Panama to introduce a beneficial owner register

Published 23 January 2020 by Hatstone Trust Company (BVI) Limited

Bill No. 169 (the “Bill”), which deals with the establishment and regulation of a beneficial owner register, has been approved by the Panamanian National Assembly. The Bill will become law once executed by the Panamanian President and published in the Panamanian Official Gazette.  

The Bill requires resident agents to file relevant information, such as details of the ultimate beneficial owner (the “UBO”), at the Superintendence of Non-Financial Institutions (the “Superintendence”) on all Panamanian legal entities.

UBO definition

For the purposes of the Bill, UBO is defined as: “A natural person, who directly or indirectly owns controls, and/or has a significant influence over the account relationship, contractual relationship and/or the business or the natural person benefitting from a transaction, or who ultimately controls the legal entity’s decisions”.

Ownership, control or influence 

The Bill also provides the following points when considering ownership, control or influence over a legal entity:

1)    Shareholding Participation: the natural person who ultimately owns or controls, whether directly or indirectly, 25% or more of the shares or voting rights in a legal entity, except if the shares are listed on a recognized stock exchange.

2)    Control:

  1. a)    The partner or partners who control the partnership;

    b)    The trustee, the settlor, the beneficiary, the protector or another person who controls the trust;

    c)     In case of a legal entity which is in liquidation, bankrupted or under administrative receivership, the natural person who is appointed as liquidator or administrative receiver; and

    d)    In case of a shareholder in a corporate entity who would otherwise be the UBO but is deceased, the natural person acting as executor or personal representative of the deceased’s estate.

3)    Management: the natural person who ultimately exercises control over the management of the legal entity.

Reportable information

The following information is reportable:

1)    Legal entity information: a) Full name; b) Folio Number; c) Incorporation date; d)    Address; and e) Activity.

2)    UBO information: a) Full Name; b) ID Number, passport or any other personal identification number; c) Date of birth; d) Nationality; e) Address; and f) Date on which the natural person became a UBO of the legal entity.

Restricted access

The Bill provides that the information filed by the resident agent will not be made public and can only be accessed by the resident agent of the legal entity and two designated persons of the Superintendence. Should anyone gain unauthorized access to the register then they can be fined $500,000.

Sanctions

The Bill establishes that the Superintendence can order the Panamanian Public Registry (the “PR”) to place an annotation of suspension of the corporate rights against the records of the legal entity for not being registered or failing to update the Superintendence in respect of any changes to the UBO. Suspension of corporate rights means the legal entity will no longer be able to register any act, documents and/or agreement at the PR or apply for any certificates. The legal entity can be dissolved by the PR after 2 years of failing to file the UBO information.

Should the resident agent be unable to update the UBO information, for example, due to the refusal of the UBO to provide the required information, then the resident agent should resign.

Effective date

The Bill will be effective from the day after its publication in the Panamanian Official Gazette. Once the law is effective the resident agent should register the UBO information within 30 days of incorporation. For existing legal entities the resident agent shall have 6 months from the effective date.