The Republic of Panama amends it Bearer Shares Regime

In attention to the recommendations and best transparency practices of our industry, the National Assembly of Panama recently approved Law 18 of April 23, 2015 to amend Law 47 of August 6, 2013 (hereinafter “Law 47”), which established the regime for the custody of shares issued to “bearer” by Panamanian corporations.

The amendments establish that starting on August 4, 2015, any share certificate issued to bearer by corporations constituted as of this date shall have a duly authorized and supervised custodian. To such end, the holder of share certificates issued to bearer shall deliver them to the authorized custodian together with an affidavit showing the particulars of the owner, within twenty (20) calendar days following the issuance date of the corresponding share. 

For share certificates issued to bearer prior to May 4, 2015, a transition term is provided until December 31st, 2015 to appoint an authorized custodian.

The Panamanian corporation is able to issue bearer shares however, through their board of directors or assembly of shareholders, it shall authorize the corporation to adopt the custody regime and said authorization must be filed at the Public Registry of Panama.

Starting on December 31st, 2015, the incorporation charter of Panamanian corporations shall be deemed amended “by operation of law” forbidding the issuance of bearer shares except in those cases mentioned above.

It must be underlined that Law 47 allows for the possibility of establishing heirship provisions over shares issued to bearer and given in custody, which prevail over any other inheritance provisions, and may take effect without need of a probate a condition that, in our opinion, may result quite valuable in patrimonial planning.

Morgan & Morgan Group is licensed to provide Authorized Custodian services for shares issued to bearer, through our law firm and other domestic and foreign subsidiaries for all those corporations wherein we act as resident agents.

For more details and information on the custodial services and the benefits and/or advantages of adopting the custody regime for shares issued to bearer, please contact your lawyer or write to us to custodiadeacciones@morimor.com 

Amends Article 71 of the Code of Commerce:

For the purpose of incorporating into the law mechanisms to ensure an efficient and effective fulfillment of the commercial obligation to keep updated company registers at all times, Law 22 of April 27, 2015 was recently approved to amend Article 71 of the Code of Commerce.

This amendment establishes that any competent authority (any State organism or entity that has the necessary competence for a particular legal action) who in fulfillment of its duties finds that a company has failed to comply with the obligation to keep the register of minutes and register of shares will notify the Ministry of Economy and Finances for application of the relevant penalty, which shall be calculated from the moment it is applied at a rate of up to one hundred dollars (US$100.00) a day and for the duration of the default and, should the company show evident reluctance to fulfill this obligation, the Public Registry shall be notified to record the pertinent note of non-fulfillment.

Deletion of the said note will be effective upon the competent authority notifying the Public Registry that the company has cured the default, which caused the note in the first place.

It is important to mention that such marginal note will not prevent the legal entity to carry out registration of corporate documents or expedition of certificates in the Public Registry of Panama, but rather, during the existence of such marginal note, the legal entity may not be liquidated and any certificate issued by the Public Registry will indicate that such legal entity has pending obligations with competent authorities due to the non-fulfillment of the provisions of the Commercial Code. 

We encourage you to comply with this new legal requirement and Morgan & Morgan Group is at your entire disposition to assist in issuing and updating your company records as well as to provide custody thereof.

For more details on the services, we can provide to comply with the new requirement, please contact your lawyer or write to us to cms@morimor.com