Approved at third debate arrangement of custody of the shares issued to the bearer

Current Panamanian authorities expect the new immobilization bill to help Panama pass the current OECD peer review process.   What they ignore is that there will always be a new black list until Panama is turned again into a banana republic.The tax authority reports the approval as follows:

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APPROVED AT THIRD DEBATE ARRANGEMENT OF CUSTODY OF THE 

 SHARES ISSUED TO THE BEARER

The plenary of the National Assembly of Deputies approved the Draft Law N° 568 "that adopts a custodial arrangements of the shares issued to bearer" legislation that seeks to preserve the image of Panama as cooperating country in the fight against the misuse of the financial services, and that puts a tone to the Nation with international law, in relation to the topic.

Frank De Lima, head of the Ministry of Economy and Finance (MEF), Dario Espinosa, Deputy Minister of Finance and Andrés Fuentes de León, General Secretary of this institution, attended the plenary session of the National Assembly of Deputies, at the time of the adoption of the Draft Law N° 568.

The custody of the shares issued to the bearer will enable the Panamanian State comply with the commitments made by previous administrations with the Global Forum on Transparency and exchange of information; also contribute to avoid the inclusion of Panama in discriminatory lists that may affect the competitiveness of the different sectors of the economy of our country.

This policy was supported by technical studies conducted by the Superintendence of Banks in Panama and is a part of the strategy that began the National Government in 2009 to preserve the good image of Panama, as cooperating country in the fight against the misuse of the financial services, preventing money laundering and the financing of terrorism.

Establishes the custody of the certificates of the shares issued to bearer, through an authorized custodian, being these banks, securities houses or attorneys with the control of the Fourth Chamber of Business of the Supreme Court of Justice, in a special register; the same shall enter into force on the second working day, after two years of have been enacted as law of the Republic of Panama.

http://www.mef.gob.pa/es/noticias/Documents/Approved%20at%20third%20debate%20arrangement%20of%20custody%20of%20the%20shares%20issued%20to%20the%20bearer.pdf

Martinelli's legislators move ahead restrictions to bearer shares

The Panama Ministry of Economy English-speaking staff prepared this press release:


APPROVED IN FIRST DEBATE BEARER SHARES
The Draft Law N° 568 "that adopts a custodial arrangements applicable
to the shares issued to the bearer", was adopted in the first discussion
by the Commission of Economy and Finance, the National Assembly of
Deputies.
The legislation provides the adoption of a regime that allows preserve
the bearer shares, through the custody of their certificates in a private
manner, by an authorized custodian, with the purpose of being able to
have certainty of its owner in specific cases, without affecting its free
movement, on a confidential basis.
Dario Espinosa, deputy minister of Finance, said that "through this bill
strengthens the country's commitment to comply with high standards of
transparency and good use of the financial services, at the same time
comply with the international agreements, previously acquired by
Panama".
On this legislation, Espinosa added that "it complements the
Government's efforts to prevent the inclusion of our country in
discriminatory lists that could affect the competitiveness of the
Panamanian banking system, which we know is one of the pillars of the
economy of Panama".
According to the new provision, may act as local custodians of the
certificates of the shares issued to the bearer, the banks of a general
license, fiduciary regulated by the Superintendence of Banks in Panama,
securities houses and central securities duly registered by the
Superintendence of Stock Market of Panama, as well as lawyers or
resident agents.
The custodial arrangements apply to shares issued to the bearer poses
which shall come into force on the date of the next business day, then
after two years, since the promulgation of the same as law.
The deputy minister Espinosa, in front of the members, was
accompanied by the administrator of the National Authority of Public
Revenues (ANIP), Luis Cucalón.

http://www.mef.gob.pa/es/noticias/Documents/Approved%20in%20the%20first%20debate%20bearer%20shares.pdf

Bearer shares do exist in OECD member countries

Panama has been offering to amend its corporate legislation to the same degree of confidentiality as other OECD members.  As we see from the example of bearer shares in OECD member Greece, they can exist perfectly without the need of immobilization or restriction when issuers are non-listed corporations.  Bearer instruments also exist for business entities in Wyoming (U.S.) and England.
The level playing field is more levelled in some places...

What types of non-listed shares do Greek société anonymes have?

Greek codified company statute 2190/1920 provides for two basic forms of non-listed shares in Greek société anonymes: (i) bearer shares and (ii) registered shares. When purchasing non-listed shares, the buyer should request a copy of the company’s Articles of Association (AoA), which stipulate the type, number and nominal value of the shares that have been issued by the company. Registered shares are issued in the name of a particular shareholder. In this case, the transfer of the particular shares requires that the name of the shareholder be prescribed on the share certificate itself. In the case of bearer shares, the name of the owner of the shares is by definition not stipulated on the share certificate itself.

Are companies obligated to issue share certificates verifying ownership of shares?

Companies are obligated to issue share certificates for bearer non-listed shares. If the company has registered non-listed shares, the AoA may preclude or limit its obligations to issue share certificates. In this case, the AoA determine the manner in which the shareholder’s capacity is proven in order for the rights deriving from the shares to be exercised. In the case the AoA do not contain a relevant provision, as well as in any other case in which share certificates are not issued, the proof of the shareholder’s capacity takes place on the basis of the data contained in the shareholder’s book or any temporary certificates issued and, if necessary, the documents in the possession of the shareholder.

The above share certificates may embody one or more non-listed shares. In the latter case, the certificates become less marketable. Shareholders are allowed to ask that existing share certificates be replaced by others embodying fewer shares if this is permitted in the AoA. Instead of share certificates, temporary share certificates may be used for a predefined period of time until the share certificates are issued. If this is the case, the transfer of shares is effected by virtue of the transfer of these temporary share certificates.

How are bearer non-listed shares transferred?

Transfer of bearer non-listed shares is effected by virtue of an agreement concluded between the seller and the buyer regarding the transfer of the seller’s shares and the delivery of the share certificates or the temporary share certificates from the seller to the buyer that embody the said shares. Possession of the share certificates is sufficient evidence for the holder to prove that he/she is the owner of the shares, such evidence being able to be brought forth both before the company as well as before third parties. As concerns the company, the holder of the share certificates is entitled to exercise the shareholders’ rights attached to the certificates. The exercise of these rights does not require registration in the books of shares or notification to the company.  The burden of proof that the holder of the share certificates is not the owner lies with the company. As concerns third parties, the presumption of possession means that it is possible for a bona fide third party to validly acquire ownership from a person not legally possessing the shares, if the third party did not have the knowledge of the fact that the seller did not have ownership of the share certificates.

By Konstantinos Thomopoulos
http://www.greeklawdigest.gr/component/k2/item/53-share-transfer-deals?Itemid=

See also OECD Report Towards a Level Playing Field
http://mypanamalawyer.blogspot.com/search/label/bearer shares

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  http://mypanamalawyer.blogspot.com/2012/11/attorney-discusses-restrictions-on.html

Majority of Panama lawyers oppose restriction to bearer shares

Bill 568 is being discussed which would require that bearer shares of Panama corporations be held in custody by a Panama lawyer, trustee, bank or foreign authorized banks.  Panama Bar Association (Colegio Nacional de Abogados) which comprises the majority of Panamanian attorneys, the Lawyers' Guild Movement (Movimiento Gremialista de Abogados) and Inter-American Bar Association Panama chapter and the largest law firm in Panama Morgan and Morgan, directly reject the initiative as a threat to the competitiveness of Panamanian legal structures.   The bill allows foreign banks to serve as custodians of bearer shares, which would then be subject to Panama confidentiality laws and veil piercing laws of their home countries.

Other law firms with a total of 250 attorneys, as Arias, Fabrega & Fabrega-the oldest of Panama; Mossack Fonseca & Co., Aleman, Cordero, Galindo & Lee, Alfaro, Ferrer & Ramírez; Galindo, Arias & Lopez, Arias, Aleman & Mora and attorneys Icaza, Gonzalez-Ruiz & Aleman, are in favor of restricting bearer shares as confirmed by Jaime Alemán of Aleman, Cordero, Galindo & Lee.  These law firms incorporate a substantial number of entities and have offices in British Virgin Islands (BVI) and other jurisdictions where bearer shares are already subject to immobilization with a limited number of custodians.

The Panamanian Association of Business Executives (APEDE) has also rejected the initiative.

Panama Corporation System for Bearer Shares meets OECD KYC Requirements

Last year, Australian 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.

Full text in http://www.laestrella.com.pa/online/impreso/2013/03/08/acciones-al-portador-provocan-divisiones.asp
See also Attorney discusses restrictions on bearer shares  http://mypanamalawyer.blogspot.com/2012/11/attorney-discusses-restrictions-on.html

Lombardi Aguilar Attorney Discusses Restrictions on Bearer Shares

Business Law Attorney Alvaro Aguilar’s Radio Interview Addresses Concerns and Impact of Impending Legal Action on the Financial Center

FOR IMMEDIATE RELEASE

Panama City

PRLog (Press Release) - Nov. 15, 2012 - Attorney Alvaro Aguilar, partner at Lombardi Aguilar Group, said that Panama incorporators have in place know-your-customer laws which do not exist in the U.S. and European countries which deem the Isthmus as an “uncooperative” jurisdiction. Aguilar was recently interviewed on Omega Stereo www.omegastereo.com about a recent study by Australian university professor Jason Sharman comparing Panama's due diligence system for incorporations with those of Organization of Economic Cooperation and Development (OECD) member states.

“Since the 1930s Panama has stood out as an international financial and logistical center, in the face of larger centers such as London and New York”, said Aguilar, who specializes in formation of corporations, trusts and foundations for business purposes. “The contradiction that more than half of the OECD members are allowed to have bearer shares, some with immobilization, has no other motive than to slowly erode the competitiveness of a financial center which has always been independent.”

Aguilar reminded listeners the circumstances under which the Panama corporate system originated in the 1930s. When totalitarian countries threatened Europe, Ships owned by Panama companies were leased by the then neutral US to assist the United Kingdom in its war effort. Other companies owned Panama-flag ships used to take Jewish refugees to the territory of Palestine. "Bearer shares of said companies were an element in choosing Panama for said operations" said Aguilar.  He mentioned several cases in Eastern Europe and Latin America of businessmen in currently using Panama companies with bearer shares to shelter from authoritarian regimes the personal assets they have earned.

According to the Sharman study, "available evidence strongly suggests that Panama is significantly more compliant with international beneficial ownership standards than many OECD countries, especially the United States". 20 out of 34 OECD countries allow bearer shares, and have not immobilised them, including important financial centers like the UK.   Panama is not a member of the OECD.  Aguilar also pointed out that the England and the U.S. state of Wyoming have business entities authorized by law to issue bearer scrip and bearer share warrants without being surrendered for immobilization.

A plan for immobilization of bearer shares of Panama companies has been opposed by the University of Panama School of Law and several local practitioners.

Mr. Aguilar is a graduate of Universidad Santa Maria la Antigua (LLB) and Washington College of Law at The American University (LLM) International Trade & Banking program. Previously he has been selected by the Central American business weekly CAPITAL FINANCIERO as one of the "40 under 40" acknowledging to his achievements as a young legal professional. He specializes in corporation law and trust & estates matters.

About Lombardi Aguilar Group

Lombardi Aguilar Group is a partnership of consultants created as an alternative for clients worldwide who seek fast, innovative and effective solutions to their legal problems. The firm currently provides services to individual and corporate clients in Panama as well in the Americas, Europe and Asia. Its partners maintain a commitment with professional ethics and social responsibility by participating in the board of directors of groups such as the Panama Bar Association, the Alliance Francaise, the German and the American Chambers of Commerce (AMCHAM) of Panama, and the Association of Chinese-Panamanian Professionals (APROCHIPA).

The firm centers its law practice in private client services and asset protection (Private Interest Foundations, Trusts), business structures (Offshore Corporations), tax planning, real estate and e-commerce. It also advices in areas of Law such as Corporate, Commercial, Intellectual Property, Maritime, Tax, Environmental and Immigration Law as well as related litigation.

For more information, contact +507 6638-8707   +507 396-5080 , e-mail info (at) laglex.com, or see: Lombardi Aguilar Group http://www.laglawyers.com/

Photo:
http://www.prlog.org/12024151/1

http://www.prlog.org/12024151-lombardi-aguilar-attorney-discusses-restrictions-on-bearer-shares.html

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Attorney Discusses Restrictions on Bearer Shares

Lombardi Aguilar Attorney Discusses Restrictions on Bearer Shares

Attorney Alvaro Aguilar, partner at Lombardi Aguilar Group, said that Panama incorporators have in place know-your-customer laws which do not exist in the U.S. and European countries which deem the Isthmus as an “uncooperative” jurisdiction. Aguilar was recently interviewed on Omega Stereo www.omegastereo.com about a recent study by Australian university professor Jason Sharman comparing Panama's due diligence system for incorporations with those of Organization of Economic Co-operation and Development (OECD) member states.

“Since the 1930s Panama has stood out as an international financial and logistical center, in the face of larger centers such as London and New York”, said Aguilar, who specializes in formation of corporations, trusts and foundations for business purposes. “The contradiction that more than half of the OECD members are allowed to have bearer shares, some with immobilization, has no other motive than to slowly erode the competitiveness of a financial center which has always been independent.”

Aguilar reminded listeners the circumstances under which the Panama corporate system originated in the 1930s. When totalitarian countries threatened Europe, Ships owned by Panama companies were leased by the then neutral US to assist the United Kingdom in its war effort. Other companies owned Panama-flag ships used to take Jewish refugees to the territory of Palestine. "Bearer shares of said companies were an element in choosing Panama for said operations" said Aguilar.  He mentioned several cases in Eastern Europe and Latin America of businessmen in currently using Panama companies with bearer shares to shelter from authoritarian regimes the personal assets they have earned.

According to the Sharman study, "available evidence strongly suggests that Panama is significantly more compliant with international beneficial ownership standards than many OECD countries, especially the United States". 20 out of 34 OECD countries allow bearer shares, and have not immobilised them, including important financial centers like the UK.   Panama is not a member of the OECD.  Aguilar also pointed out that the England and the U.S. state of Wyoming have business entities authorized by law to issue bearer scrip and bearer share warrants without being surrendered for immobilization.

A plan for immobilization of bearer shares of Panama companies has been opposed by the University of Panama School of Law and several local practitioners.

Mr. Aguilar is a graduate of Universidad Santa Maria la Antigua (LLB) and Washington College of Law at The American University (LLM) International Trade & Banking program. Previously he has been selected by the Central American business weekly CAPITAL FINANCIERO as one of the "40 under 40" acknowledging to his achievements as a young legal professional. He specializes in corporation law and trust & estates matters.

About Lombardi Aguilar Group  

Lombardi Aguilar Group is a partnership of consultants created as an alternative for clients worldwide who seek fast, innovative and effective solutions to their legal problems. The firm currently provides services to individual and corporate clients in Panama as well in the Americas, Europe and Asia. Its partners maintain a commitment with professional ethics and social responsibility by participating in the board of directors of groups such as the Panama Bar Association, the Alliance Francaise, the German and the American Chambers of Commerce (AMCHAM) of Panama, and the Association of Chinese-Panamanian Professionals (APROCHIPA).  
The firm centers its law practice in private client services and asset protection (Private Interest Foundations, Trusts), business structures (Offshore Corporations), tax planning, real estate and e-commerce. It also advices in areas of Law such as Corporate, Commercial, Intellectual Property, Maritime, Tax, Environmental and Immigration Law as well as related litigation.
For more information, contact +507 6638-8707   +507 396-5080, e-mail info (at) laglex.com, or see: Lombardi Aguilar Group http://www.laglawyers.com/