Felipe Escalona and James Sattin of Galindo Arias & López in Panama City look at the new legislation around bearer shares

As a regional and, increasingly, global business hub intent on extending its economic activities beyond the water and into more diverse business, finance and banking activities, the Republic of Panama has taken to heart the old adage that sunshine is the best of disinfectants, and, accordingly, has focused much of its recent legislation on improving transparency in all sectors of its robust economy. Along these lines, certain new laws have been passed with the aim of more strictly regulating the Panamanian Sociedad Anónima, which has remained the most popular and most commonly utilised Panamanian corporate structure since the nation’s founding over one hundred years ago. 

In particular, on July 29 2013, the National Assembly of Panama enacted Law 47 of August 6 2013 (Law 47), “which sets forth a custody regime applicable to bearer shares”. Law 47 requires that all owners of bearer shares appoint an authorised custodian, (who may be a bank and/or trust company authorised to do business in Panama, brokerage houses, or certain duly authorised Panamanian lawyers and law firms) who shall maintain custody of such bearer share certificates. The underlying purpose of this new regulation is to alleviate any potential concerns investors may have regarding ownership of a corporation by making known the ultimate beneficiary of the shares in question.

Law 47 will enter into force on August 6 2015, and, as of such date, owners of bearer shares will have a maximum of 3 years to deliver their share certificates to authorised custodians, together with an affidavit that must include certain basic information regarding the owner of such shares and the resident agent of the issuing entity. In addition, Law 47 requires that any and all corporations that issue bearer shares after the effective date of the Law deliver the resulting certificates to the appointed authorised custodian together with the corresponding affidavit.

Upon a duly issued request, the aforementioned affidavit shall be furnished by the authorised custodian to the authorities, in connection with any pending investigations related to money laundering, terrorism and/or any other criminal activities, or in compliance with any double taxation agreements entered into by the Republic of Panama. This last point is especially important, as, since 2010, Panama has entered into a series of treaties and agreements with twenty different nations throughout Europe, North and South America and Asia for the open exchange of taxation information for the purpose of hindering tax evasion while also limiting double taxation. Nonetheless, prior to the passage of Law 47 the controversy regarding the inherently anonymous nature of bearer shares and the ability of the true owner of a Sociedad Anónima to conceal his identity had persisted.

With regard to enforcement, this new Law empowers the Fourth Chamber of General Business of the Supreme Court of Justice to keep a registry of attorneys and law firms that act as authorised local custodians, as well as to enforce the monetary penalties that arise from any failure of these individuals or organisations to comply with their obligations in such capacity.

Beyond the direct impact of Law 47 itself, its very approval can be seen as incontrovertible proof of the Panamanian government’s serious commitment not only to increasing transparency, but also to collaborating with international organizations with the aim of reducing, and ultimately eliminating entirely, illegal activities in the ever-growing and ever-evolving nation.



Felipe Escalona


Galindo Arias & López

Panama City


James Sattin


Galindo Arias & López

Panama City