Bearer Shares Limitations

APRIL 29, 2015

In a move designed to further discourage the use of bearer shares in the Republic of Panama, the Panamanian Superintendency of Banks issued, on December 2, 2014, the General Resolution of the Board of Directors SBP-GJD-0009-2014 in which they established measures for the identification of the real owners or final beneficiaries of Panamanian corporations.

This latest resolution sets out a list of requirements that all Panamanian banks must comply with in a period of twelve months counted from the issuance of the resolution, for clients whose corporations allow the issuance of bearer shares.

As a first option, the bank must request the client to modify the articles of incorporation of its company in order to specifically state that it can only issue nominal shares or altogether ban the issuance of bearer shares, whichever the client prefers. It is important to note that even before the promulgation of this resolution, this suggestion has been applied regularly in the past few years by local banks.

The second scenario is when the client has a corporation and the shares have been issued to the bearer. The bank can maintain the client in this scenario as long as: i) the bearer shares are kept in custody by the bank or by an authorized custodian, and ii) a sworn statement is delivered to the bank detailing the information of the real owner or final beneficiary. If the information contained in the sworn statement varies in any form, the client must update the information within thirty days after the fact; otherwise, the bank can proceed with the closure of the account.

Finally, these recent changes made by the Superintendency are just another way to enforce the use of nominal shares in Panamanian corporations. They also strengthen the custodian regimen applicable to bearer shares, as stated in Law No. 47 of August 6, 2013.

Article by Beatriz del C. Cabal Chen, Panama