa Rica, Ecuador, El Salvador, Haiti, Mexico, Nicaragua, Paraguay, Peru, the Dominican Republic and Uruguay have also created laws with some type of quota.

The tangible positive results that diversity brings -not only of gender- are indisputable, including increasing performance, profitability and competitive advantages. The World Economic Forum estimates that the world GDP could increase by $5.3 trillion dollars by 2025 if it closed the gender gap in economic participation by 25% over the same period. This shows that it is not only necessary, but also convenient, to increase the participation of women and achieve gender parity.

Partner Ramon Varela and associate Ana Carolina Castillo contributed with the Panama chapter of Chambers & Partners Alternative Energy & Power 2019.

The guide analyzes the most relevant aspects that affects the energy industry in twenty-nine jurisdictions, including Panama.

The complete guide is available here.

Executive Decree No. 521 of August 6th, 2018 

As of August 8th, 2018, foreigners of nationalities that require a visa to enter the Republic of Panama may enter with a Schengen Visa or current Residency from Korea, Japan or Singapore. 


  • By means of Executive Decree No. 521 of April 6th, 2018, any foreigner who requires a visa to enter the national territory, holding a Visa or valid residency in Korea, Japan or Singapore, may enter Panama, as a tourist, without an entry visa.
  • The Visa must: (i) be granted for multiple entries and exits; (ii) be used at least once to enter the territory of the granting State; and (iii) have a validity of at least six (6) months.
  • This Executive Decree became effective as of August 8th, 2018.

Aspects to be considered: 

  • This Decree includes Korea, Japan and Singapore within the list of exceptions. Previously, the list only included the United States of America, Canada, Australia or the United Kingdom, and those holding a Schengen Visa from the European Union.

With this Executive Decree it is provided that the validity of the visa or residency of the above mentioned countries, must be of at least six (6) months, reducing the time established in the previous decree of at least one (1) year of validity.