We inform you that, during the month of November of this year, Law 254 of November 11, 2021 was approved, which modifies existing laws regarding accounting records, due diligence that must be carried out by all previous resident agents. to the incorporation of legal entities and during their validity, and a possible registry of final beneficiaries, as is standard in most jurisdictions worldwide.
Although this Law is pending regulation, we allow ourselves to share below the aspects of it that are of interest to you, with the aim of keeping you informed about legal progress in Panama.
As you know, and to legal entities, whether offshore or not; that operate in Panama or abroad, must keep, since 2017, accounting records and their supporting or supporting documentation.
The aforementioned Law 254 updated the definition of “Accounting Records” as “those that clearly and precisely indicate the operations of the legal entity, its assets, liabilities and equity, as well as that serve to determine the financial situation with reasonable accuracy at all times and allow the preparation of financial statements”
For its part, the “Support Documentation “is one that “includes contracts, invoices, receipts and / or any other documentation necessary to support the transactions carried out by a legal entity and the Financial Statements are those composed of the balance sheet, state of results, statement of changes in equity and the statement of cash flow and the notes of the financial statements.”
The modifications introduced by Law 254 establish that the accounting records and supporting documentation must be kept for the next five (5) years from the calendar date on which the transactions for which they apply were generated.
In addition, legal entities must provide the resident agent, as of April 30 of each year, the accounting records or copies thereof, relative to the fiscal period that ended on December 31 of the immediately preceding year, and notify the Resident agent the name, contact information of the person who keeps the accounting records and supporting documentation and the physical address where they are kept.
Additionally, it introduces that, for the dissolution of a legal entity, the client will have to send the resident agent the accounting records and supporting documentation corresponding to the five years prior to the date on which the dissolution is registered, who will be in charge of its custody. The deed of dissolution will have to include a statement from the resident agent proving that they are in possession of said documents.
In addition, a registry of final beneficiaries of legal entities will be implemented, through a technological platform with restricted access, which will be fed by the resident agent at the time the legal entity is created or when it is appointed as its resident agent with the information. that is requested from the client at the time of doing the due diligence, which can only be accessed by a Panamanian competent authority for reasons of investigation of crimes against money laundering, tax evasion and financing for the proliferation of weapons of mass destruction.
Juan Pablo Fábrega Polleri