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While most tax-haven jurisdictions in the world are completely eliminating bearer shares resulting from pressure from the Organization for Economic Cooperation and Development (OECD), Panama has creatively found a solution. A new law allows Panama to immobilize bearer shares instead of eliminating them, thus protecting privacy while creating mechanisms to control illegal activities.
Bearer shares, which have always been a pillar of the fiscal privacy offered in Panama, are corporate stock certificates which do not carry anyone’s name. Instead, they are made out to a “bearer,” meaning whoever is in possession of the certificate is the owner of the shares.
The new law (Law 47), passed in the National Assembly last August, requires anyone holding Panamanian bearer shares to designate an authorized custodian to take possession of them. The custodian can be a licensed bank, a Panamanian attorney (or law firm), Panamanian fiduciaries (trustees) or licensed brokerage houses.
The new law takes effect on August 6, 2015. From that date forward, every holder of a bearer share certificate will have three years to submit them to an authorized custodian along with a sworn declaration providing basic identity information about the true owner of the shares, the corporation which issued them as well as that company’s resident agent.
The designated custodians will be required by law to provide this documentation to authorities who request it for the purpose of aiding investigations related to money laundering, the financing of terrorist activities or to comply with international double-taxation treaties.
While the law requires that the Supreme Court keep a registry of the lawyers and law firms that have served as authorized bearer share custodians, it does not place any obligation on Panamanian corporations to register the names of its shareholders at the Public Registry, which continues to only require the names of a company’s officers, directors and registered agents be listed.
Contact a Panamanian law firm specializing in corporate law with any questions concerning Law 47.