Law No. 129 of 2013, which title says that is seeks to promote “access to credit and modernizes the system of securities guarantees through the chattel mortgage” entered in force on January 8th, 2014.
This new law repeals most of the outdated Decree-Law No. 2 of 1955 and regulates the chattel mortgage as a collateral for obligations of every nature, present or future, determinate or indeterminate, and other mechanisms that were not contemplated on the laws that regulate the pledge.
In addition to the personal properties defined on Articles 326 ad 327 of the Panamanian Civil Code, Law No. 129 determines that other assets too can be subject to a chattel mortgage, such as inventories and any kind of movable assets, stocks, shares and interest in any kind of corporations; the right to the payment of cash deposits like accounts receivable and rights over letters of credit; rights over assets that constitute intellectual property, among others.
Law No. 129 also diversifies the group of entities that can register a chattel mortgage, including institutions that normally carry a register of personal property or title over rights, such as Municipalities, the Authority of Transit and Terrestrial Transport Registry of Vehicles and the National Direction of Copyright.
In addition to the latter, Law No. 129 aims to lower and simplify the requirements for the celebration of a chattel mortgage. For example, it allows the arrangement of successive mortgages and also enables the conversion of a pledge (where there is transference of the possession of the assets furnished as collateral) into a chattel mortgage and vice versa.
Finally, one of the most significant features of Law No. 129 is that it includes dispositions that regulate the factoring agreement, which is considered as a mortgage over present or future credits.