Panama’s growing economy, with a solid banking and financial services industry, and reputable Securities Regulator Office (SMV) makes it a great jurisdiction to establish Private Investment Funds (PIF).

What is a Private Investment Fund?

It is a company incorporated for the purpose of doing specific investments on behalf of its shareholders, and that does not solicit capital from retail investors or the general public, unless as specifically allowed in the local securities laws, which usually refers to qualified investors.

In Panama, the PIF is enacted by Law 1 of July 8th of 1999 along with regulation 5 of July 23rd of 2004 by the Superintendence of the Securities Market (SSM).

The PIF must have a legal representative in the Republic of Panama, who may be a broker, a brokerage house, an investment advisor, a bank, a firm of public accountants, a lawyer, a law firm or, in any event, people authorized for such purposes by the SSM. The legal representatives will represent the PIF before the SSM and receive administrative and judicial notifications in representation on its behalf.

Types of Private Investment Funds

In Panama, there are two types of Private Funds based on the number of investors, as follows:

Twenty Investors (20-I) PIF:

This type of Private Fund is limited to up to twenty investors and subjected to private offerings only. Unlike the 50-I, there’s no need to register with or notify the SSM about the investment fund’s establishment, nor to meet the other 50-I provisions, therefore, there’s no need of a custodian, auditor, or investment manager. However, the 20-I investor restriction must be clearly stated in its articles of incorporation.

Fifty Investors (50-I) PIF:

This option does not require to be registered and regulated with the SSM to be established, but it does need to be notified of its constitution.

Provisions to create a 50-I PIF.

  • Limited to 50 investors and solicitation can only be done privately, and not by publicly
  • Shares shall only be offered to qualified investors with a minimum initial investment of US$ 100,000.00 each

Who is a qualified investor?

An individual or legal entity considered professional investors (licensed fund managers or advisors) or with a net worth of at least US$1,000,000.00.

Requirements to establish a 50-I PIF.

  1. Registered agent, usually a Panamanian law firm
  2. Legal representative, the Panamanian serving as registered agent can be used as legal representative.
  3. Documentation:
    • Copy of articles of incorporation and other constitutional documents such as trust instruments.
    • Copy of documents used by the fund to offer its shares
    • Financial statements for the last fiscal year
    • Certificate of good standing
    • Evidence of appointment of a legal representative
    • Certificate of the directors or corporate body confirming compliance with all the requirements
    • Name and address of the fund, investment manager, offeror, custodian, directors and key executives.

The prospectus or other similar document that is used to offer the participation quotas of a Private Investment Fund will prominently require the following legend:

“This Private Investment Fund, in accordance with the terms set forth in Decree Law No. 1 of July 8, 1999, has not been registered with the National Securities Commission, nor is it within its supervision or oversight, for complying with some of the following conditions: (1) a provision that limits the number of effective owners of their participation quotas to fifty, or that forces the offers to be made through private communication and not through public means of communication; (2) A provision that establishes that its participation quotas can only be offered to qualified investors in minimum initial investment amounts of one hundred thousand Balboas (B/.100,000.00) “.

The PIF must notify its representative in the Republic of Panama any change to the aforementioned information within the next 120 days after the change to the information has occurred. It must also deliver to its representative in the Republic of Panama copies of its audited financial statements for the latest fiscal year within the next 120 days after the end of the corresponding fiscal year.

The Kraemer & Kraemer team is qualified to provide assistance for the establishment of Private Investment Funds. Send us a note to and our team will be glad to help you.

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