PANAMA INTRODUCES A BEARER SHARES CUSTODIAN SYSTEM

Panama is committed to achieving transparency in corporate business and fighting unlawful activities that take advantage of corporate business structures. Thus, in 2013 through Bill 47, Panama adopted a regulatory framework for the continued and lawful use of bearer shares by introducing an Authorized Share Custodian System. The Share Custodian system aims to maintain bearer shares in custody with an authorized custodian. In addition, the law aims to easily access information regarding the shares' beneficial owner in case of money laundering or other criminal proceedings.

Under the law, a corporation can adopt a bearer share system or opt for a registered (nominative) shares system. If the company elected a bearer shares system, it was required to file at the Public Registry of Panama a resolution authorizing the immobilization of the bearer shares. Besides, the beares shares needed to be delivered to an authorized custodian.

Deadlines to choosing the new system and Automatic Amendment of the Articles of Incorporation

Law 47 allows those companies with bearer shares before the law entered into effect to keep their bearer share structure. The law established a deadline to adjust to the new system until August 5, 2018. However, in April 2015, this deadline was changed by a law amendment. The latest change established that corporations had until December 31, 2015, to decide how to handle bearer shares. 

If the company wanted to keep the bearer shares system, it was required to file a Board of Director's Resolution in the Public Registry, indicating that they were maintaining bearer shares and choosing to immobilize these with a custodian. 

For the companies that did not officially adopt the bearer shares system, the law automatically modifies the Articles of Incorporation (AOI) of the company to prohibit the issuance of bearer shares and make all shares registered (nominative) shares only.

If you choose to place the Bearer Shares in custody, the law authorizes several professionals and institutions to be a custodian. Among the options for a custodian, you will have:

1. Custodians authorized by the Banking Superintendence.
2. Banks, brokerage houses, and custodians that have applied to be custodians and have presented their documentation (manuals and procedures) for the custody of bearer shares to their respective Superintendents
3. Banks and foreign administrators of countries that are members of the Financial Action Task Force (FATF)
4. Lawyers or law firms register on the Book of Custodians of the Fourth Chamber of General Business of the Supreme Court of Panama. You can see the list of registered lawyers and law firms on the Supreme Court's website. Lill Martinez is an authorized custodian, as you can verify on the list. 

Custodian Responsibilities and Disclosure of information 

Custodians of bearer shares will be subject to the regular rules regarding confidentiality concerning the ownership of these bearer shares. Still, they may be required by appropriate authorities through due process to disclose some information.

New Shares Issuances

If you choose to change to Registered Share or miss the term to keep your bearer shares, you need to coordinate with us the corporate resolution to cancel your bearer share certificate and issue the new share certificate with registered shares.

New incorporations

Our office will be incorporating all new companies with Registered (Nominative) Shares only, unless specifically requested by clients to include the option of Bearer Shares held by an Authorised Custodian. 

Please email us at lill@kerycruz.com for more information regarding corporate structures, the use of bearer or registered shares, if you want to cancel your bearer shares and issue nominative shares, or if you choose to close your company.