Incorporation of Corporations in Panama

What is a Public Limited Company?

It is an independent legal entity, separate from its shareholders, offering a flexible and efficient structure for conducting various trading and investment activities.

This corporate form is recognized for its ability to issue shares and for the limited liability of its shareholders, which makes it an attractive option for businesses of different sizes and sectors.

Do you need advice?

Advantages of Corporations in Panama

Flexibility and Efficiency

They have a flexible structure that allows efficient administration and adaptability to the needs of the business.

Some of the advantages include:

Limited Liability:

Shareholders are only liable up to the amount of their contributions.

Privacy and Confidentiality:

Panamanian laws protect the information of shareholders and directors.

Tax Exemption:

Income earned outside of Panama is not subject to local taxes.

Incorporation Process

Initial Requirements

To start the process of incorporating a corporation in Panama, the following requirements must be met:

Name of the Company:

Verification of the availability of the name in the Public Registry.

Directors and Officers:

A minimum of three people is required, who can be of any nationality.

Share capital:

There is no minimum paid-in capital requirement; however, a capital greater than $10,000 increases registration fees.

Actions:

Shares can be issued in nominative or bearer form.

Required Documentation

The following documentation is essential for the incorporation of a Public Limited Company:

Articles of Incorporation:

It should include the name of the society, purpose, names and addresses of the directors and officers.

Legal Representative:

Name and address of the legal representative of the company.

Registration in Authorities:

Registration in the Public Registry and obtaining a Tax Identification Number (NIT).

Common Uses of Corporations

Corporations in Panama are versatile and are commonly used for various purposes, such as:

Bank Account and Trust Holders:

Facilitating financial and fiduciary management.

Real Estate Ownership:

For property acquisition and management.

Asset and Wealth Management:

Managing and protecting personal and corporate assets.

Marketing and Promotion Agents of Products and Services:

Serving as vehicles for commercial and marketing activities.

Vehicle for International Investments and Business Operations:

Facilitating participation in global markets.

Legal Grounds

The legal foundations of corporations in Panama are mainly based on Law 32 of 1927, which regulates the creation, organization and operation of these entities. This law has been complemented by other regulations and reforms that have been implemented over the years, especially in response to changes in the international environment and transparency requirements. The main legal bases are described below:

Law 32 of 1927

Law 32 of 1927 is the cornerstone of corporation legislation in Panama. Its key provisions include:

Company Constitution:
- To incorporate a corporation in Panama, it is required to draft a articles of incorporation or bylaws, which must be signed by at least two persons (natural or legal) and presented before a notary public. This document must include the name of the company, its corporate purpose, the authorized capital, and the structure of the board of directors and shareholders.
Share capital:
- A minimum share capital is not required for the incorporation of the company. Capital may be divided into registered or bearer shares, although the issuance of bearer shares has been restricted by subsequent laws.
Board of directors:
- The company must have a board of directors composed of at least three members, who do not necessarily have to be shareholders. The directors may be natural or legal persons and may be of any nationality.
Shareholders:
- Public limited companies can have nominee or bearer shareholders (with current limitations). Shareholders have the right to participate in meetings and to vote according to the number of shares they hold.
Duration:
- Public limited companies can be incorporated for a definite or indefinite period, as established in their bylaws.

Law 47 of 2013

This law was an important change in the regulation of corporations, specifically in relation to bearer shares:

Custody of Bearer Shares:

Law 47 states that all bearer shares must be held by an authorized agent (such as a bank or lawyer), who is responsible for knowing and recording the identity of the ultimate beneficiary of the shares.

Law 129 of 2020

This law introduced the requirement to register the final beneficiaries of companies:

Beneficial Ownership Registry:
- Law 129 establishes the obligation to register the final beneficiaries of corporations with a resident agent (usually a Panamanian lawyer). This record must be kept up to date and the information must be confidential, although accessible to Panamanian authorities if necessary.

Panama's Commercial Code:

The Panamanian Commercial Code also contains provisions applicable to corporations, especially with regard to accounting obligations and insolvency.

Frequently asked questions

Tax Rules:

Corporations operating within Panama are subject to Panamanian tax regulations. However, those that operate exclusively outside the country can benefit from tax exemptions, although they must comply with the aforementioned transparency requirements.

Why Choose Us?

At Legalia Panama we become your ideal legal allies to help you with the incorporation of your Corporation in Panama because we offer a professional and highly specialized service, with solid experience in corporate and commercial law.

Our team of expert attorneys will guide you through every step of the process, ensuring that your company meets all legal and operational requirements for a successful start.