Corporate Law – Utilizing Panama – Bearer Shares vs Registered Shares

Photo of Andrew Cuevas.

Cuevas, Garcia & Torres, P.A. .

Vantage Property Title Company.

Andrew Cuevas, Esq. – President
E-mail: [email protected].

Tel: (305) 461-9500
Fax: (786)362-7127


Mr. Andrew Cuevas, Esq., is the President of Cuevas, Garcia & Torres, P.A., and Vantage Property Title Company. Cuevas, Garcia & Torres, P.A., provides legal services in the areas of Community Association Law, Real Estate law, and Business Immigration, including title insurance services through Vantage Property Title Company. If you have any questions regarding this article or any other questions, you may contact Mr. Cuevas at (305) 461-9500 or via e-mail at [email protected]. If you are interested in reading previous newsletters, please visit, select the icon for Newsletters , and then choose the area of law you are interested in.

The purpose of this article is to provide a brief explanation of the use of Panamanian corporations, the various reasons for utilizing such corporate structures, and the method in which shares can be held by the owners of the corporations. For certain tax and privacy purposes, from time to time foreign individuals open offshore corporations in the Republic of Panama and utilize these corporations either to acquire real property directly in the United States, or to be shareholders of United States entity which ultimately acquire US properties. Several reasons for utilizing corporations in these “fiscal paradises” include maintaining confidentiality, avoiding assets being attacked in litigation, and for estate planning. It should be noted that owners of shares of these companies have the obligation to comply with all the tax laws of their country of origin and the countries in which they are conducting business/residing. Another advantage with Panamanian companies is that so long as the business activity being conducted is not done within the territory of Panama, there is no obligation to pay taxes in Panama by the income generated in the company’s name (this does not relieve the owners’ obligations to comply with tax laws in their own country).

The shares for such companies can be held in the form of registered shares (where actual stock certificates are issued) or in the form of bearer shares (where shares do not have an actual owner name on it but the physical holder of the shares is the owner of the company). In order to prevent the illegal transfer of bearer shares and for several other reasons, the laws of the Republic of Panama allows Panamanian corporations to keep bearer shares so long as the shares are deposited with a Private Custody Agent that can be us as Resident Agent of the company. This law came into effect on May 4, 2015 for newly created companies and for companies established before that date, the Law provides a deadline until December 31, 2015 to comply with this requirement.


If you have bearer shares and want to physically keep them, the corporation’s Articles of Incorporation must be amended in order to allow the entity to employ the Custody Procedure. This procedure must be authorized by the corporation’s Board of Directors or by the Shareholders Assembly and this decision must be registered in the Panama Public Registry before December 31, 2015. To comply with this formality and to be able to provide the Shares Custody Services, the Law requires that the owner of shares issued to the bearer must issue and deliver to the Private Custody Agent an affidavit confirming the details of the share ownership together with the original share certificate. If owners do not want to maintain bearer shares, the Board of Directors must hold a meeting to authorize the cancellation of the shares issued in bearer form and the issuance of new share certificates in registered form. This document is not registered in the Panama Public Registry and thus maintains the shareholder information in strict confidentiality.

If by December 31 2015 the amendment required by the new registration procedures has not been implemented, the shareholder will not be able to exercise the rights inherent to shareholders vis-à-vis the corporation, its Board of Directors and the Panama Public Registry.


If the corporation’s Articles of Incorporation allows the issuance of both registered shares and bearer shares, and the shares have only been issued in registered form, then no procedure is required since the Law will automatically disable the ability to issue bearer shares to all companies incorporated before May 4, 2015, if they have not completed the amendments described above, prior to December 31, 2015.

This article is solely a partial explanation of all the issues related to the topic of this newsletter, and is not to be considered legal advice. All persons who may be affected by these issues should consult with their legal counsel to obtain explanations of all issues addressed herein and what steps would be necessary to protect their legal rights.