Panama IBC Law 32, Article 36 from 1927

On first reading, Article 36 of 1927's Law 32 might sound like it violates Panama's commitment to giving businesses and individuals as much freedom as possible. A closer look, however, shows that the law gives offshore corporations considerable legal rights that protect the confidentiality of shareholders.

This portion of the law states that "Every corporation... shall keep at its office in the Republic, or at such other place... a book to be known as the stock register."

The stock register contains the names and residences of shareholders.

Readers often misunderstand the "or at such other place..." portion of the law. Panama doesn't require its offshore corporations to maintain records within the jurisdiction. They can keep records at any location in the world. Companies can keep their articles of incorporation and stock registers in any other country.

By stating this, Panama law gives corporations the right to protect the identities of their shareholders. Yes, the corporation is required to keep a record of shareholders, but government officials don't have access to those records.

The law goes on to tell corporations how to handle bearer stocks. (Bearer stocks do not feature the names of owners. Whoever has the stock certificate, owns the stock.) When Panama lays out guidelines for bearer stocks, it also solidifies a company's option to use this anonymous form of stock ownership.

Whether an offshore company chooses to use nominative or bearer shares, the identities of people who own shares are protected by Panama's laws.