ESG Global Vision

Law

In force

• National Commission against Money Laundering, Financing of Terrorism and Financing of the Proliferation of Weapons of Mass Destruction.
• Financial Analysis Unit for the Prevention of Money Laundering and Financing of Terrorism.
• Supervisory bodies: Superintendency of Banks of Panama, Superintendence of Insurance and Reinsurance of Panama, Superintendence of the securities market, Intendancy of Supervision and Regulation of Non-Financial Subjects (Now called "Superintendency of Non-Financial Subjects"), Autonomous Cooperative Institute of Panama.
• Non-financial reporting entities supervised by the Intendancy of Supervision and Regulation of Non-Financial Subjects (Now called "Superintendency of Non-Financial Subjects").
• Activities subject to supervision that are carried out by certain professionals.
• Financial reporting entities supervised by the Superintendency of Banks of Panama.
• Financial reporting entities supervised by the Superintendency of the Securities Market.
• Financial reporting entities supervised by the Superintendence of Insurance and Reinsurance of Panama.
• Financial reporting entities supervised by the Autonomous Cooperative Institute of Panama

• The Law establishes specific requirements for supervisory bodies and entities subject to such supervision.

• In general, those requirements include: (i) Measures to identify, assess and understand the risks and consequences of money laundering, financing of terrorism and financing of the proliferation of weapons of mass destruction, (ii) adequate controls to mitigate these risks in order to protect the integrity of the financial system and other sectors of the country's economy, and (iii) measures to facilitate international cooperation.

• The aforementioned measures and controls are described from Title V of the Law (from Section 26).

• This Law was recently amended by Law 254 of November 11, 2021, which introduces adjustments to the legislation on international tax transparency and prevention of money laundering, the financing of terrorism and the financing of the proliferation of weapons of mass destruction. 

• This law was also regulated by Executive Decree No. 383 of August 13, 2015. Article 7 establishes due diligence measures to be implemented in the event of being a legal entity, together with other due diligence measures established in other articles of the regulation

Financial reporting

Company responsibility

In force.

Legal entities and resident agents (licensed attorneys or law firms).

The purpose of this law is to establish a regulatory framework for the creation of the “Private and Unique System of Registry of Final Beneficiaries” in the Republic of Panama.

This will allow the state to access information relating to final beneficiaries of legal entities collected by lawyers or law firms that provide services as  “resident agents" to assist the competent authority in the prevention of money laundering, financing of terrorism and financing of the proliferation of weapons of mass destruction.

Social policy

In force.

Companies of benefit and collective interest.

The purpose of this law is to establish a legal framework for "benefit" and "collective interest" companies, i.e. companies whose main objective is to generate a positive impact on society and the environment while deriving their income from business activities, such as selling goods or services.

Law

In force

National or foreign, private or mixed capital companies who are interested in the construction and operation of "mini-hydroelectric power plant systems", "small hydroelectric power plant systems", "hydroelectric power plant systems", "geothermal power plant systems" and "plant systems from other new, renewable and clean sources".

• Those interested in taking advantage of the benefits established in this law, those interested in the construction and operation of "mini-hydroelectric power plant systems", "small hydroelectric power plant systems", "hydroelectric power plant systems", "geothermal power plant systems" and "plant systems from other new, renewable and clean sources", must maintain a valid concession or license in accordance with Law 6 of 1997.

• Section 12 lists specific obligations for the beneficiaries of this Law, among them “to collaborate with the official programs and plans for the improvement and conservation of the respective hydrographic basin or area of influence, including but not limited to reforestation or erosion control work and desertification, in order to conserve the country's natural resources for future generations.

• Article 13 of this law was repealed by Law 57 of October 13, 2009.

Law

In force

Individuals or legal entities who build and operate wind power plants with their respective connection lines, transformation equipment and other components in the territory of the Republic of Panama, in order to produce energy and sell it to the National Interconnected System.

• All construction and operation of wind power plants intended for the provision of public electricity service must obtain a license issued by the National Public Services Authority.

• Once the license is granted, the licensee will be subject to the applicable standards for the provision of services established in Law 6 of 1997 and its regulations.

• Licensees must comply with technical, operational and quality standards and with the network code established by the National Public Services Authority in case of connection to the National Interconnected System.

• Section 22 of the Law includes the list of incentives that would be obtained by individuals or legal entities that build, operate or maintain solar power plants and/or installations.

• Articles 9 and 15 of Law 44 of 2011 were modified by Law 18 of 2013 in regards to specific matters related to wind power plants.

Law

In force

Individuals or legal entities who build or operate equipment, plants or solar installations in the territory of the Republic of Panama.

• All construction and operation of solar power plant systems intended for the provision of public electricity service must obtain a license issued by the National Public Services Authority.

• Once the license is granted, the licensee will be subject to the applicable standards for the provision of services established in Law 6 of 1997 and its regulations.

• Licensees must comply with technical, operational and quality standards and with the network code established by the National Public Services Authority in case of connection to the National Interconnected System.

• Section 20 of the Law includes the list of incentives that would be obtained by individuals or legal entities that build, operate or maintain solar power plants and/or installations.

• Incentive 1 on this Section was modified by Law No. 38 of August 9, 2016, changing the authority before which the acknowledgment of exoneration is requested. The scope of this incentive is specified and extended to all natural persons or legal entities who acquire goods described in the Law without limit of quantity.

Law

In force

• Generator: Individuals or public or private legal entities that produce, import, distribute, market or consume products or materials that become waste.
• High-volume generator: Non-resident generator that carries out an activity that generates an amount equal to or greater than ten tons of total gross waste per year or 50 kilograms per day, whichever comes first.
• Waste manager: Individual or public or private legal entity that performs any of the operations that make up waste management, whether or not it is the producer of the waste.
• Segregator: individual or legal entity dedicated to the individual or collective recovery of usable waste.
• National, provincial and municipal authorities, including regional authorities, and the general public.
• Actors of the "Zero Waste Culture": those who produce, import, market, consume, dispose of and manage waste, including public and private entities, organizations, those who carry out commercial, industrial, agricultural and similar activities, as well as communities and individuals.
• Specific exceptions specified in this law. This law does not apply to:

1. 1. the Panama Canal Authority, the operations executed directly by it or through its contractors;
   2. ships in transit through the Panama Canal;
   3. hospital waste management

The Law establishes the Zero Waste policy for better environmental and social use of waste and includes requirements for waste management in the operational processes of companies, prioritizing the prevention and reduction of the volume of waste, the possibility of its restoration, recycling and more environmentally friendly final disposal.

Law

In force

Municipalities, individuals, and legal entities of the private sector.

The Law establishes administrative sanctions for any legal entity littering in public places given the regulations of proper waste disposal. The definition of public place embodies all transit routes, squares, parks, rivers, beaches, canals, and other surrounding places.

Law

In force

“Waste Generators” (i.e. Any natural or legal entity whose activity produces waste).

If approved, the Law would require Waste Generators to act according to good environmental practice guidelines in waste management for sorting and separation at source, adapt their behavior to the waste management plan and present a guide for the management of their waste. Waste separation categories would include: (1) recyclable waste separated into metals, plastic, tetra pack, paper and cardboard and any other that the regulations or the National Plan of Integral Waste Management contemplate, (2) organic waste, (3) waste as defined by the Integral Waste Management Plan and the regulations, (4) in the case of glass, the return system developed by current regulations will be complied with.

Law

In force

Legal entities specialized in the operation of industrial recycling plants. Natural persons or legal entities that reconvert their activity and replace plastic products with biodegradable materials. Article 6 establishes that the law does not apply to the following:

1. Natural persons or legal entities whose replacement materials are synthetic plastic options labeled as degradable, biodegradable, oxo-biodegradable, bioplastic, biobased, recycled or any other plastic derived from petroleum and other hydrocarbons.
2. Legal entities dedicated to collecting recyclable materials for export. Recycling must take place directly within the territory of the Republic of Panama

The Law establishes tax exemptions and incentives in environmental matters in order to promote commercial practices, the conversion of companies and the development of the recycling industry.

Law

In force

Legal entities considered “Fixed sources” of emissions (i.e. building or facility, temporary or permanent, where operations that give rise to the emission of pollutants into the air are carried out).

The Executive Decree establishes the maximum permissible limits of air emissions produced by fixed sources in order to protect the health of the population, natural resources, and the quality of the environment, from atmospheric pollution. Article 5  establishes the maximum permissible emission limits for fixed sources.

Law

In force

The disabled person, their parents, guardians, or legal representatives and their employers.

• The Law requires that employers allow 144 hours per year (subject to extension) for persons with disabilities and those related to them, to accompany them to appointments, required treatment or educational activities related to the disability condition. Employers cannot fire or dismiss a disabled person or reduce their position or salary unless grounds for it are proven by the employer. They are required to guarantee accessibility to the physical environment and means of transportation, job stability and ensure inclusion of disabled persons in the permanent payroll once the probationary period is over. Employers are exempt from payment of import duties for training and information access articles, materials and equipment.

• This Law was recently regulated by Executive Decree 333 of December 5, 2019. It requires the HR departments of private companies to record the use of those hours. In addition, the information of the relative or person authorized to accompany him and other requirements should be accredited within the file as established in article 13 of said regulation.

Law

In force

Private legal entities and their workers whose spouse or partner in a single and stable situation is pregnant.

The Law requires private entities to allow a paid paternity leave for a 3-day term (once a year) starting on the date of birth, following a  request by the employee. The private entity (employer) should receive the birth certificate from the employee (who bears the responsibility to present it).

Law

In force

Official and private universities, autonomous and semi-autonomous entities, shopping centers, airports, companies and institutions in general.

• The parties covered by this regulation must adapt a space for breastfeeding which must be duly identified and must comply with parameters established for this purpose by the Panamanian Health Organization, the World Health Organization and the United Nations Children’s Fund.

• An employer who fails to comply with the obligations listed in this regulation will be sanctioned in accordance with the procedure for fines and sanctions indicated in the Sanitary Code and the provisions of article 125 of the Labor Code.

Law

In force

Women and public and private entities

This Law establishes that private employers who request pregnancy tests, photographs, impose age restrictions, inquire about marital status, or who apply sexist or racist criteria that differentiate on a salary scale, and commit moral or sexual harassment have discriminated against women in the workplace.

Social Policy, Corporate governance policy.

In force.

Employees from both public and private sectors.

This law provides that when a woman is pregnant, and not currently employed, the father of the baby will be able to take the maternity leave in lieu.  Under this provision, the father may not be fired from his public or private employment for the months that the pregnancy lasts and after the delivery for a period of one year, except in special cases provided by law.

The maternity leave will be suspended if it is verified that the pregnant or postpartum woman has a regular job. In the same way, it will be suspended in the event of the death of the child.

Law

In force

Any individual or public or private legal entity where chemical substances capable of generating contamination in the work environment are produced, stored or handled.

• Section 3 lists 18 specific requirements for employers including: "3.1.1. Adopt preventive measures considering the nature of the work and: a) physical-chemical and toxicological characteristics of the polluting substances; b) characteristics of the generating sources of polluting substances; c) characteristics, nature, exposure time and frequency of exposure of workers with said contaminating substances; d) proper management of polluting substances." 

• This same Section 3 includes 4 requirements for employees including: "3.2.1 Collaborate with the evacuation and control measures established in the work centers where they carry out their activities".

• The regulation also includes provisions on recognition, evaluation, control, storage and transport of chemical substances or pollutants, as well as work in confined spaces and personal protective equipment.

Law

In force

“Public sources”: all state entities including those belonging to the executive, legislative and judicial bodies, public ministry, decentralized, autonomous and semi-autonomous entities, Panama Canal Authority, municipalities, local governments, community boards, mixed capital companies, cooperatives, foundations, boards of trustees and non-governmental organizations that receive or have received funds, capital or assets from the State.

“Private sources”: any individual or legal entity within the territory of the Republic of Panama, other than public sources, including but not limited to financial institutions.

• The Law establishes the regulatory framework for the implementation of the exchange of information for tax purposes, creating obligations and appropriate controls for supervision and compliance for private and public sources.
• This Law was recently amended by Law 254 of November 11, 2021, which introduces adjustments to the legislation on international tax transparency and prevention of money laundering, the financing of terrorism and the financing of the proliferation of weapons of mass destruction. 
• This law was also regulated by Executive Decree No. 124 of May 12, 2017 which establishes general and special obligations for due diligence in two different sections.

Law

In force

• Legal entities that do not carry out operations that are perfected, consumed or produce their effects within the Republic of Panama.
• Legal entities dedicated exclusively to the possession of assets inside or outside Panamanian territory.

• The legal entities covered by this law are required to keep accounting records and maintain supporting documentation. The Law establishes specific requirements on the management of such records and documentation, including specific obligations for the resident agent involved.

• This Law was recently amended by Law 254 of November 11, 2021, which introduces adjustments to the legislation on international tax transparency and prevention of money laundering, the financing of terrorism and the financing of the proliferation of weapons of mass destruction.  

• This law was also regulated by Executive Decree No. 258 of September 13, 2018 which establishes the way in which the accounting records must be provided according to the type of legal entity and also further specifies the scope of legal entities that are obliged to keep accounting records and supporting documentation.

Law

In force

• The Superintendency of Non-Financial Subjects.
• The non-financial reporting entities listed in Section 40 of the Law, including, but not limited to:

1. 1. Companies located in the Colon Free Zone, the Panama Pacific Agency, Baru Free Zone and other free zones established in the Republic of Panama;
   2. Casinos, games of luck and chance and organization of betting systems and other physical and telematic establishments that develop these businesses through the Internet;
   3. Developer companies, real estate agents and real estate brokers, when they carry out operations for their clients related to the sale of real estate;
   4. Companies dedicated to construction, general contractor companies and specialized contractors;
   5. Securities transport companies.

Please note that the above are only 5 of the 13 subsections indicated in Section 40 of the Law.

• The Superintendency may request from the non-financial reporting entities the information and supporting documentation regarding their operations, activities, clients, products, services, prevention manuals and the documentation and/or information it deems necessary to prevent money laundering, financing of the terrorism and financing of the proliferation of weapons of mass destruction.

• Non-financial reporting entities must be registered with the Superintendence.

• The "Intendancy of Supervision and Regulation of Non-Financial Subjects" changes its name to "Superintendency of Non-Financial Subjects" as of the entry into force of this Law.

• This Law was recently amended by Law 254 of November 11, 2021, which introduces adjustments to the legislation on international tax transparency and prevention of money laundering, the financing of terrorism and the financing of the proliferation of weapons of mass destruction.

Law

In force

• Lawyers and law firms providing resident agent services.
• Any legal entity constituted or registered and valid within the Republic of Panama that requires the services of a resident agent.

• Any attorney or law firm that provides professional services as a resident agent to one or more legal entities constituted or registered in the Republic of Panama, must register and maintain an up-to-date registry with the Superintendency of Non-Financial Subjects.

• Legal entities whose resident agent is not duly registered in accordance with the provisions of this Law will receive a suspension of the corporate rights rendered by the Public Ministry of Panama until the resident agent corrects his condition.

• Legal entities must provide the resident agent with all the data required by this Law, Law 23 of 2015, its amendments and regulations to know the final beneficiary.

• According to this Law, the "final beneficiary" is any natural person or persons who ultimately, directly or indirectly, own, control and/or exercise significant influence over the client or the account relationship or the contractual and/or business relationship, or the natural person or persons on whose behalf or benefit a transaction is made. The term includes the natural person or persons who exercise ultimate effective control over a legal entity.

• This Law was recently amended by Law 254 of November 11, 2021, which introduces adjustments to the legislation on international tax transparency and prevention of money laundering, the financing of terrorism and the financing of the proliferation of weapons of mass destruction.