Important changes for Panama’s Companies

noticeImportant changes in the Panama’s offshore legislation have been implemented with the adoption of Law 52 of 2016, which establishes the obligation to keep accounting records for those legal persons that do not conduct transactions that are perfected, consummated or have its effects within the Republic of Panama.

 

This new regulation is now in full force; therefore, it is important to read carefully and that all clients send us the following information:

  • The address where the accounting records are located (if you need an address to quip your Accounting Records, please contact us);
    The name and address of the custodian of said records.
  • Below please find the most salient features of this new legislation now in force in Panama:
  • The law take effect on January 1, 2017;
  • As noted above, the rule states the obligation to keep accounting records for those legal persons that do not perform operations that are perfected, consummated or take effect within the Republic of Panama. This means that it applies to those legal entities, ie companies of all types and private interest foundations registered or re-domiciled in the Republic of Panama, but not operating within the Republic of Panama and consequently not generating income from Panamanian source;
  • The accounting records and supporting documents must be kept available for a period not less than five (5) years, counted from the last day of the calendar year in which the transactions were completed or the last day of the calendar year in which the legal person ceased its operations;
  • The accounting records and supporting documentation may be kept in the offices of the Resident Agent and in cases where such records and supporting documents are kept elsewhere, the legal person shall be obliged to inform the Resident Agent in writing the physical address where the accounting records and supporting documents are located and the name and contact details of the person who keeps them in custody. Any changes to the above address should be reported to the Resident Agent within a term of fifteen (15) business days;
  • If information is requested by a competent authority to the Resident Agent, the legal person shall provide said accounting records within a period not exceeding fifteen (15) working days. If the documents and information are not provided the Resident Agent shall file resignation from the legal person;
  • Failure to comply with this new regulation results in the imposition of fines of Thousand Dollars (USD 1,000.00) and One Hundred Dollars (USD 100.00) for each day that passes without the cause that led to the breach is remedied;

In addition to making it mandatory to carry accounting records, as mentioned before, the Law 52 of 2016, also amends Article 318-A of the Tax Code of the Republic of Panama, specifically by adding suspensions of corporate rights for the following reasons:

  • Suspension of corporate rights to the legal persons that remain without appointing a resident agent for a period longer than ninety (90) calendar days after the resignation, removal or termination of existence of its former resident agent.
  • Suspension of corporate rights to those legal persons incurring in late payment of its
  • Government Fees for a period of three (3) consecutive years.
  • Suspension of corporate rights to those legal persons incurring late payment of any fine or penalty imposed and duly executed.
  • The suspension results in the inability to initiate legal proceedings, conduct business or dispose of its assets; inability to make claims or exercise any right; inability to make any corporate action which would be compelling for the legal person.
  • Once the suspension is recorded, the legal person shall have a term of two (2) years to be reactivated. During this period any board member, shareholder, partner, resident agent or concerned party may apply for reactivation prior payment of a fine of One Thousand Dollars (USD 1,000.00). Once the term of two (2) years aforementioned passes without the reactivation, the registry will proceed with the definitive cancellation and consequently the legal person shall be definitively dissolved.

The mentioned Law 52 of 2016 also adds the following items to Law 2 of 2011:

  • Article 9-A, creates the mandatory certification of the Resident Agent where it is established that he is not owed fees for the exercise of this office, when the legal person, through their administration body, decides to change the resident agent .
  • Article 10, in which the possibility of resigning as the resident agent is established when it has lost communication with the shareholder or has not received payment of their fees for three (3) consecutive years.
  • Finally, Law 52 of 2016 amends Article 21 of Law 47 of 2013, which deals with the custody of bearer shares, noting that when the owner of bearer shares has not delivered the respective certificate in custody, it shall be deemed canceled by rule of law as well as the political and economic rights attached to said shares represented by the bearer share certificate.
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