University of the Isthmus

Panama Headquarters

Bachelor's degree in Law and Political Science

Essay:
The main legal changes adopted by Panama regarding corporations
anonymous as a result of what happened due to the Panama Papers.

Presented by:
López, Rubén
8-823-2406

Subject:
Commercial Law II

Professor:
Carlos, Coto

Date:
February 2, 2023
 Introduction

In this case, we will talk about the Corporations created by one of the firms of
most important lawyers in Panama, Mossack-Fonseca. For years, politicians,
businesspeople, football players, distinguished individuals, and private citizens have purchased companies
with well-structured frameworks and in accordance with the laws carried out by a law firm
of lawyers.

Mossack-Fonseca creates and sells shell companies to intermediaries such as banks,

lawyers and other companies. And the last owners buy these. We will use a
simple illustration to help you understand it: a company that manufactures brooms
Then, the brooms are sold to the merchants, which means that the
the consumer who finally buys them is a mystery to the factory.

Therefore, it is acceptable to form Corporations; however, it is not acceptable

use these companies for purposes such as tax evasion, the purchase of weapons
or the laundering of illicit drugs, among others.

The public limited companies, or extraterritorial companies, as they are more commonly known
commonly, they have been criticized recently due to the scandal of the 'Papers of
Panama
The main legal changes adopted by Panama regarding corporations
anonymous as a result of what happened due to the Panama Papers.

The term 'Panama Papers' refers to more than 11 million documents

taken from the law firm Mossack-Fonseca and made public by the Süddeutsche
Newspaper (SZ) and the International Consortium of Investigative Journalists (ICIJ) and that
it aims to show the poor management of some businesses acquired by prominent ones
international personalities.

The main offices of Mossack-Fonseca in Panama City, as well as other offices

of this same firm, were raided as part of the investigation in order to know
to shed more light on the situation. 109 international media outlets of
76 different countries presented this journalistic investigation on April 3, 2016.
They revealed the methods used by their friends to hide billions.
in dollars in tax havens.

Among other relevant topics for the analysis of the 'Panama Papers', we will discuss the
historical context of the law firm Mossack-Fonseca, the connotations
international and the economic ramifications for Panama in this project
research.

Given that they have a variety of uses and advantages, Panamanian offshore companies are
the best fiscal instruments. Although they are often used for planning
Fiscal, its greatest application is found in commercial and economic management, where they serve
as a tool for asset protection as well as to facilitate the exchange of
goods and services.

Most of the Panamanian offshore companies adopt the legal form

, what helps to hide the owners' identity and strengthens the
client confidentiality by allowing them to use nominee directors and powers not
registered.

Due to its tax system based on territoriality, which allows it to organize and protect
efficiently your assets, Panama is known as a Financial and Service Center
Offshore. Given that they have a variety of uses and advantages, offshore companies
Panamanian are the best fiscal instruments.

Most of its applications are found in commercial and economic management, where
they serve as a tool for both the protection of assets and for planning
Fiscal. They also facilitate the exchange of goods and services between companies.
Most Panamanian Offshore Companies use the corporate legal structure.
what helps to conceal the identity of the owners and strengthens confidentiality
client through the use of nominal directors and unregistered powers.

Due to its tax system based on territoriality, which allows it to organize and protect
efficiently its assets, Panama is recognized as a Financial Center and provider
offshore services.

The OECD states that Panama has not done its homework. The mechanism of 'exchange
information automatic" between the tax administrations of several nations, which
will come into force in 2018, is one that the nation is reluctant to commit to. The
The requirement encourages jurisdictions to collect data from their financial institutions and
compare them annually with other jurisdictions.

According to the OECD, "it is crucial to ensure common rules and that tax evaders do
have no places to hide." Technicians from this organization claim that the law
Panamanian restricts access to crucial details such as account ownership and the
maintenance of reliable accounting records.

The "Panama Papers" have international ramifications that exclude the

American individuals and the economic groups that dominate that nation.
change, they focus on European banking houses and the political rivals of the States
United. There are numerous questions surrounding this strange selection of those who have been
mentioned.

The list of offshore companies linked to the law firm Mossack Fonseca, with
headquartered in Panama, unleashed a flow of information that reached one and the other with strangers
selection and exclusion criteria, as on Sunday, March 3, the first issues began to arise.
explanations of the hacking of the documents. The empty spaces begin to appear
from where this cycle began.

The researchers from Süddeutsche Zeitung claim that the anonymous source did not do
demands in exchange. From that moment on, the reason for the publication of this
The leak remains a mystery.

The International Consortium of Investigative Journalists, founded by the Center for the
Public Integrity based in Washington received the pirated content. The first
details about the content of these "papers" were made public on Sunday, April 3,
after a year of analysis.

The leaks that are most widely disseminated are those that impact the adversaries of the State.
North Americans who fight to preserve global hegemony and avoid the formation of
poles that challenge that position. Among them is the government of Venezuela,
Syrian government of Bashar al-Assad, which the United States has classified as a state
sponsor of terrorism and the presidents of China and Russia, although they are not mentioned
specifically.

It is worth noting that no major actor or institution with influence over the economy and
the political landscape of the U.S. seems to have been involved in the disclosure of
the "documents". This may help explain why Nevada, Wyoming, and Delaware
they have been designated by the U.S. for the same activity due to their legal frameworks
that have facilitated the formation of fictitious corporations for tax evasion.

Some have prepared responses: Professor Shima Baradan Baughan from the Faculty of
The University of Utah's law school told [Link] that "going to Panama is not necessary."
for Americans to conceal their illegal activities. James Henry, economist,
He also said that Americans frequently use offshore.

In a way, they are the early adopters." And lawyer Jack Blum, a specialist in
whites - Collar of financial crimes and international tax evasion, asserted that 'Mossack
Fonseca had a subsidiary to establish offshore companies in the state of
Nevada.

In this sequence of events, it is important to highlight three actions.

carried out by the Government of Panama that stand out for their significance and
ramifications, namely: the establishment of an Independent Committee of Experts to
the Center for Financial and Corporate Services of Panama; the signing of the Agreement on
Mutual Administrative Assistance in Tax Matters and the promulgation of Law 52 of 27
October 2016.

The Panamanian government established a Committee of Experts on April 29, 2016, with the
objective of supporting Panama in its efforts to combat global tax evasion and
improve Panama as an important financial center, according to the government website
from Panama. using the most transparent procedures possible.
His duties included reviewing the legal system, including laws, policies, and treaties.
international; evaluate the success of recent reforms; and identify weaknesses in the
international services infrastructure of Panama.
The Law of the Republic of Panama of 1927, also known as Law 32, contains
many of the regulations governing the financing of foreign companies. The 96
articles of the Companies Act of 1927 are broken down into 11 sections or chapters that
they encompass everything from the constitution, actions, and general shareholders' meetings to the
sale of goods and functions.
This law has significantly contributed to making Panama the best place for the
foreign and international companies conduct business in all industries. Due to
the pressure from other countries, the law has undergone several changes, but it remains in effect. A minimum
Two adults, whether or not they live in Panama, can make contributions to society, according to the law.
Panamanian 32 from February 26, 1927.
They must meet a series of conditions, the first of which is:
The name, address, and subscriber information are listed in the articles.
of incorporation.
• Common objectives, terms used to define it (SA), social denomination and
social capital. Information about resident agents should also be included.
the property of the business.
• Deed: the deed must be presented at the Mercantile Registry.
A place designated by law or in Panama for the office.
• Shareholder information in the stock register, including names and
directions.
Jointly convened General Assembly.
A board of directors, composed of three important people.
Panama has signed a series of international agreements that regulate trade.
The Ministry of Economy and Finance advocates for the revision of the current corporate law.
anonymous because it is one of these issues. The new regulations require that an agent
resident keep a record of beneficial shareholders, including shares to
carrier.
Non-compliance will also lead to sanctions. The agreements to avoid double
imposition is maintained by this clause. Bearer shares are allowed by
the Panamanian law, but the government needs to know who the owners are to
to provide the nation that pays for the information it needs.
Modifications to Law No. Companies could continue issuing shares that do not
they were identifiable. The assembly approved a law that governs retention policies that
they apply to the shares issued in favor of the owners. The project approval was very
well received by the Banking Association of Panama.
Subsequently, to prevent Panama from joining the list of nations that shield the
fugitive tax
Economic) proposed to the countries to block bearer actions in the system
financial.
Bearer shares were distributed by companies in Panama until 2015. That is to say,
it is an action whose holder is the bearer of the issuance certificate and there is no record
physical document containing the data. As a result, we could be added to the gray list of
countries with weak controls and anti-money laundering systems from the Action Group
International Financial (FATF).
Panama also approved Law No. 86 to remove them from the list and improve the opening of
financial transactions. On August 6, 2013, the SEC adopted Rule 47, which requires
the control of any shareholder who possesses worthless shares and the appointment of a
authorized supervisor. The laws mentioned above specify the duration of the
validity and the deadlines for the issuance of certificates and related information.

In addition, it makes decisions about what to do after the issuance of the certificate by
the corresponding authority and the application of the law.
The law also defines tutors who are citizens or foreigners.
Our local custodians are: Panama Trust Company, Panama Center and Stock
Exchange, and a registered lawyer in the Fourth Chamber of the Supreme Court of Justice of the
Republic of Panama. They also have general licenses from the Bank of Panama and from
The Central and American Stock Exchange of Panama.

Foreign supervisors include banks, trust companies, and the

financial intermediaries that are authorized to conduct business in a member country
of GAFI or a member of the group registered with the Panamanian Banking Authority. A
Despite the fact that Law No. On April 23, 2015, the country approved the law known as 18,
despite the constant pressure from the international community to strengthen its policies
that govern financial transparency and eliminate the FATF Gray List.
A legislative change was made that ordered the replacement of the certificate before it was
it will issue the certificate before the approval of the law. It would also be necessary to modify
the bylaws to prohibit the issuance of bearer shares and make exceptions
only in the event that the board or the shareholders' assembly approves the application of
freezing regime of Panama.
Once the bearer issuance is approved, the certificates issued thereafter
approval of the law must be deposited within a specified period (20 days). Additionally
Among these changes, Panama also approved legislation to comply with the FATF policy.
that prohibited the proliferation of WMD, the financing of land development and the
money laundering.
The Fiscal Transparency Law was introduced in the year 2021, which was approved on the 11th of
November 2021; this characteristic was already very present in societies
anonymous prior to the reform of the law of February 32, 1927.
It is important to note that it includes provisions both by sex and adjustments for
money laundering. The law addresses the three topics of accounting, unpaid debt, and the
specific regime of the taxpayer. All Panamanian companies and organizations that
operating at national and international levels are already required to maintain a record of
it has supporting documentation.
These rules are described in this law. For residents to inform the authorities
Panamanian, requested the disclosure of accounting records and supporting documents. The
Accounting records accurately and clearly represent the operations of an entity.
These accounting books and supporting documents must be kept at all times.
moment.
The legal entity must submit these records and documents to the requirements.
within a certain period in case they are returned by the authorities
Panamanian.
Conclusion

After the Panamanian law firm Mossack Fonseca published the so-called
Panama Papers, the legal and financial institutions of Panama promoted
falsely the image of Panama and influenced the establishment of legitimate businesses
abroad.
It is clear that this situation directly affected the economy and the well-being of the country, so
it is necessary to analyze the future of Panama and at the same time take measures to
to ensure the stability of the country's economy without respecting its sovereignty.

The consequences of this fact compel them to analyze the legislative changes that must be made.
to be implemented to stop the development of the country, but highlights the importance of controlling
foreign companies to prevent political corruption, drug trafficking, the
terrorism, smuggling, and money laundering by criminals.
Panama as a nation should take advantage of that opportunity and create laws to strengthen and
prevent foreign companies from being affected and the financial services that are
They offer the country not to be affected.
 Bibliography

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