Key Takeaways
- Panama did not abolish bearer shares; it immobilized them, so the instruments remain permitted but must be held under custody.
- Authorized custodians carry specific obligations, and transferring bearer shares now depends on meeting those custody requirements.
- Legacy bearer share certificates face a transition deadline, and missing it carries consequences for both owners and corporations.
- Immobilization reshapes the balance between confidentiality and transparency, a key practical consideration for non-resident owners and their advisers.
Bearer Shares in Panama: What They Are and Why They Matter
A bearer share is a share certificate that names no owner; whoever physically holds the paper owns the shares. Bearer shares in Panama remain legally permitted, but since 2015 they cannot circulate freely on their own. They must be deposited with an authorized custodian under an immobilization regime introduced to meet international transparency standards.
For a foreign owner or adviser, this distinction matters because the instrument still exists but functions very differently from the anonymous certificate of decades past. The IMF's 2024 report on the country describes these shares as "contained but not abolished," which captures the position well.
This article explains where bearer shares come from, how the custody rules work, what happens if you ignore them, and what the regime means for confidentiality and banking access. It is most relevant to non-resident shareholders of existing entities and to advisers weighing share structures for a new incorporation.
The Legal History of Bearer Shares Under Panamanian Corporate Law
The country's corporate framework rests on Law 32 of 26 February 1927, a statute the government drafted to attract foreign investors and multinational owners. The option to issue bearer shares existed from the moment that corporation law took effect.
Two early provisions shaped how these instruments behaved. Article 28 allowed bearer shares only when fully paid and non-assessable, while Article 30 made them transferable by simple delivery of the certificate.
That design gave bearer shares their defining trait: free transferability without endorsement and without reissuing a certificate in the new holder's name. Over the decades, repeated revisions to Law 32 kept the structure attractive to overseas corporations, even as the surrounding compliance rules changed.
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Law 47 of 2013 and the Immobilization Regime
On 6 August 2013, the National Assembly passed Law 47, requiring anyone holding bearer shares to appoint an authorized custodian who takes physical possession of the certificates. The reform followed two legislative debates and reflected commitments to the OECD Global Forum and to Recommendation 24 of the Financial Action Task Force.
The chosen model is immobilization, not elimination. Certificates sit in private custody with regulated custodians who can confirm ownership when a competent authority requires it, while the shares continue to carry every political and economic right attached to them.
Two later statutes refined the system. Law 18 of 23 April 2015 tightened deposit timelines and deadlines, and Law 22 of 2015 obliged every corporation to keep updated share and minutes registers.
Current Status: Permitted but Immobilized, Not Abolished
Bearer shares have not been banned. The rule is that every bearer certificate must be deposited with an authorized custodian, and the regime continues to permit issuance for companies that adopted it correctly.
A hard cut-off applied at the end of 2015. As of 31 December 2015, the articles of incorporation of every registered company are deemed automatically amended to prohibit bearer share issuance, unless the board or shareholders passed a resolution before that date expressly adopting the immobilization regime and registered it with the Public Registry.
Most banks in the jurisdiction no longer accept clients whose companies are entitled to issue bearer shares, which has pushed many owners toward nominative shares.
The policy choice was deliberate. Rather than abolish the instrument as several offshore centres did, the legislator kept it alive under controls, leaving owners a choice between immobilized bearer shares and nominative shares, including issuance to a Panama Private Foundation or a trust.
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Authorized Custodians and Their Obligations
Law 47 recognizes two classes of custodian: local and foreign. Each is regulated and must keep records identifying the person who deposited the shares.
Local Authorized Custodians can be attorneys, resident agents, trust companies, general licensed banks, and brokerage or clearing houses regulated in the country. Foreign Authorized Custodians must register with the relevant supervisor, either the Superintendence of Banks or the Superintendence of the Securities Market.
Foreign banks, trust companies, and financial intermediaries licensed in FATF member or associated jurisdictions may also serve, provided they appear in the registry maintained by the Banking Superintendency for that purpose. Custodians remain bound by confidentiality rules, yet they must identify the beneficial owner; where that owner cannot be identified, the custodian must decline or end the relationship.
| Category | Who qualifies | Registration |
|---|---|---|
| Local | Attorneys, resident agents, trust companies, licensed banks, brokerage/clearing houses | Regulated within the jurisdiction |
| Foreign | Banks, trust companies, intermediaries licensed in FATF member/associated states | Banking Superintendency or Securities Market Superintendence |
The Supreme Court keeps a public register of lawyers and law firms acting as custodians, accessible on its website. Fees vary by provider; one published example sets an annual custodian fee at USD 400, charged alongside the company's annual fee.
Custody Requirements and the Transfer of Bearer Shares
Depositing bearer shares is not a bare hand-over. The owner must submit a sworn declaration identifying the valid owner, the issuing corporation, and the resident agent, and that declaration must be available to authorities investigating money laundering, terrorist financing, or related crimes.
Transfers changed too. A transfer now requires physical delivery of the original certificate plus an affidavit from the new owner attesting to ownership, with full personal and contact details lodged with the custodian.
Issuing fresh bearer shares after the April 2015 amendment is possible only where the board or shareholders approve adoption of the immobilization regime and record that approval in the Public Registry. The same registered resolution is the gateway to depositing existing bearer shares in custody.
One feature carries real planning value. Law 47 lets the beneficial owner set inheritance instructions over shares under custody that prevail over other testamentary provisions and can take effect without probate, though a custodian will require a grant of probate or similar instrument where no such instruction exists.
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The Transition Deadline for Legacy Bearer Share Certificates
Law 47 came into force on 6 August 2015, two years after passage. Law 18 then accelerated matters, requiring any corporation that had issued bearer shares to appoint a custodian by 31 December 2015 rather than relying on the original three-year window.
For certificates issued before 4 May 2015, the same 31 December 2015 date applied for appointing a custodian. From that date, the charters of all corporations were deemed amended by operation of law to forbid bearer share issuance, except for companies that had formally adopted the immobilization regime beforehand by filing a board resolution in the Public Registry.
Going forward, any corporation issuing bearer shares after 6 August 2015 must deposit the certificates with its custodian within 20 calendar days of issuance, together with the sworn declaration.
Consequences of Non-Compliance for Owners and Corporations
The penalty for ignoring custody is the suspension of rights. Owners of pre-4 May 2015 certificates that were not delivered to a custodian by the deadline cannot exercise political or economic rights, including voting and dividends, until the certificates are replaced with nominative ones or placed in custody.
Post-4 May 2015 certificates carry a sharper sanction: if the owner fails to comply, the corporation must annul them. Separately, failing to maintain the share and minutes registers triggers a daily fine of up to USD 100 for as long as the default continues.
There is also a structural consequence at the registry level. A marginal note of non-compliance recorded at the Public Registry blocks liquidation, and any certificate the registry issues will flag pending obligations until they are cured.
What Immobilization Means for Confidentiality and Transparency
Immobilization does not expose shareholder names. The Public Registry shows officers, directors, and registered agents, but not bearer shareholders; only the custodian knows and manages the owner's personal data.
That custodial information is not freely available. The sworn declaration can be released only to government authorities running a formal investigation into terrorism, money laundering, criminal activity, or double-taxation violations.
Wider reforms sit alongside this regime. The Single Beneficial Ownership Registry (Registro Único de Beneficiarios Finales), created by Law 129 of 2020, and the Superintendence of Non-Financial Entities collect ownership data behind closed doors, and an onsite assessment in September 2023 confirmed completion of the country's action plan, leading to its exit from the FATF grey list at the October 2023 Plenary.
One caveat remains for European counterparties. As of late 2023 the jurisdiction had not been removed from the EU lists of non-cooperative tax jurisdictions and of high-risk third countries for money laundering, both of which it has been on since 2020, so EU-connected banks and advisers face continuing due diligence obligations.
Practical Considerations for Non-Resident Owners and Advisers
Bearer shares stay a valid option, but every newly issued certificate must be immobilized with a custodian, and keeping them at all requires a registered board or shareholder resolution adopting the regime. Build that resolution into your structuring from the start.
Banking access is the practical constraint that decides most cases. Because many banks decline clients whose corporations can issue bearer shares, owners and advisers increasingly favour nominative shares, often issued to another company, a private foundation, or a trust.
- Verify any local custodian against the Supreme Court register before engaging them; no broader public vetting tool exists.
- The inheritance feature, allowing heirship instructions that bypass probate, is worth weighing for non-resident estate planning.
- Account for the EU listings when modelling counterparty and banking relationships.
Conclusion
Bearer shares in Panama survive as a controlled instrument rather than the anonymous certificate they once were, and the practical question for a foreign owner is rarely whether they are legal but whether they are worth the friction. With banks reluctant and custody, declarations, and registered resolutions all required, most owners now lean toward nominative structures. The regime still offers genuine value in privacy and estate planning, provided the custody rules are followed to the letter. Treat the choice as a structuring decision made with current advice, not a default.
How Expanship Can Help Your Business in Panama
Expanship advises non-resident owners on whether to retain bearer shares under custody or move to nominative structures, arranges the registered resolutions adopting the immobilization regime, and helps verify and engage authorized custodians. The same team supports the wider needs of a foreign-owned entity, from formation through annual compliance.
- Company incorporation and choice of share structure
- Registered agent and registered office services
- Tax registration and ongoing filings
- Compliance management, including share and minutes registers
- Accounting and bookkeeping
- Banking introductions suited to your structure
To discuss your structure, contact Expanship Panama.
Frequently Asked Questions
Yes. They have not been abolished, but since 6 August 2015 every bearer share certificate must be deposited with an authorized custodian under the immobilization regime introduced by Law 47 of 2013.
For certificates issued before 4 May 2015 and not deposited by 31 December 2015, the owner cannot vote or receive dividends until the shares are replaced with nominative certificates or handed to a custodian. Certificates issued after that date must be annulled by the corporation if the owner fails to comply.
Local custodians include attorneys, resident agents, trust companies, licensed banks, and brokerage or clearing houses regulated in the jurisdiction. Foreign banks and intermediaries from FATF member or associated states may also qualify if registered with the Banking Superintendency, and lawyers acting as custodians appear on a public Supreme Court register.
No. The Public Registry records officers, directors, and registered agents, not bearer shareholders; only the custodian holds the owner's identity, disclosed solely to authorities conducting a formal investigation into terrorism, money laundering, criminal activity, or double-taxation matters.
In practice this is difficult. Most banks in the jurisdiction decline clients whose corporations are entitled to issue bearer shares, which is why many owners convert to nominative shares or issue them to a private foundation or trust.
The reform was driven by the OECD Global Forum and FATF Recommendation 24. The legislator chose immobilization to preserve privacy and free circulation of the shares while adding controls against misuse, distinguishing the approach from offshore centres that prohibited bearer shares outright.
Legal Disclaimer
The information provided in this article is for general informational purposes only and does not constitute legal, tax, or professional advice. While we strive to ensure the accuracy and timeliness of the content, laws and regulations are subject to change, and the application of laws can vary widely based on specific facts and circumstances.
Readers should not act upon this information without seeking professional counsel tailored to their individual situation. Expanship and its authors disclaim any liability for actions taken or not taken based on the content of this article.
For specific advice regarding your business setup, compliance requirements, or any legal matters, please consult with qualified legal and tax professionals in the relevant jurisdiction.
