Transparency Reforms in Panama: Impact on Companies and Ultimate Beneficial Owners

Law 254 of 2021 not only aligns with international standards of fiscal transparency but also imposes stricter regulations on legal entities, resident agents, and corporate structures in Panama. Some of the most important changes include:

• Identification of the Ultimate Beneficial Owner (UBO): It is now mandatory to identify and maintain an updated registry of a company’s true owners, removing the anonymity that previously prevailed.
• Annual Sworn Declaration: Resident agents must submit an annual declaration certifying that the information on ultimate beneficial owners is up to date.
• Sworn Declaration for Nominee Directors: Nominee directors must declare to the Superintendency of Non-Financial Subjects the companies they represent.
• Stricter Penalties: Significant fines and sanctions, including the potential dissolution of companies, will be imposed for non-compliance with the new regulations.

These changes reinforce Panama’s commitment to transparency and help prevent illicit activities such as money laundering and terrorist financing.

For those interested in incorporating a new company in Panama, Law 254 introduces several key considerations. Here are some of the main implications:

• Additional Registration Requirements: New companies must provide complete, verifiable information about their ultimate beneficial owners from the outset.
• Stricter Fiscal Compliance: New businesses must establish mechanisms to ensure strict adherence to transparency regulations and anti-money laundering laws.
• Increased Role of the Resident Agent: The role of the resident agent becomes even more critical, as they are responsible for ensuring legal compliance.

Given these new regulations, expert legal advice is essential to avoid penalties and streamline the registration and operational processes. At Limitless Legal, we can help you establish your company in Panama correctly and efficiently.

The anonymity of ultimate beneficial owners, which has historically attracted many businesses to Panama, is undergoing significant changes under the new regulations:

• Mandatory and Confidential Registry: All companies must maintain an up-to-date list of their ultimate beneficial owners, accessible only to the relevant authorities.
• Responsibility of Resident Agents: Resident agents are obligated to certify that the information on ultimate beneficial owners is accurate and current.
• Data Protection Measures: Although the information remains confidential, failure to comply will result in severe penalties.

These changes aim to strike a balance between eliminating the misuse of anonymity and ensuring the security and privacy of legitimate businesses.

Failure to comply with the new regulations can lead to serious penalties and legal risks:

• Heavy Fines: Depending on the violation, companies may face significant financial penalties.
• Operational Restrictions: Non-compliance may limit the ability to conduct business in international markets.
• Legal Liability: In severe cases, companies and their representatives may face legal investigations.

Ensuring regulatory compliance is essential to avoid these risks and operate with confidence.

Compliance with these new regulations not only avoids sanctions, but also brings strategic benefits:

• Improve business reputation: Companies that meet international standards build trust in investors and partners.
• Increased access to markets: Complying with regulations facilitates business relationships with demanding international markets.
• Reduction of legal risks: Implementing compliance measures minimizes the chance of facing legal problems.

Adapting to these changes allows companies to maintain a competitive and sustainable position in the market.