Through the approval of Laws 47 of 2013, and 18 of 2015, the Republic of Panama adopted measures to regulate the custody of bearer shares issued by Panamanian corporations.
From May 4, 2015, date in which this new regime will enter in effect,
- any corporation that has bearer shares issued prior to the entering of force of Law 18, will have until December 31, 2015 to convert such share certificates into nominatives share certificates, or deliver such bearer share certificates to an authorized custodian; and
- any corporation that issues bearer share certificates following the entering of force of Law 18, will have to deliver such bearer share certificates to an authorized custodian no later than 20 days after their issuance.
The new law also determines that as of December 31, 2015, all Articles of Incorporation of corporations incorporated in Panama will be considered automatically amended, within full rights and without the need of additional corporate action, to prohibit the issuance of bearer shares, unless the Board of Directors or the Shareholders adopt a resolution prior to December 31, 2015 authorizing the corporation to apply the regime of immobilization of shares established in the Law, and such resolution has been duly registered in the Public Registry of Panama.
If the shareholders of a corporation wish to maintain their bearer share certificates and deliver them to an authorized custodian, the Board of Directors or Shareholders of the corporation should issue a resolution authorizing the corporation to apply the regime of immobilization created by the Law. Such resolution will have to be duly registered in the Public Registry of Panama.
Non-compliance with the provisions regarding the immobilization of bearer shares.
The owners of bearer share certificates issued prior to May 4, 2015, that are not handed to an authorized custodian prior to December 31, 2015 may not exercise their political or economic rights in the corporation until such bearer share certificates have been replaced for nominative share certificates or the bearer shares in question have been delivered to a custodian.
If the owner of bearer share certificates issued after May 4, 2015, do not comply with the previously mentioned provisions regarding the custody of bearer shares, the corporation will have to annul such bearer share certificates.
REGISTRY OF MINUTES AND SHARES
Law 22 of 2015 modifies the Panamanian Commercial Code to include the obligation to all Panamanian corporate entities to keep a registry of minutes and shares.
The new provisions establish that any legal entity will be able to keep these registries using physical or electronic means or any other mechanisms that may reflect with clarity the operations carried out that may be “printed”. It is not mandatory to keep bound, stamped or numbered books.
In case of default, the legal entity may be subject to a fine that will be computed from the moment the sanction is imposed and for the period the breaches lasts (up to US$100 daily).
If the legal entity does not comply with this obligation, the competent authority will notify the Public Registry of Panama to register a marginal note in the registry indicating that the corporation is not in compliance with the dispositions of the Commercial Code.
It is important to mention that such marginal note will not avoid 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 unfulfillment of the provisions of the Commercial Code.
If you want to obtain more information or discuss with more detail any of the subjects herein indicated, please do not hesitate to contact us.