Corporation Law of the Republic of Panama
Law 32 of February 26, 1927

CHAPTER III:

Stock

ARTICLE 20. Every corporation shall have power to create and issue one or more classes of shares of stock with such designations, preferences, privileges, voting powers or restrictions or qualifications thereof and other rights as its articles of incorporation provide and subject to such rights of redemption as shall have been reserved to the corporation in such articles of incorporation. The articles of incorporation may provide that shares of stock shall be convertible into the shares of other classes.

ARTICLE 21. Shares of stock may have a nominal or par value. Such shares may be issued as fully paid and non-assessable, as partly paid or without any payment having been made thereon. Unless the articles of incorporation otherwise provide, fully paid and non-assessable shares having a par value, or securities or shares convertible into such shares, shall not be issued for a consideration which, in the judgment of the Board of Directors, is less in value than the par value of such shares or of the shares into which such securities or shares are convertible. Nor shall certificates for partly paid shares state that there has been paid thereon an amount greater than the value, in the judgment of the Board of Directors, of the consideration actually paid thereon. Such consideration may be money, labor, services or property of any kind. In the absence of fraud, the judgement of the Board of Directors as to the value of any such consideration shall be conclusive.

ARTICLE 22. Shares of stock may be created and issued without par value provided the articles of incorporation include the following statements:

1.The total number of shares that may be issued by the corporation;

2.The number of shares, if any, with par value and the par value of each;

3.The number of shares without par value;

4.Either one of the following statements:

(a)The stated capital of the corporation shall be at least equal to the sum of the aggregate par value of all issued shares having par value plus a certain determined amount in respect to every issued share without par value plus such amounts as from time to time by resolution of the Board of Directors may be transferred thereto; or

(b)The stated capital of the corporation shall be at least equal to the sum of the aggregate par value of all issued shares having par value plus the aggregate amount of consideration received by the corporation for the issuance of shares without par value, plus such amounts as from time to time by resolution of the Board of Directors may be transferred thereto. There may also be included in such articles of incorporation an additional statement that the stated capital shall not be less than the amount therein specified.

ARTICLE 23. Subject to the designations, preferences, privileges and voting powers or restrictions or qualifications granted or imposed in respect to any class of shares, each share with or without par value shall be equal to every other share of the same class.

ARTICLE 24. A corporation may issue and may sell its authorized shares without par value for such consideration as may be prescribed in its articles of incorporation; or for such consideration which, in the judgement of the Board of Directors, shall be the fair value of such shares; or for such consideration as from time to time may be fixed by the Board of Directors, pursuant to authority conferred in such articles of incorporation; as shall be consented to or approved by the holders of at least a majority of the shares entitled to vote.

ARTICLE 25. Any and all shares referred to in Articles 22, 23 and 24 of this law shall be deemed fully paid and non-assessable. The holders of such shares shall not be liable to the corporation or its creditors in respect thereto.

ARTICLE 26. The shares of a corporation shall be paid at such time and in such a manner as the Board of Directors may determine. In case of default in the payment, the Board of Directors may either proceed against the defaulting stockholder to enforce payment of the amounts due and unpaid and to collect such damages as the corporation may have suffered, or rescind the subscription contract in respect to the stockholder in default, having the right in this last alternative to retain for the corporation such amounts as the defaulting stockholder may be entitled to receive from the funds of the corporation. In the event that the corporation should proceed to rescind the subscription contract in respect to the stockholder in default and to retain for the corporation the amounts to which the stockholder may be entitled, the Board of Directors shall give at least sixty days advance notice to such stockholder. Shares acquired by the corporation by virtue of the provisions of this article may be reissued or re-offered for subscription.

ARTICLE 27. Every certificate of stock shall contain the following statements:

1. The reference to the registration of the corporation in the Mercantile Registry;

1. The amount of its capital stock;

1. The number of shares owned by the stockholder or bearer;

1. The class of share, if there is more than one class, and if the stock is classified, a summary statement of the special conditions, designations, preferences, privileges, voting powers, restrictions or qualifications that one of the classes of the shares has over the others. 1. If the shares which it represents are fully paid and non-assessable, the certificate of stock shall so state; and if such shares are not fully paid and non-assessable, the certificate shall state the amount or amounts which have been paid thereon; 1. If the shares are represented by certificate issued in the name of the owner, it should contain the name of said owner.

ARTICLE 28. Shares may be issued to bearer only if fully paid and non-assessable.

ARTICLE 29. Shares represented by certificates issued in the name of the owner shall be transferable on the books of the corporation in such manner and under such regulations as may be provided in the articles of incorporation or in the by-laws. But in no case shall the transfer of stock be binding on the corporation unless it shall have been registered in the corporation books. If the stockholder shall be indebted to the corporation, the corporation may refuse to permit the transfer of his stock until such indebtedness is paid. But in all cases the transferor and the transferee shall be jointly liable for the payment of the amounts owed to the corporation by virtue of the shares so transferred.

ARTICLE 30. Shares issued to bearer shall be transferable by delivery of the certificate or certificates representing title.

ARTICLE 31. If so provided in the articles of incorporation, any holder of a certificate for shares issued to bearer may exchange such certificate for a certificate or certificates for a like number of shares of the same class issued in his name; and the holder of a certificate for shares issued in the name of the owner may exchange it for a certificate for a like number of shares issued to bearer.

ARTICLE 32. The articles of incorporation may provide that in case a stockholder desires to sell, transfer or otherwise dispose of his shares of stock, the corporation or some stockholder or stockholders thereof shall have a preferential right to purchase such shares. Any other restrictions upon the transfer or transferability of the shares may also be imposed; but any restriction absolutely preventing a stockholder from selling, transferring or disposing of his shares of stock shall be invalid.

ARTICLE 33. A corporation may issue a new stock certificate in place of any certificate previously issued by it alleged to have been destroyed, lost or stolen. The Board of Directors may, in such cases, require the owner of the destroyed, lost or stolen certificate to post security against any claim that may be made against the corporation or damage suffered by it.

ARTICLE 34. The articles of incorporation may provide that the holders of any designated class or classes of stock shall not be given voting rights; or they may otherwise limit or define the respective voting powers of the several classes of stock. Such provisions of the articles of incorporation shall be controlling in all elections and in all proceedings in which the law requires the vote or the written consent of the holders of all of the shares or of a specified proportion of the shares of the corporation. The articles of incorporation may also provide that for specified purposes the vote of more than a majority of the holders of any class of stock shall be required.

ARTICLE 35. One or more stockholders by agreement in writing may transfer stock to a voting trustee or trustees for the purpose of conferring upon it or them the right to vote thereon in the name and in place of the owner for the period and upon the terms and conditions therein stated. Other stockholders may transfer their stock to the same trustee or trustees and thereupon shall be a party to such agreement. The certificates of stock so transferred shall be surrendered and canceled and new certificates therefor issued to such trustee or trustees, in which it shall appear that they are issued pursuant to such agreement, and in the entry of such ownership in the proper books of the corporation that fact shall also be noted. In order for the provisions contained in this article be carried into effect, it will be necessary that a certified copy of such agreement be filed with the corporation.

ARTICLE 36. Every corporation organized under this law shall keep at its office in the Republic, or at such other place or places as the articles of incorporation or the by-laws may provide, a book to be known as the Stock Register, containing (except in the case of shares issued to bearer) the names alphabetically arranged of all persons who are stockholders of the corporation, showing their places of domicile, the number of shares held by each one respectively, the date of acquisition thereof and the amount paid thereon or that they are fully paid and non-assessable. In the case of shares issued to bearer such Stock Register shall state the number of shares so issued, and the date of issue and that such shares are fully paid and non-assessable.

ARTICLE 37. Dividends may be paid to the stockholders from the net earnings of the corporation or from the surplus of its assets over its liabilities and capital stock, but not otherwise. The corporation may declare and may pay dividends upon the basis of the amount actually paid upon partly paid shares of stock.

ARTICLE 38. When the directors shall so determine, dividends may be paid in stock of the corporation; provided the stock issued for such purpose shall be duly authorized and provided, if such stock has not heretofore been issued, there shall be transferred from surplus to the capital of the corporation an amount at least equal to that for which such stock could be lawfully issued.

ARTICLE 39. Every stockholder shall be personally liable to the creditors of the corporation only to an amount equal to the amount not paid on his stock; but no action shall be brought against a stockholder for any debt of the corporation until judgment therefor has been rendered against the corporation and execution thereon has been returned unsatisfied in whole or in part.

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