Weekly Report - 01 August 2013 (WR-13-30)

PANAMA| Restricting bearer shares. On 29 July Panama’s unicameral national assembly approved a bill restricting the use of bearer shares in the country. According to the government the bill, which has yet to be sanctioned by President Ricardo Martinelli, seeks to “adapt Panamanian legislation to the highest international standards in terms of transparency” as part of efforts to improve Panama’s image abroad as a country committed to the fight against malpractice in the financial services industry. The bill stipulates that all bearer shares, which provide no indication of who the actual owners are as they are not formally registered to anyone’s name, are to be held by authorised financial bodies with the ability to determine the identity of share owners if necessary, for up to two years before they can be transferred. The use of bearer shares has been highly criticised by international organisations which argue they can be used to avoid taxes or hide the true ownership of assets. Deputy finance minister, Darío Espinosa, had previously said the bill sought to safeguard Panama’s own financial system. He warned that if the measure was not adopted, Panama could be found to be in breach of the Organisation for Economic Co-operation and Development (OECD) best practice recommendations which could affect Panama’s international credit lines and the local banking sector, driving up the price of credit in the country. Some local representatives from the banking and law sectors backed the bill but called for the timeframe allowing for the transfer of bearer shares to be reduced. Some legal experts argued the proposed two-year timeframe could result in a loss of competitiveness in the local financial sector while others pointed out that some OECD countries have less stringent restrictions with regard to the use of bearer shares.

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