Dear Clients:
Please be advised that on October 28th, 2016, it was published in the Official Gazette of Panama, the Law 52 of October 27th, 2016, which establishes the obligation to keep accounting records to any legal person, whose operations take effect outside the territory of Panama. This includes corporations and private interest foundations. Said law will come into force on January 1st, 2017.
Please find below the key summaries:
ACCOUNTING RECORDS
The main obligations this Law indicates in relation to accounting records are the following:1) Legal entities that do not perform operations that are perfected, consummated or take effect within the Republic of Panama are required to keep accounting records and keep its supporting documentation in the offices of its Resident Agent in the Republic of Panama or in any elsewhere inside or outside the Republic of Panama, as determined by its management.
1) Legal entities that do not perform operations that are perfected, consummated or take effect within the Republic of Panama are required to keep accounting records and keep its supporting documentation in the offices of its Resident Agent in the Republic of Panama or in any elsewhere inside or outside the Republic of Panama, as determined by its management.2) The definition of Accounting Records, according to this Law is the following: Information that indicates clearly and precisely the business operations of the legal person, assets, liabilities and equity, and allows to determine the financial situation of the legal person, as well as to prepare financial statements of such legal person. The breadth of the accounting records will depend on the complexity and magnitude of the activity of each legal entity.
2) The definition of Accounting Records, according to this Law is the following: Information that indicates clearly and precisely the business operations of the legal person, assets, liabilities and equity, and allows to determine the financial situation of the legal person, as well as to prepare financial statements of such legal person. The breadth of the accounting records will depend on the complexity and magnitude of the activity of each legal entity.3) The accounting records and supporting documentation must be kept and be available for a
3) The accounting records and supporting documentation must be kept and be available for a period not less than five years, counted from the last day of the calendar year for which transactions for applying these records were completed, or the last day of the calendar year in which the legal person ceases its operations.4) In cases where the accounting records and supporting documents are kept in a place other than the offices of the Resident Agent, legal persons are obliged to provide the Resident Agent in writing the following information:
4) In cases where the accounting records and supporting documents are kept in a place other than the offices of the Resident Agent, legal persons are obliged to provide the Resident Agent in writing the following information:a) The physical address where the accounting records and supporting documentation are kept.
a) The physical address where the accounting records and supporting documentation are kept.
b) The name and contact details of the person who keeps said accounting records.
c) Legal persons must inform the Resident Agent in writing of any change of address or contact information regarding where the accounting records are maintained and supporting documentation, in a period within fifteen business days, counting from the date on which the respective change was approved.5) In the case the legal entity keeps the accounting records and supporting documentation outside of the Republic of Panama, he/she will be obliged to provide them to the resident agent on the request of the competent authority, within no more than fifteen business days, counted from the notification of the information requirement to the Resident Agent of the legal person on whom the information is requested.
5) In the case the legal entity keeps the accounting records and supporting documentation outside of the Republic of Panama, he/she will be obliged to provide them to the resident agent on the request of the competent authority, within no more than fifteen business days, counted from the notification of the information requirement to the Resident Agent of the legal person on whom the information is requested.6) In the case the legal entity does not provide to the Resident Agent the accounting records and supporting documentation within the period specified in the preceding article, the Resident Agent will be forced to resign as Resident Agent of the legal entity, within not more than ten business days counted from the next day after the deadline established in the previous article. Such resignation shall be submitted in writing to the Public Registry of Panama.
6) In the case the legal entity does not provide to the Resident Agent the accounting records and supporting documentation within the period specified in the preceding article, the Resident Agent will be forced to resign as Resident Agent of the legal entity, within not more than ten business days counted from the next day after the deadline established in the previous article. Such resignation shall be submitted in writing to the Public Registry of Panama.7) If the Resident Agent does not file in the Public Registry of Panama its resignation within the ten working days mentioned in the preceding paragraph, the competent authority shall impose a penalty of five hundred dollars (B./500.00) and order the Public Registry the definitive removal of the resident agent of the legal entity. The removal will result in such resident agent may not be re-registered as such for the same legal entity.
7) If the Resident Agent does not file in the Public Registry of Panama its resignation within the ten working days mentioned in the preceding paragraph, the competent authority shall impose a penalty of five hundred dollars (B./500.00) and order the Public Registry the definitive removal of the resident agent of the legal entity. The removal will result in such resident agent may not be re-registered as such for the same legal entity.8) In
8) In case of removal of the Resident Agent, in accordance with the provisions of this article, the Public Registry of Panama shall not register a new Resident Agent for the legal person sanctioned until the competent authority informs that the causal that originated the sanction have been corrected.
PENALTIES
The legal person that does not comply with the obligations established under this Law shall be punished by the competent authority with:
a) A penalty of one thousand dollars (US$ 1,000)
b) A penalty of one hundred dollars (US$ 100) for each day that passes without the cause that led to the breach is corrected.
Do not hesitate to contact our Panama law firm for any questions regarding the above mentioned new regulation.
Best Regards,
Mata & Pitti Abogados