Registering securities for crowdfunding is no longer required in Panama; hence, individuals wishing to register a crowdfunding company in Panama & issue securities in Panama will only need to meet the below criteria:
- get a permit to offer securities via a crowdfunding platform in Panama from the SMV (Panama’s number one financial regulator);
- make sure that the capital they wish to raise, number of securities & overall value of capital represented by an individual security is stated on a crowdfunding platform;
- set a deadline for investors by which they can make a commitment to buy securities for crowdfunding in the state of Panama;
- make sure that investors are committed to meeting a minimum required amount of capital;
- make sure that potential investors invest no more than ten percent of their per-annum income per year (if it’s less than one hundred thousand dollars);
- make sure that potential investors invest no more than fifteen percent of their per-annum income (if it exceeds one hundred thousand dollars), but no more than one hundred thousand dollars per year;
- additional crowdfunding offers can be made by issuers making use of preferential crowdfunding;
- making other offers, engaging in selling activities or conducting transactions requiring no registration are also possible;
- attracting investments from other sources (e.g. taking out bank credits & accepting funds from venture capitalists) is also possible.
Crowdfunding platform operators mustn’t obtain permission to advise on crowdfunding in the state of Panama. No permit is required for stock exchanges or brokers/dealers, either. Platforms specializing in crowdfunding do not have to register if they:
- inform the SMV about commencing their operation within a 5-day period;
- pledge not to provide investment advice on securities sold via their platforms;
- get issuers of securities to provide them with the data required by law, refrain from buying securities from their platforms & get investors to pledge to buy securities within a commitment period & pay for them after meeting a minimum target.
Thanks to the recent changes in crowdfunding legislation made by the governments of certain countries (in particular, the US & Argentina), crowdfunding is becoming a viable & affordable source of raising capital & financing for micro, small & medium enterprises. It’s expected that similar legislative initiatives will help simplify the procedure for launching a crowdfunding platform in Panama & attract innovative investors that have far fewer crowdfunding options in their countries. Failure to stimulate crowdfunding in the state of Panama can lead to capital flight & have some very negative implications for Panama’s economy & economic wellbeing of its citizens.
For more information on crowdfunding regulation in Panama or advice on the registration of a crowdfunding company in Panama, please contact IQ Decision UK.