November 2017 public holidays

November 2017 public holidays

Please note that our office will be closed the following dates in November 2017, for public holidays:

  • Friday – November 3 – Separation from Colombia
  • Monday – November 6 – November 5th is Colon Day, and as this falls on a Sunday, the public holiday is celebrated on Monday
  • Friday – November 10 – Panama remembers its Primer Grito de Independencia – its first cry for independence from Spain
  • Tuesday – November 28 – Independence from Spain

November 2017 public holidays – their meanings

In November, Panama celebrates a month of national festivities. Throughout November 2017, all around the country the flag and patriotic symbols are displayed (offices are draped with the flag or colors, most cars fly a small flag inside). There are four days of great historical importance for Panama in November.

The 3rd, 5th, 10th and 28th of November are public holidays, and as the 5th falls on a Sunday in November 2017, marches will be done on the Sunday, but the 6th will be a day off. The 2nd and 4th are also days on which school bands march and there are generally parades in all towns.  The celebrations these days are due to the separation of Panama from Colombia, the “cry” of independence and the independence from Spain, respectively.

In case you are unaware of the meaning of each of these public holidays, the following is a very short summary of what each day represents:

Separation from Colombia

Known as Separation Day, this holiday celebrates the independence of Panama from Colombia in 1903.  Panama came under Spanish control with the arrival of settlers in the 16th century. From 1538 until 1821 Panama was governed as part of the Viceroyalty of Peru. On 28 November 1821, Panama become independent from Spain as the region was a department within the Republic of Greater Colombia. In 1903, Colombia and Panama disagreed on whether the U.S. should be allowed to build a canal across Panama. With the support of the U.S., Panama broke away from Colombia on 3 November 1903.

Colon Day

Celebration of Colon Day is connected with the history of independence of Panama from Colombia. The USA assisted Panama in separation from Colombia, but the latter didn’t want to recognize independence of Panama. Officially Panama declared its independence on November 3, 1903, but the battle didn’t finish. The government of Colombia ordered the Army to march on Panama City. On November 3, 1903 the Panamanians had to stay their grounds in the city of Colon, that is a strategic place near the Caribbean Sea.

Primer Grito de la Independencia

This public holiday commemorates the beginning of Panama’s struggle for independence from Spain in 1821. Rufina Alfaro was a young woman who lived in a small village near Los Santos. On November 10, 1821 she led a group of Panamanians, shouting “Viva la Libertad” (Long live liberty).

People armed with sticks and stones seized Spanish barracks without spilling a single drop of blood. After the uprising, citizens of Azuero Peninsula declared their independence from Spain. Apparently a letter was also penned to the legendary Simon Bolivar, asking him for assistance in getting independence and complaining about the Spanish Governor.

Independence Day

On November 28th, Panama celebrates Independence from Spain. On November 28, 1821, eighteen days after Primer Grito de Independencia, Panama was declared a sovereign entity. This declaration said that Panama was free from the control of the Spanish Monarchy. It immediately thereafter decided to join “Gran Colombia” (fearing that Spain might attempt to retake the country).

Shelf companies, Arrears, Registered Agents & Compliance

Shelf companies, Arrears, Registered Agents & Compliance

Cleaning up after Panama Papers

How could Panama, after the fiasco of the Panama Papers, clean up its act easily and in the stroke of a pen? One way to get rid of shelf companies, non-compliant clients, and those that are in arrears is:

From my perspective, striking off all of these companies takes care of a number of problems. Firstly, these companies were at least 3 years in arrears. Secondly, the client is not in contact with the registered agent. This means the registered agent has not got up to date due diligence from the client. Thirdly, in 2015 bearer shares were abolished. Companies were left with registered shares only, unless action was taken.  In all likelihood, this was not done.  Fourthly, the company probably doesn’t have financial records. Finally, shelf companies are virtually done away with, unless the provider has kept them up to date.  Hopefully all of these changes make Panama a better place to incorporate and run business from, legitimately.

If you think your corporation might have been struck off by mistake, and it holds assets (real estate or a bank account), you need to reactivate your company. For legal assistance with Panama Corporation, please do not hesitate to contact our office.


The corporations that were struck off by the Tax Department owed $30 Million plus in government fees. These are unpaid annual renewals.  Not only was the government not paid, most likely the registered agent in Panama was not paid. I doubt directors were paid. Prior to the amendment of Article 318-A of the Tax Code in 2016, companies were not automatically dissolved until 10 years after they stopped paying annual renewal fees. That was 10 years that the company continued to exist without being in contact with anyone in Panama.

Unfortunately, even so, the Tax Department lacked efficiency in notifying the Public Registry of such arrears and publishing the dissolution notices. In my 20 plus years in Panama, I have only seen this 10-year notice list published once. Under the 2016 amendment, after 3 years, the Tax Department notifies the Public Registry to put these companies as “struck off”, unable to carry on any business, and two years later, if they are not reinstated, they automatically move to involuntary liquidation and dissolution. And so, in 2017, some 40,000 plus companies are struck off.  In 2019, unless reactivated, these companies are automatically “dissolved”. Hence, banks worldwide are requiring, many on a yearly basis, a Certificate of Good Standing for companies.

Registered Agents

Many registered agents will heave a sigh of relief with this list of 40,000 companies that are struck off. Those are 40,000 companies that the registered agents of Panama no longer have to be concerned about with respect to Law 2 (2011) and Law 23 (2015), as long as they had their KYC in place at the time of incorporation, or at least until 2013 or 2014. After Panama Papers, it’s time for a massive clean up! Some firms are doing this voluntarily, but the economic cost is onerous.

Law 2 (2011) provides the registered agent the option to resign from all companies where they have lost contact with the client and are not able to update due diligence. This requires preparation of public deeds (notary costs) and filing at the public registry (also cost).  All up, about $100.00 per corporation. If you have 10 companies, that’s $1,000.00; for 100 companies that $10,000.00. And that’s 40,000 companies that Registered Agents will not have to resign from.

Since February 2016, all Registered Agents in Panama were required to have the KYC documentation in place for all active corporations under their management, irrespective of the date of incorporation. Additionally, registered agents are paying the costs of physical space (warehousing or offices) for all these files, as well as being administratively responsible for the companies under Law 2 (2011) and Law 23 (2015). Automatic striking off and then dissolution will liberate this space and cost for registered agents.

Bearer Shares: December 31, 2015

On December 31, 2015, by Law 47 (2013) companies which had not expressly elected to place their shares in custody, had their Articles of Incorporation changed to prohibit the used of bearer shares. If a company, on December 31st, had bearer shares, these shares were automatically cancelled. For companies which were active and properly managed, that meant that before (or on) December 31st, they passed a corporate resolution to exchange the bearer shares for registered shares. Those companies that didn’t comply were left without shareholders. Bearer shares were cancelled, but not replaced. Striking these companies off, and dissolving them in two years time, is a good way to clean up those companies that are not compliant.

Accounting Records:

As of January 1, 2017, all companies in Panama are required to keep accounting records.  These records do not need to be filed. Tax returns are not required. But the registered agent must receive from all active companies a written confirmation of where and how such accounting records are kept. Obviously, for those companies that are not up to date, and in contact with the registered agent, this information is not on record.

Shelf companies

A shelf corporation or aged company is a corporation that has had no activity. It was incorporated, with a board of directors (nominees) appointed, and left with no activity: put on the proverbial “shelf”.  One of the problems with these companies is that they have no shareholders or beneficial owners: they are waiting to be purchased. Then, when sold, shares are issued – “appropriately dated”. Powers of attorney may be issued “appropriately dated”. Contracts could be signed “appropriately dated”.

The issue is not one of the company being eight years old, and new board of directors being appointed, and shares being issued with current date. The problem with the shelf company is that transactions could be back-dated to reflect having taken place around the time of incorporation, even though at that time, the client didn’t even own the company.  Of course, Panama Papers focused mostly on “shell companies”, rather than shelf companies.  Shell companies are those who were not actually trading, but just shells used by the client for hiding an asset or transaction.

This doesn’t mean that all shelf companies will have been blotted out with this change: if the provider who had the shelf corporation was up to date in all the government fees, the company will still exist. But in terms of compliance, it’s hard to find any legitimate way that the company could still exist and be in compliance. Shares for a new company should be issued within 30 days of incorporation. Who is the shareholder? And if the Registered Agent is required to keep all records regarding the beneficial ownership of the company from incorporation onward, there is no leeway for issuing shares to another person from the date of incorporation.

Striking off: Panamanian Corporations

Striking off: Panamanian Corporations

Wednesday, October 4th, the Ministry of Economy & Finance (read: Tax Department) published in the Gazette 174-page list of companies which have been struck off the register.  This striking off is done in accordance with Article 318-A, subsections 2, 3 & 4 of the Tax Code.  Article 318-A of the Tax Code deals with the payment of annual renewal fees (franchise tax) for corporations, foundations & LLCs.

This is the third such list it has published this week. The first was published on Monday. A second on Tuesday, and a fourth list was published today, just before I published this article! I almost missed that list. It’s an amazing 40,000 companies that are not in good standing. It’s estimated that these companies owe some $36 Million in government fees alone.

Effects of striking off:

Subsection 2 of Article 318-A establishes that failure to pay this annual renewal fee for 3 years consecutively results in striking off. Subsection 3 establishes the following effects of being struck off:

  • blocked from initiating legal action, doing business transactions or transfering assets;
  • unable to make claims or exercise rights;
  • blocked from filing corporate changes of any type.

Nonetheless, if your corporation is struck off, you may do the following:

  • request reactivation (paying an additional $1,000.00 penalty fee for reactivation);
  • defend any legal process begun against the company;
  • continue with any legal processes which started before striking off.

Automatic dissolution after striking off:

It is important to note that you only have a 2-year period after it is struck off to reactivate it, otherwise striking off leads to automatic dissolution at the Public Registry.  Consequently, the company will be considered to be wound up.  This means that any company that is in arrears for 5 years or more, is automatically dissolved (previously this was a 10-year period).

The lists of companies can be found in the following gazettes:

What do you need to do?

If you a corporation that owns property or has assets of any kind, and you have not been paying the annual renewal fees, then you have 2 years to reactive the company if it is on these lists. You need to pay all outstanding government fees and the $1,000 reinstatement fee (and registered agents and directors fees, if applicable). Otherwise, in 2 years from now, the Public Registry will dissolve the company automatically.

This is the first time any such list has been published since the amendment was introduced in 2016. Therefore, it contains companies that have not paid for five or even seven years, and not just those who owe 3 years in fees. This is the moment to bring your Panamanian corporation back into good standing if you are actually using it or you need it.


Finally, if you have any questions regarding your Panama Corporation and striking off, please do not hesitate to contact our office.  Our staff would be happy to assist you.