Panama, November 2016.
Act 52 of October 27, 2016. That establishes the obligation to maintain accounting records for certain legal persons and dictates other provisions.
Please present this letter to extend our most cordial greetings and, at the same time, to contact you, with the purpose of informing you that, as of January 1, 2017, is in effect Law 52 of October 27, 2016, which states "The obligation for companies and private interest foundations that do not perform operations that are perfected, consumed or have their effects within the Republic of Panama (offshore), should keep accounting records and supporting documentation in the office of its resident agent, residing within the Republic of Panama or any other place within or outside the Republic of Panama.
In case of having the requested documentation outside the national territory, (must be available for a period of not less than 5 years) counted from the last day of the calendar year for the transactions that were completed where these records are applied, or the last day of the calendar year in which the legal person ceases its operations. The legal personas are obliged to provide the resident agent, in writing, with the physical address of the accounting records, the contact details of the person who has them in custody and any modifications made to them.
It is important to note that if the resident agent fails to provide the pertinent documentation within a period of not more than fifteen (15) business days as indicated by law, the resident agent will be obliged to resign within ten (10) business days and present this resignation to the Public Registry Office, otherwise you will be exposed to a fine of five hundred dollars ($ 500.00).
For the fulfillment of this Law, the required documentation will be understood as follows:
Accounting Records: Information that clearly and precisely indicate the commercial operations of the legal persons, their assets, liabilities and patrimony, which determine the financial situation of the legal person, as well as to prepare financial statements of such legal person.
The breadth of accounting records will depend on the complexity and magnitude of the activity to which the legal person is dedicated.
Support Documentation: all contracts, invoices, receipts or any other document that can justify or support the transactions carried out by the legal person.
The resident agent is obliged to keep under strict confidentiality the accounting records and supporting documentation in his custody, and must be delivered exclusively to the competent authorities after a formal request.
Failure to comply with the obligations established by this law, the legal person may be punished with fines of one thousand dollars ($ 1,000.00), and one hundred dollars ($ 100.00) for each day that elapses without remedying the cause thereof.
Likewise, Law 52 indicates that failure to pay the single annual rate of the legal persons in the period, in which it is caused, will result a non-registration at the Public Registry of Panama of any corporate act subject to registration and non-issuance of certifications to such legal persons. Likewise, the Public Registry will suspend corporate rights to legal persons that incur in delinquency in the payment of the single annual rate for a period of three (3) consecutive years or that is delinquent in the payment of any fine or penalty imposed by the competent Authority and / or remain without designating a resident agent for a period of more than ninety (90) calendar days following the waiver or removal of the former resident agent.
Understanding that if your company is in the first half of the year, your deadline would be July 15, 2019 and if your company is in the second half of the year, your deadline would be January 15, 2020.
The suspension of Corporate Rights entails not being able to:
- Initiate legal proceedings, conduct business or dispose of assets;
- Make claims or exercise any right;
- Perform any corporate action that is mandatory for the legal entity.
In the same way they will be able to:
- Make a request for reactivation;
- Continue to defend processes initiated against them; and
- Continue legal proceedings instituted on your behalf prior to the date of suspension.
The responsibility of the directors, officers, administrator, shareholders, partners, members of the founding council and resident agent is not altered by the suspension of corporate rights.
The reactivation of corporate rights of the legal person will have a term of two (2) years as of the three (3) years established by the delinquency of the single annual rate. During this period, any director, officers, administrator, shareholder, member of the founding council, resident agent or any interested third party may request its reactivation and the legal person may reinstate its activities by paying a fine of one thousand dollars ($ 1,000.00) to the competent authority which ruled the suspension and the legal person must remedy the causes that gave rise to such suspension.
The Public Registry of Panama will proceed to the definitive cancellation of the legal person if its reactivation does not take place within two (2) years, and as a result, the liquidation process will be initiated in accordance with the provisions of the Panamanian Law.
Likewise, the resident agent reserves the right to resign from the position in the event that no response is received from the communication of collection or compliance with legal rules by legal persons (clients).
In case you want our services to keep the accounting records and supporting documentation, please contact our offices to inform you of our fees.
If you have further question, please do not hesitate to contact us.
MORENO & ARJONA BUREAU