Draft bill 157.

Summary.

The draft bill proposes to regulate the payment of board meeting fees, promote governance practices, and increase accountability among boards of directors in the Republic of Panama. Its obligations would apply to state-owned enterprises, mixed-ownership enterprises in which the State holds 51% of the shares, state financial intermediaries, and decentralized institutions. It excludes institutions of higher education and institutions granted autonomy under the Constitution of the Republic of Panama. It defines a board meeting fee as the payment for attending meetings of collective bodies; it also defines state-owned and mixed-ownership enterprises, state financial intermediaries, and decentralized institutions.

For appointments of directors that the law assigns to the President of the Republic, it establishes independence, merit, probity, and transparency as guiding principles. The selection process must avoid incompatibilities and conflicts of interest and allow directors to perform their duties free from undue influence. Positions would be awarded on the basis of merits assessed objectively and transparently, taking competence, experience, and qualifications into account. Appointees must act with integrity and honesty, put the public interest first, and demonstrate integrity and commitment to public service. The public administration must disclose the selection criteria and procedures, including the reasons for appointments.

The text bars ministers, vice ministers, members of the National Assembly, and certain directors or heads of state institutions from receiving board meeting fees for serving on those boards. Subject to the stated exceptions for ministers, vice ministers, and certain directors or heads, no other public official may be appointed by the President of the Republic to more than one board of directors. People who are not employed by the State may likewise hold no more than one board position. It also provides that only public servants may be appointed to director positions representing the State. Board members’ meeting fees may not exceed 250 balboas (B/.250.00) per month.

The covered entities must apply for meeting fees by submitting a detailed form to the Office of the Comptroller General of the Republic, stating the criteria used to set them. They must also publish a quarterly report on their websites concerning the resources allocated to their boards of directors, in accordance with Law 6 of January 22, 2002. Failure to publish the report would be punishable by a fine of up to the amount of the meeting fee received; repeated failure could result in removal from office. Codes of Ethics and Conduct will establish the applicable procedures, and each entity must adopt one for its directors. The bill would take effect 1 year after publication.

The text refers to the Office of the Comptroller General of the Republic, the National Bank of Panama (Banco Nacional de Panamá), the Savings Bank (Caja de Ahorros), the Agricultural Insurance Institute (Instituto de Seguro Agropecuario), the Agricultural Development Bank (Banco de Desarrollo Agropecuario), and the National Mortgage Bank (Banco Hipotecario Nacional). It could be of interest to or affect the financial and agricultural sectors, enterprises with state ownership, decentralized institutions, and their board members.