Panama enforces custody of Bearer Shares
In our news article of December 2013 we reported on the regulatory changes that will affect a Panamanian company’s bearer shares under Panamanian Law N°.47 which was to enter into force in August 2015.
The Law originally provided that bearer shares issued before August 2015 must be placed with an authorised custodian by August 2018, with an affidavit sworn by the beneficial owner to confirm their ownership and provide personal identification information. Bearer shares issued after August 2015 were required to be deposited with an authorised custodian with the owner’s identification affidavit within 20 days of issue. In default, penalties would be imposed.
An amendment recently passed by the Panamanian National Assembly has changed the timing of the introduction of these provisions. Law N°. 47 will now enter into force on 4th May 2015, ie three months earlier than previously provided. Furthermore, the transitional period of three years for the registration of shares issued before August 2015, has been considerably shortened and has been brought forward from August 2018 to 31st December 2015.
When a Panamanian corporation enters into a custody scheme with a duly authorised Panamanian custodian, the custodian’s appointment must be approved by the company’s board of directors or board of shareholders. A copy of the board’s authorisation is then required to be filed and recorded in the Public Registry.
As a result of these changes, an authorised custodian must be appointed and the required affidavit provided by the beneficial owner by the end of this year, far sooner than originally envisaged.
In a separate development, a second draft bill affecting corporations has also been approved by the National Assembly.
If, in the course of a formal investigation of a company by the Panama authorities, it is found that the company has failed to comply with the obligation properly to maintain the share register and register of minutes, a penalty of US$150 a day will be imposed for each day the default continues.
Moreover, a restriction will also be placed on the company at the Public Registry and any official certificates issued will state that the company has pending obligations with the Panamanian authorities. While the restriction will prevent the dissolution of the company, it will not affect the registration of corporate documents. The restriction is removed when the company is in compliance with its obligations.
For more information on this topic, and to review your estate palnning and to discuss alternative ownership arrangements please speak to our teams in Monaco. Contact Simon Huxford at email@example.com