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Comparison of Panama IPO Market to Us Market
for the country, which strengthens itself with enterprises that generate goods, services and jobs.
Among the disadvantages and/or consequences of making an initial public offering we have the following:
ü Reduction of the flexibility in corporate affairs.
ü Starting administrative expenses increase.
ü Compliance with the requirements of reporting to the CNV and those of the stock exchanges where the securities are listed.
ü Restrictions in matters of advertising.
ü Exposure to class action suits.
ü Transparency.
ü The issuer must maintain good relations with the holders of its securities.
ü Sales of securities by persons who control them.
8. The securities market of Panama
The intermediation of securities in Panama dates to many years ago. It could be said that it is as old as the Republic itself, which this year celebrates the centennial of its independence. In its beginnings, this activity was carried out in an informal manner; it lacked mechanisms of organization and it did offer neither the information nor the sufficient transparency to protect the investing public. It was not until July 1970 when the National Government enacted Decree No. 247, which was later substituted by Law-Decree No. 1 of 8 July 1999, whereby the National Securities Commission was created and the Securities market in the Republic of Panama is regulated.
At the beginning of the 1970s, a group of investors made serious and meritorious efforts to establish a stocks exchange, to the point of meeting periodically and publishing reports about the operations performed among them. However, the growth and development of both international banking and the National Banking Center caused, as a result, that both the National Government and the private sector found all the necessary financing in the Banking Market, rendering useless, at the time, the existence of a stocks exchange.
By the early 1980s, the high levels of external indebtedness and a poor economic development caused a reduction of financing offers by the international financial system towards the Governments of Latin America. Likewise, the past economic and political crisis Panama underwent during the years 1987, 1988 and 1989 caused that an informal securities market acquired significant importance as means of financial intermediation.
Despite being an informal market, it had great acceptance within the Panamanian community, which made people estimate that it was the appropriate moment for the creation of a stocks exchange in Panama, that complied with the objective of serving as intermediate between the State and the private sector, on one side, and the investors, on the other, for the trading of securities. This way, a formal securities market is created in Panama, divided in a primary market and a secondary market.
Over the years, Panama’s Stock Exchange, along with the trading posts, stock traders and other collaborators of the national securities market have increased their efforts to divulge information on the newspapers about the negotiable [next page]