Law 52 on the Accounting Records for corporations and private interest foundations in Panama.
By means of Law number 52 of October 27, 2016 (hereinafter identified as “Law 52”), the National Government has established that corporations and private interest foundations that do not carry out operations that are perfected, completed or have their effects within the Republic of Panama, are required to keep accounting records and to maintain supporting documentation of their operations, beginning in January 1, 2017.
The legislation defines “accounting records” as data that clearly and precisely indicate the commercial operations of legal persons, their assets, liabilities and equity, which enable the preparation of financial statements and the determination of the financial situation of the legal person.
The “supporting documentation” of such business operations includes contracts, invoices, receipts or any other information necessary to document the transactions carried out by the legal person. Accounting records and supporting documentation must be maintained and available for a period of not less than five years, counted from the last day of the calendar year within which the transactions for which these records apply were completed, or the last day of the calendar year in which the legal entity ceases operations. The accounting records and supporting documentation of the legal entity may be kept at the offices of its resident agent within the Republic of Panama or at any other place within or outside the Republic of Panama that its administrative bodies determine.
In the cases in which they are kept in a place other than the offices of the resident agent, legal entities will be required to provide the resident agent, in writing with: 1. The physical address where the accounting records and supporting documentation are kept. 2. The name and contact details of the person who keeps them in your custody. 3. Legal entities must inform the resident agent, in writing, of any change in the physical address or contact information regarding where the accounting records and supporting documentation are kept, in a period not exceeding fifteen business days, counted from the date the respective change was approved. If the legal entity keeps the accounting records and supporting documentation outside the Republic of Panama, it will be obliged to provide them to the resident agent, upon request from the Panamanian competent authority, within a period of no more than fifteen business days, counted from of the notification of said request for information to the resident agent of the legal entity.
In the case of legal entities that do not carry out commercial activities and are exclusively dedicated to being asset holders (whatever their nature), they must provide information indicating the value of the assets they hold and the income received from said assets when required by the competent authority.
In the case of legal entities that perform commercial activities outside of Panama, they must provide the Journal and the General Ledger when required by the competent authority. An exception shall be made in the case of legal persons engaged in the purchase and sale of debt and commercial securities of a public nature, or issued by the Government or Municipalities, as well as private, or issued by individuals or commercial companies, to profit in their resale or by any other means of commercial speculation; in that case, the custodian’s statement or balance sheet of the company will suffice instead of the Journal and General Ledger
In the event that the legal entity does not provide the accounting records and the support documentation to the Registered Agent within the above-mentioned period, the Registered Agent is obliged to resign and stop acting as the entity’s Registered Agent.
Likewise, Law 52 states that corporate rights will be suspended for the legal entity that fails to appoint a resident agent for a period greater than ninety (90) calendar days, after the resignation, removal or termination of its former resident agent.
Failure to comply with these provisions by the legal entity will be sanctioned with a fine of US $ 1,000.00 plus US $ 100.00 (legal currency of the United States of America) per day, from the time of the breach until it is rectified.
The accounting records and supporting documentation will be kept by the resident agent or the legal entity in strict confidentiality, so they will not be considered as public information; must be delivered exclusively to the Panamanian competent authority upon formal request to the resident agent.
It is noteworthy that this requirement does not affect the operations of companies or private interest foundations, nor the way in which they are used. It limits itself to extending to these legal entities the fulfillment of a formality of the legal entities, by their nature.