Myths & facts about Panama corporate powers of attorney

Are powers of attorney granted by a corporation made void when its legal representative is changed?

This is irrational because then a corporation would be able to shake the obligations incurred by a previous attorney-in-fact just by switching legal representatives.

A corporation is a type of entity in Panama and as a juridical person that it is, it has to appoint an individual (or natural person) to act on its behalf.   While natural persons can act on their own behalf, Article 73 of the Civil Code specifies that juridical persons like corporations “shall be represented judicially and extra-judicially by the natural persons which the laws, or the respective by-laws, articles of association, regulations or foundation deeds determine; and upon said determination by the persons which a resolution of said community, corporation or association, appoints for said purpose”.

This provision applies also to corporations, which Corporation Law (Law 32 of 1927) specifies in Article 63:

Article 63. Directors may be removed at any time by the votes, cast to that effect by the holders of the majority of the subscribed shares with a voting right in the elections of directors. Officers, Agents, and employees may be replaced at any time by means of a resolution adopted by the majority of the Directors or in any other manner provided by the articles of incorporation or by-laws.

The law does not say that the changing, incapacity or death of a legal representative or director results in the powers of attorney that he granted in the past on behalf of the corporation becoming void.  Being the attorney-in-fact of a power of attorney an agent of the corporation, they are replaced by a decision of the board, not because new directors have been appointed.

Does a corporation which authorizes its Legal Representative in its charter to appoint attorneys-in-fact, also need a shareholder resolution?  The charter of said corporation states:

The Board of Directors may likewise elect other officers, agents and employees it deems convenient. Any person may be in charge of more than one office.  The Legal Representation of the corporation will be exercised indistinctly by the President, the Secretary or the Treasurer, acting individually.  The legal representative may grant General Powers of Attorney in favor other individuals or entities to exercise all powers on behalf of the corporation including, without limitation, to desist, settle, substitute and delegate.

The Panama Corporation Law specifies in Article 65 that:

The Corporation shall have a President, a Secretary and a Treasurer, who shall be elected by the Board of Directors, and it may also have all such officers, agents and representatives as determined by its Board of Directors, by-laws or articles of incorporation, same being elected in the manner established therein.

This is a case which illustrates why it is important to read the charter when determining the scope of corporate authority of a Panama corporation.  In the specific case of the question, the charter has a special clause stating that either one of the President, the Secretary or the Treasurer, acting individually (meaning without the need of a shareholder or board resolution providing authorization), may grant a General Power of Attorney in favor of other individuals or entities to exercise all powers on behalf of the corporation.   These powers include those which other articles of the Civil Code specify requires an express authorization: to desist, settle, substitute and delegate said power of attorney.

The Civil Section of the Supreme Court of Justice has stressed in an unusually candid decision that absurd decisions by public officials should not get in the way of a legal representative as long as he is acting as authorized by the letter of the corporation charter:

It does not seem adequate or correct that the judge, in the absence of direct and express provisions with regard to a specific matter, is allowed to absurdly reason and interpret legal provisions.  And that would be precisely what would happen if the legal representative of a corporation was denied, the right to act on behalf of the interests of said corporation, as long as the acts performed as comprised within the corporate purpose and are related to the own development of the corporation represented.  Remember that in private law matters anything that the law does not prohibit may be done.   If the Law nor the corporate charter of [the corporation] prohibited [the legal representative] to participate in the shareholder meeting of [another corporation] as proxy of [the corporation], the Court does not see a reason to annul the results of said meeting. (Decision of February 13, 1996, MGRevilla vs CDH, S.A.)

Is a Power of Attorney granted by a corporation to be in force from May 29, 2007, to May 28, 2008, illegal because it was granted on May 25, 2007?

Powers of Attorney are forms of mandate, which like any civil obligation may be conditioned in their scope and also their duration.   Many provisions of the Civil Code support the execution of a power of attorney for its exercise in a future date:

• Article 999 provides that in a conditional obligation the acquisition of rights, as well as their resolution or loss, depend on the event which constitutes the condition.   In the case of the question, the acquisition of rights is conditioned to the elapsing of May 29, 2007, date when the attorney-in-fact will become empowered to exercise, even if the document was granted 4 days before.
• Article 1002 provides that the condition that an event occur extinguishes an obligation from the date it elapses.   By being the power of attorney granted until May 28, 2008, the elapsing of said date terminates the powers for said attorney-in-fact.   However, some case law provides that mandates are automatically extended if their duration ends without a resignation by the attorney-in-fact or substitution by another one (Decision of August 18, 1991, quoted in Dulio Arroyo, 20 Años de Jurisprudencia de la Sala Civil, Panamá, 1982, p. 300).
• Article 1010 states that obligations which have a definitive date set for their performance, will only be demanded when said date arrives.  Therefore, the grantor may be able to demand on May 29 that the attorney-in-fact perform the accepted power of attorney.

Legal doctrine acknowledges the legality of conditional obligations and explains that dates can be used to suspend obligations or to resolve or terminate them.  In the specific case of article 1010, “this does not mention a suspension term but the existence of an initial term is given, since it is the moment when the effects of the obligation begin.  However, when the solution or performance of the obligation is delayed, the creditor may not exercise his action before the term arrives, except in the case of what has been made for its own benefit, since if nothing has been established, it is supposed to be for the benefit of both parties.” (Bonifacio Difernan, Curso de Derecho Civil Panameño, Panamá, 1981, p. 138)

When a power of attorney is granted by a corporation, additional rules of the Commercial Code are applicable:

• Article 580A was enacted in 1997 and in addition to stating that general powers of attorney do not need to be registered unless they authorize changes to title over real estate, also states that Powers of Attorney are valid from valid from the date they are granted in public deed or private document with a date confirmed by Notary Public.
• However, Article 581 states that when a power of attorney was made according to rules or instructions, these will be integral part of that one.   This means that if this case the document contained a limitation in its duration whereby the attorney-in-fact can only act as such from May 29, 2007, to May 28, 2008, even if the document was granted before Notary 4 days before.  The anticipated execution certainly does not make the power of attorney illegal.

Sample powers of attorney in English with with a future date of effectiveness are available online for Illinois and Utah.

Mandates are terminated by their revocation, resignation of the attorney-in-fact, or death, incapacity, bankruptcy or insolvency of grantor or attorney-in-fact.   This is the reason why in most civil law countries, living wills drafted under Common Law rules need to be redrafted for their enforcement in Civil Law countries.

Do General Powers of Attorney granted by a corporation need to be registered?

No.  A prevalent practice among Panama banks (Caja de Ahorros and others) is to demand that General Powers of Attorney be registered in the Public Registry.  This seems to be a remnant of what was a legal requirement Articles 57 (Section 7) of the Commercial Code and 1776 (Section 7) of the Civil Code for 90 years until Law Decree 5 of 1997 revoked said requirement.   Said Law Decree enacted a Article 580A to the Code of Commerce stating that general or special powers of attorney ("mandato") are valid from the date they are granted in public deed or private document with a date confirmed by Notary Public and may be optionally registered in the Public Registry.

If the choice is made to register a power of attorney, revocation of the registered power of attorney must also be registered unless it is not required from the text of the original document. However, Article 1776 (8) of the Civil Code still requires registering a power of attorney for the sale or encumbrance of real estate located in Panama.

Since corporations are commercial entities the Commercial Code is applicable, so another merchant such as a bank may require under its Article 592 that the written power of attorney be shown.    However, this still does not make compulsory under Panama Law the registration of a general power of attorney.

The First Superior Tribunal of Justice decided an appeal by stating that a deed containing a power of attorney granted between individuals to manage a property (excluding its sale or encumbrance) did not need to be registered because 

“said power limits its representation to matters and acts related with [a specific property in one building] and not to all matters of the grantor, and as consequence of which we can conclude that its registration in the Public Registry is not a requirement for its validity, since it is not a general power of attorney in the terms of the Law”  (Decision of August 30, 1991, IHMojica v JOvadia et al, quoted in Jaime Jovane, Jurisprudencia Civil al Dia, Panama, 1993, 419-420)

In the end, an attorney qualified in the jurisdiction of the corporation and another where the power of attorney will be used must examine all corporate and attorney documents to make a determination on how to proceed.

For more information see:

Legispan law database  http://www.asambl ea.gob.pa/main/LegispanMenu/Legispan.aspx

Infojuridica law database http://infojuridica.proc uraduria-admon.gob.pa

Judiciary database http://www.organojudicial.gob.pa

Unauthorized reproduction without mention of http://mypanamalawyer.blogspot.com as its source is prohibited and punishable by local laws and international conventions.

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

Port of Charleston gets ready for the Panama Canal expansion

U.S. East Coast ports are rushing to upgrade aging infrastructure to serve cargo carried by post-Panamax ships expected to make their way after the Panama Canal expansion concludes.

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The Western Coast of the United States has always been known for its historically bustling ports and empire of cargo ships and manufacturing industry. However, in 2014 many are predicting a major shift from the West Coast ports to East Coast ports. The shipping industry has recently made a move towards bigger ships. These mega container ships are called “post-panamax” ships because of their larger size. This large size also prevents these ships from safely navigating the Panama Canal forcing shipping and unloading to occur mostly on the Western ports of the United States. Due to an Oct. 22, 2006 referendum, Panamanians approved the Panama Canal Expansion Project which will add a third set of locks allowing the Panama Canal to handle the so called “post-panamax” ships safely and other ships that are more than twice as large as today’s ships easily. This widening of the Panama Canal will promote many shipping companies to make a move from the overcrowded Western ports to the now easily accessible and more efficient ports of the East Coast.

The South Carolina Port Authority is currently preparing for this invasion of giant cargo ships. Already, there are plans in the works to expand the port of Charleston. Also the South Carolina Port Authority has stated that the Charleston port is already “big-ship ready” with a harbor capable of handling up to 47 feet of draft. In fact the Charleston port has already handled one of the world’s biggest ships, the MSC Rita. The MSC Rita steamed into port in February of 2010 with a nearly 48-foot draft and is capable of carrying about 8,100 20-foot-long shipping containers. The South Carolina Port Authority has also stated that the expansion will not just be a simple add-on to the port but the expansion will be with long-term goals for the future of the Charleston port in mind. The South Carolina Port Authority has already received federal funding in order to do more reconnaissance and study to further deepen the port even more for future heavy cargo ships to easily pass through the port. The Charleston port is gearing up for a surge of incoming ships in 2014 due to the widening of the Panama Canal but the Port Authority is on top of everything, assuring industrial leaders that Charleston will be ready.

Source: Charleston Industrial http://www.charleston industrial.com

See also:
Charleston, rest of port industry awaits Panama Canal expansion
Trade conference covers Panama Canal, labor updates
Southern Carolina International Trade Conference - Sep 9-11, 2013

Purchase of HSBC Panama by Bancolombia creates winners and losers

HSBC sold its Panama assets as was rumored already for several months in the local financial center.   HSBC Latin American Holdings (UK) Limited signed with Bancolombia a promise agreement for the sale of HSBC Bank (Panama), S.A.      Previously HSBC BANK (USA) purchased the Panama assets of the then-Chase Manhattan Bank, N.A. - which had operated for more than half a century in Panama - and managed in a few years to squander the goodwill that "El Chase" had generated among local and regional customers.    Any negative customer perception it had after HSBC purchased Banistmo did not matter as long as statements were acceptable and large clients such as the Panama Canal Authority remained.    HSBC subsidiaries also have insurance and brokerage licenses.  Bancolombia does not have experience in major banking in Panama besides a small international license branch, and a labor shortage would it make it difficult to repeat the success in consumer banking that Venezuelan-owned Banesco had in a few years, which hired key staff from banks acquired by other merging banks.

The usual commentators will say this is proof that large banks flee Panama because it is blacklisted in several countries and with the OECD.   This does not explain why HSBC openly promotes its banking services as "offshore" in places like Dubai, Jersey and Hong Kong.

In the end, small markets like Panama are not attractive to mega-banks seeking larger markets like Argentina and Brazil.   Local banks of Panamanian capital continue serving local and foreign customers, while a few international banks find Panama useful to book offshore operations.

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Bancolombia Falls After $2.1 Billion HSBC Panama Deal

Bancolombia SA, Colombia’s largest bank, fell for a second day in Bogota trading after agreeing to pay $2.1 billon for HSBC Holdings Plc’s Panama unit in its biggest-ever acquisition.

The company’s preferred shares, which are more actively traded than the common stock, fell 2.5 percent to 29,920 pesos at 12:23 p.m. It was the second-biggest loser today on the country’s benchmark Colcap Index, which fell 0.8 percent.

The acquisition is the second Bancolombia has announced in Central America in two months. The shares have fallen 5.1 percent from this year’s high of 31,460 as analysts including Banco Santander SA’s Boris Molina and Luis Guzman speculated that the company may have to sell equity to pay for acquisitions and meet regulatory capital minimums.

“The stock is responding to the expectation that they’ll have to sell shares, even if they’re not running to do it,” Katherine Ortiz, an analyst at Corredores Asociados SA, said in a telephone interview from Bogota.

More in http://www.bloo mberg.com/news/2013-02-19/bancolombia-falls-after-2-1-billion-hsbc-panama-deal.html

See also

Superintendent of Securities Relevant Fact http://www.supervalores.gob.pa/informacion-del-mercado/hechos-de-importancia/269-hechos-de-importancia-2013/4656-hsbc-bank-panama-sa-adquirido-por-bancolombia-sa.html

Panama Stock Exchange Relevant Fact http://www.panabolsa.com/sys/upload/files/PDFs/informes/z_info_corporativa_6699_HSBC_Vende_HSBC_Bank_Panama_a_Bancolombia.pdf

HSBC BANK (PANAMA), S.A. Financials
HSBC LEASING, S.A. Leasing financials

HSBC operations remaining elsewhere http://www.hsbc.com.pa/1/2/es/grupo/hsbc-en-el-mundo

Compare Offshore Branches with HSBC Premier Offshore Banking http://www.hsbcpremier.com/1/2/hsbcpremier/en/compar
Why do offshore banking with HSBC Expat http://www.expat.hsbc.com/1/2/hsbc-expat/why-hsbc-expat/offshore-banking

Which HSBC Premier offshore banking centre will suit your needs? http://www.hsbcpremier.com/1/2/hsbcpremier/en/compare

Panama files dispute against Argentina at WTO

DISPUTE SETTLEMENT

Panama files dispute against Argentina’s trade measures in goods and services

Panama has notified the WTO Secretariat, 12 December 2012, of a request for consultations with Argentina on alleged discrimination and restrictions in certain measures applied by Argentina to trade in goods and services.

This is the eighth dispute involving Argentina notified to the WTO Secretariat since May this year. The other disputes are cases filed by the European Union, the United States, Japan and Mexico against Argentina, a case filed by Argentina against the European Union and two cases against the United States. 

> Further information will be available within the next few days in document WT/DS453/1

What is a request for consultations?

The request for consultations formally initiates a dispute in the WTO. Consultations give the parties an opportunity to discuss the matter and to find a satisfactory solution without proceeding further with litigation. After 60 days, if consultations have failed to resolve the dispute, the complainant may request adjudication by a panel.

> Other disputes involving Panama
http://www.wto.org/english/tratop_e/dispu_e/dispu_by_country_e.htm#pan
as complainant — 5 case(s): DS105, DS158, DS348, DS364, DS366
as respondent — 1 case(s): DS329
as third party — 6 case(s): DS27, DS246, DS415, DS416, DS417, DS418

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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RAK as an offshore trust jurisdiction

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Trusts and Corporate Trusts

RAK Offshore also provides an ideal location to establish various kinds of offshore trusts. An offshore trust is a light and versatile vehicle that can be used as a direct investment that offers great income, tax, and inheritance advantages. An offshore trust can also be used to hold companies or other assets under the RAK Offshore Special Corporate Trusts Regulations.

The key elements of a RAK Offshore trust are:

The Deed: A constitution or legal agreement which sets out the duties and responsibilities of the trustees, the rights of beneficiaries as well as the specifics governing the trust property.

The Settler or Grantor: The person or entity who establishes the trust and lays down its rules

The Trustee: A licensed individual legally appointed to receive the trust property and to manage it in accordance to the terms of the trust deed.

The Beneficiaries: The persons or entities entitled to the benefits of the trust property

The Protector or Protection Committee: The person or people appointed by the settler as a guardian over the trustee and the trust property.

Trusts can be discretionary of nondiscretionary. In discretionary trusts, ownership, control, income and capital distribution vest in the trustees. The beneficiaries of the trust are not entitled to any benefits until the trustees exercise their absolute discretion. In non-discretionary trusts, the trustees have no discretion and all amounts accrue to the beneficiaries as of right.

Why choose RAK offshore for your trust

Trusts are a flexible way of handling both private and corporate affairs and there are numerous reasons to settle a trust with RAK Offshore.

RAK Offshore has developed a comprehensive, yet efficient legislation, to fulfill every potential need, from avoiding forced heirship or managing your employee benefits to establishing a charitable organization or simply protecting assets.

The range of trusts offered by RAK Offshore are:

Education Trusts: Income and capital are accumulated within the trust until the actualization of a conditional event. For example, a trust to fund the education of your children or grandchildren.

Employee Trusts: For holding pension fund monies or for employee incentive schemes

Spendthrift Trusts: For protecting prodigal or immature beneficiaries

Grantor Trusts: The settler retains control over income or capital, or retains power to revoke the trust

Charitable Trusts and Foundations: For advancing charitable causes. The distinct advantage of charitable trusts is that they are normally granted tax relief provided they meet certain requirements.

Corporate Trusts: For a business owner who wants to keep management control of his company, while transferring it to a beneficiary.

RAKOffshore also provides an ideal location to establish various kind of offshore trusts. An offshore trust is a light and versatile vehicle that can be used as a direct investment that offers greatincome, tax, and inheritance advantages. An offshore trust can also be used to hold companies or other assets under the RAK Offshore Special Corporate Trusts Regulations.

The key elements of a RAK Offshore trust are:

The Deed: A constitution or legal agreement which sets out the duties and responsibilities of the trustees, the rights of beneficiaries as well as the specifics governing the trust property.

The Settlor or Grantor: The person or entity who establishes the trust and lays down its rules

The Trustee: A licensed individual legally appointed to receive the trust property and to manage it in accordance to the terms of the trust deed.

The Beneficiaries: The persons or entities entitled to the benefits of the trust property

The Protector or Protection Committee: The person or people appointed by the settler as a guardian over the trustee and the trust property.

Trusts can be discretionary of nondiscretionary. In discretionary trusts, ownership, control, income and capital distribution vest in the trustees. The beneficiaries of the trust are not entitled to any benefits until the trustees exercise their absolute discretion. In non-discretionary trusts, the trustees have no discretion and all amounts accrue to the beneficiaries as of right.

Why 

choose RAK offshore for your trust

Trusts are a flexible way of handling both private and corporate affairs and there are numerous reasons to settle a trust with RAK Offshore.

RAK Offshore has developed a 

comprehensive, yet efficient legislation, to fulfill every potential 

need, from avoiding forced heirship or managing your employee benefits to establishing a charitable organization or simply protecting assets.

The 

range of trusts offered by RAK Offshore are:

Education Trusts: Income and capital are accumulated within the trust until the actualization of a conditional event. For example, a trust to fund the education of your children or grandchildren.

Employee Trusts: For holding pension fund monies or for employee incentive schemes

Spendthrift Trusts: For protecting prodigal or immature beneficiaries

Grantor Trusts: The settler retains control over income or capital, or retains power to revoke the trust

Charitable Trusts and Foundations: For advancing charitable causes. The distinct advantage of charitable trusts is that they are normally granted tax relief provided they meet certain requirements.

Corporate Trusts: For a business owner who wants to keep management control of his company, while transferring it to a beneficiary. 

RAK Offshore Trusts
Minimum Assets	No
Charitable Purpose Trust	Yes, but tighter control on charitable trusts
Perpetuity Period	99 years Wait and see provision Do not apply to charitable trusts
Re-domiciliation	Possible in and out
Choice of Proper Law	Very liberal Different laws can govern a trust
Revocable and Irrevocable	Yes
Accumulation	Possible
Registration of Trusts	Yes, anonymous
Exchange Control	No
License for Trustees	Yes
Confidentiality Rules	Strict
Financial Disclosure	Yes
Foreign Court Awards (for trust taking the law of the jurisdiction)	Immunity
Time Limit to bring Suit	2 years
Fraudulent Dispositions	Yes
Forced Heirship Excluded	Yes
Number of Trustees	1 to 4
Trustee as Beneficiary or Settler	All combinations possible
Protectors	Office of protectors allowed
Financial Guaranties	Yes
Tax Treaties	Yes
Compliant with the Hague International Convention on Trusts	Yes

• Flexible types of trusts available combined with liberal asset-protection provisions
• Strong protection for customer money
• Liberal choice of law governing the trust and the option of re-domiciliation
• No minimum amount of property
• Compelling confidentiality rules
• A trust estate may form an IBC
• Anonymous registration of trust
• Office of protectors is allowed
• No taxes

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If you need to form your RAK company or trust, contact us through our website, by email, Bitwine or Skype

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Panama IT Strengths and Weaknesses

Analysis: National IT Strengths and Weaknesses

The IT landscape of Panamá has undergone several important changes in the past five years. Although many significant advances have been made, improvements are still needed in many areas.

Strengths

1. Well Developed Telecommunications Infrastructure: as a result of privatization in 1997, and de-regulation in 2003 the market has changed dramatically. Although there is still a single local service provider, Cable and Wireless, individuals can now choose from different service offerings for their national long distance, and international calling needs. Cable and Wireless has made significant investments in the telecommunications infrastructure since it entered the market in 1997.

2. Increased Government Involvement in ICT Sectors: this year, the government started the introduction of a set of initiatives that intend to improve the ICT landscape of Panamá. The Panamanian government has developed a comprehensive plan, e-panama.gob.pa, that incorporates information and telecommunications technology, focuses on social and economic development, and seeks to increase participation of the population in issues of national importance. The e-panama plan includes e-government, e-education, e-economy, e-health, and e-democracy. This will provide lasting benefits regarding education, infrastructure, and investment incentives.

3. Low Cost of Labor: the cost of labor is much less than in developed countries such as the United States. For example, the monthly salary for a worker in a call center is between $500-600 per month.

4. Incentives for ICT Investments in the Country: the government will soon be formally establishing the Panamá-Pacific Special Economic Area that will provide tax incentives and benefits for ITC companies. Also, special laws have been passed, such as the one regarding call centers, in order to provide incentives for international companies to set up their call centers in Panamá.

5. FDI: FDI figures have increased dramatically in 2003, after experiencing a significant decrease for 2002.

Weaknesses

1. Lack of Trained Workforce: the workforce in Panamá is not trained in ITC specific areas. Also, the lack of individuals that have an advanced command of the English language is a weakness, since the government is trying to attract international companies in the ICT sector, such as call centers and help desks. The government is currently training about 3,000 individuals in advanced English in a time period of three months. This may continue in the future, especially as more companies establish themselves in the Panamá-Pacific Special Economic Area for ICT sector companies.

2. Low Computer and Internet Penetration Rates: Computing and Internet Diffusion are very low, especially when comparing them to countries like Costa Rica. Low computer and internet penetration rates may grow significantly after the e-panama.gob.pa initiatives are implemented.

3. No Domestic Production of Software and Hardware: currently, there is no significant domestic production of software or hardware in Panamá.

4. Legal Environment: there is a general perception of widespread corruption in the country. The legal system is not lacking in laws that protect the business community (such as copyrights and intellectual property), however the judicial system is slow and bureaucratic. Changes in this area are of vital importance if the country wants to be more appealing to international companies seeking to enter a Latin American market.

Source: Cecilia Stoute, INITEB site http://www1.american.edu/academic.depts/ksb/mogit/country.html

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/

Panama banking center has 93 active banks

Panama has 93 licensed banks, of which 14 are representative offices not allowed to receive deposits.   This leaves 2 government-owned banks and 48 full-service general license banks open to the general public. An additional 29 banks have international license banks which can receive deposits only from non-Panamanians.

General License
1. ALLBANK CORP. *
2. BAC International Bank Inc
3. Balboa Bank & Trust Corp
4. Banco Aliado, S.A
5. Banco Azteca (Panamá), S.A
6. Banco Bilbao Vizcaya Argentaria (Panamá), S.A. (BBVA)
7. Banco Bolivariano (Panamá), S.A.
8. Banco Citibank (Panamá,) S.A
9. Banco Davivienda (Panamá), S.A
10. Banco Delta, S.A (BMF)
11. Banco de Bogotá (Panamá), S.A
12. BANISI, S.A.
13. Banco G & T Continental (Panamá), S.A. (B.M.F)
14. Banco General, S.A.
15. Banco Internacional de Costa Rica, S.A (BICSA)
16. Banco Lafise Panamá, S.A.
17. Banco Latinoamericano de Comercio Exterior, S.A. *
18. Banco La Hipotecaria, S.A
19. Bancolombia, S.A.
20. Banco Panamá, S.A
21. Banco Panameño de la Vivienda, S.A. (BANVIVIENDA)
22. Banco Pichincha Panamá, S.A.
23. Banco Prival, S. A. (en español) - Prival Bank (en inglés)
24. Banco Trasatlántico, S.A.
25. Banco Universal, S.A.
26. Banesco, S.A.
27. Bank Leumi Le-Israel, B.M.
28. Bank of China Limited
29. BCT Bank International, S.A.
30. Capital Bank, Inc
31. Citibank, N.A.
32. Credicorp Bank, S.A.
33. FPB Bank Inc.
34. Global Bank Corporation
35. HSBC Bank (Panamá), S.A. *
36. Korea Exchange Bank, Ltd.
37. Mega International Commercial Bank Co. Ltd.
38. Mercantil Bank (Panamá), S.A.
39. Metrobank, S.A.
40. MiBanco, S.A. B.M.F
41. MMG Bank Corporation
42. Multibank, Inc.
43. Produbank (Panamá), S.A
44. St. Georges Bank & Company, Inc.
45. The Bank of Nova Scotia (SCOTIABANK)
46. The Bank of Nova Scotia (Panamá), S.A.
47. Towerbank International, Inc.
48. Uni Bank & Trust, Inc

* Relevant Changes
** Awaiting notice of approval

(c) Mypanamalawyer.blogspot.com Reproduction prohibited

International License
1. Andbanc (Panamá), S.A.
2. Atlantic Security Bank
3. Austrobank Overseas (Panamá), S.A.
4. BAC Bank, Inc.
5. Banca Privada D'Andorra (Panamá), S.A.
6. Banco Credit Andorra (Panamá), S.A.
7. Banco Corficolombiana (Panamá), S.A.
8. Banco de Bogotá, S.A.
9. Banco de Crédito del Perú
10. Banco de la Nación Argentina
11. Banco de Occidente (Panamá), S.A.
12. Banco del Pacífico (Panamá), S.A.
13. Banco Ficohsa (Panamá), S.A.
14. Banco Internacional de Perú, S.A.A – Interbank
15. Banco Santander (Panamá), S.A.
16. Bancolombia (Panamá), S.A
17. BHD International Bank (Panamá), S.A.
18. Inteligo Bank, Ltd.
19.Banco Colpatria Multibanca Colpatria, S.A., Sucursal Panamá
20. ES Bank (Panamá), S.A.
21. First Central International Bank
22. GNB Sudameris Bank, S.A.
23. GTC Bank, Inc.
24. Helm Bank (Panamá), S.A.
25. International Union Bank
26. PKB Banca Privada (Panamá) S.A.
27. Popular Bank Ltd., Inc.
28. Scotiabank Perú, S.A.A. Sucursal Panamá
29. TAG Bank, S.A.

* Relevant Changes
** Awaiting notice of approval

Source: http://www.superbancos.gob.pa/es/igee-informacion-general

For procedures to open a bank account, see also

http://mypanamalawyer.blogspot.com/search/label/bank%20account