Wednesday, April 10, 2013

Panama Executive Power shelves plan for restrictions on bearer shares

According to local daily Estrella de Panama, the Executive Power decided to freeze the bill to immobilize bearer shares, amid the publication of articles in the international press which reveals the identity of thousands of owners of bank accounts in tax havens, including Panama.

This was announced by an official of the Ministry of Economy and Finance (MEF) through an email sent to the bankers on 2 April and which was seen by a reporter of the daily.

'Following instructions from Minister De Lima, I inform you that we have reported not to go forward with the approval of the bill whereby custody regime applicable to bearer shares is adopted . We appreciate the support and time spent in pursuing this initiative. ' says the email. Three bankers who asked that their names be withheld confirmed the existence of the email.

Bill 568, whereby bearer shares are  immobilized, came to the National Assembly by the hand of the Minister of Economy and Finance, Frank De Lima, on February 27 along with three other projects: the amendments to the law prime interest, the law of the Panama Investment Fund and the creation of the National Revenue Authority. However, bill 568 only reached its first reading. The members of the Committee of Finance met only twice to hear arguments for and against the initiative. The largest association of lawyers - the Panama Bar Association - and several important law and business associations have been against the custody, while a few law firms (Mossfon and a few others already with custody licenses in BVI and elsewhere) and the banking sector have expressed their support. The last scheduled meeting for discussion of the bill was before Easter. Currently, the discussion was not on the agenda of the committee.

Last year, Australian business professor Jason Sharman made a comparative assessment of Panama’s compliance with international OECD transparency standards of corporate beneficial ownership with special reference to bearer shares. Panama’s compliance with beneficial ownership standards was judged relative to the legal standards and actual practices extant in major OECD competitors, especially the United Kingdom and the United States.  He found that Panama's compliance measures exceeded those in place in OECD countries and made unnecessary the immobilization of bearer shares.   England LLC bearer warrants and U.S. Wyoming bearer scrip continue being allowed as corporate bearer instruments.

See also Attorney discusses restrictions on bearer shares

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