Circular 078 (2023)

December 18, 2023
Circular No. SBP-DR-0078-2023

To:
General Manager
City

Reference: Entrepreneurship Societies.

Dear General Manager:

By means of this letter, we wish to remind you of the existence of Law 186 of December 2, 2020, which regulates entrepreneurship societies in the Republic of Panama. The purpose of this law is to create a new type of legal entity that facilitates the formalization of businesses in the country through a simplified registration system and by granting fiscal incentives to entrepreneurs who establish them. Entrepreneurship societies are commercially operational entities with a socio-economic purpose, directed toward the creation of innovative processes, products, or services that represent value creation or social benefit.

It is worth highlighting that, as established in the aforementioned law, these societies must constitute a "Standard Statute" instead of a social pact. This document must contain all the information regarding the society, including its corporate purpose, share capital, identity of the ultimate beneficiaries, among others. This document must be submitted to the single entrepreneurship window of the Small and Medium Enterprise Authority (AMPYME), after which the corresponding registration proceeds in the Public Registry and in the General Directorate of Revenues.

On the other hand, it is important to note that Law 186 of 2020 establishes income limits for entrepreneurship societies, with a limit of B/. 150,000.00 for micro-enterprises and B/. 1,000,000.00 for small enterprises. In this regard, if an entrepreneurship society exceeds the limit of B/. 1,000,000.00, it must formalize its transformation into another type of legal entity within a period of six months to continue operating. Similarly, these societies have the obligation to digitally maintain, in the entrepreneurship window of AMPYME, the control of all income and expenses of the society; therefore, all business transactions they conduct must issue an electronic invoice.

Regarding this matter, this Superintendence has learned, through the Small and Medium Enterprise Authority, of the interest of these entrepreneurship societies to have access to banking products, primarily for the management and movement of their income and expenses, understanding that as a new legal vehicle with certain particularities, they might not be able to comply with all the formalities required of other societies.

Circular No. SBP-DR-0078-2023

In that sense, we urge banking entities that decide to maintain entrepreneurship societies as clients to ensure that they establish in their policies and procedures the minimum documentation required for this type of society, including documentation related to the financial profile. Although it is true that these societies do not exactly meet all the requirements established in Agreement No. 10-2015, it can be observed in Law 186 of 2020 that they are required to have a "Standard Statute" instead of a social pact, and they must also substantiate their income and expenses. Therefore, other alternatives can be established for the purposes of the financial profile, understanding that the aforementioned Agreement states that any legal or contractual documentation that evidences the client's income flow may be required.

Finally, we remind you that these societies have been created to facilitate the business of entrepreneurs in our country, who equally maintain the expectation of being banked to use and manage their funds through the banking system.

We thank you, General Manager, for issuing the pertinent instructions to your staff for the compliance with the present circular.

Sincerely,

Amauri A. Castillo
Superintendent