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Regulations on Accounting Records for Offshore Companies 

by Karla Pinilla, Advisor, Morgan & Morgan

Published: August, 2019

Submission: August, 2019

 



In order to comply with the international guidelines regarding corporate transparency, the government of Panama enacted Law 52 of October 27, 2016 in the Official Gazette. This Law establishes the obligation for Panamanian companies and other entities to maintain accounting records, financial records and supporting documentation of all transactions that took place during the last five (5) years, so that their financial status can be easily determined with reasonable accuracy.


The corresponding records and documentation should be sufficient to demonstrate and evidence the transactions executed by the company accurately.


To whom does this Law apply?


Law 52 was regulated by Executive Decree No. 258 of September 13, 2018 and is applicable to legal entities that do not carry out operations to be completed or that will not have effects within the Republic of Panama.


Legal Entities are any corporation, limited liability companies, any other legal entity for commercial purposes and private interest foundation, incorporated and in force in accordance with the laws of the Republic of Panama


Regulations established in the Law


Accounting records must be held by the Resident Agent; otherwise, the clients are obliged to provide to the Resident Agent the physical address where they are held and the name and contact information of the person in charge of keeping these documents in custody. Additionally, if there is a change of address for any reason, the client must inform the Resident Agent of the new address within the next fifteen (15) days.


If the information is not kept by the Resident Agent, it must be delivered to it within the next fifteen (15) days counted as of the date on which this information is requested.


Additionally, Resident Agents are required to keep a copy of the records of shares and shareholders of the companies under their administration.


The Resident Agent will be obliged to resign as such in the event that the legal entity fail to provide the accounting records within the aforementioned period of fifteen (15) days, a new Resident Agent may not be registered until the grounds that gave rise to the sanction are remedied.


Such information regarding where the accounting records are held are relevant to Article 5 of Law 52, as:


The physical address where the accounting records are held and the name of the person who keeps the accounting records and supporting documentation.


The records must be prepared and endorsed by a Certified Public Accountant of the Republic of Panama.


Sanctions


Legal entities that fail to comply with the obligations established in Law 52 will be subject by the competent authorities to a fine of $1,000.00 and a penalty of $100.00 for each day of noncompliance.


 



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