Nominee Directors for Bearer Share Corporations

Dec 16, 2008

In Panama, anonymous ownership of offshore corporations is still allowed, by means of bearer shares. Bearer shares are now prohibited in the majority offshore/IBC financial centers. So this excellent financial privacy tool helps to keep Panama as a premier offshore business and banking center.

However, with Panama corporations, officers and directors (President, Secretary and Treasurer) are  listed on public record at the Panama Public Registry. Anyone with an internet connection who understands a little Spanish can check information online.

In Panama, to preserve financial privacy there is therefore a decades old tradition of  bearer share corporations using so-called nominee directors to provide an additional layer of asset protection to the Panama corporation’s beneficial owners. A nominee director is passive in nature, simply receiving an honorarium for renting his or her name. Usually, nominees are employees of the law firm involved in the incorporation of the Panama company. The beneficial owner remains in control by means of a private Power of Attorney.

Sometimes, a professional Panamanian director rather than a nominee may be appointed. A professional director differs from a nominee in that he or she has greater control over day-to-day operations (for example, having signatory power over the offshore corporate bank account), but the beneficial owner is still ultimately  responsible for running of the company.

To ensure and guarantee safety of a nominee director the beneficial owner and a nominee director may wish to sign a director indemnity agreement or letter. Typically the nominee director will sign an undated resignation letter, which the beneficial owner may execute at any time he wishes, thereby appointing a new director and registering the new director, whether nominee or otherwise, at the Public Registry.

Being a nominee director is a respectable, if not particularly well paid, profession. The main point of it is to preserve the personal and financial privacy of individuals who would rather not disclose their interest or association with a given corporate body. Additionally, it enables clients to maintain their Panama corporations in full compliance with Panamanian law, while at the same time to protect the identities of the persons actually controlling the company. Our firm is happy to provide both nominee and professional director service for all offshore Panama corporations we incorporate. Please contact us for further details.