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  Corporations in Panama
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PANAMANIANS CORPORATIONS

Panama has a very attractive environment for doing businesses since it offers among others things, a very complete and favorable corporate structure such as the Panamanian Stock Corporations called in Spanish “Sociedades Anónimas” or “S.A.”.


These types of corporations are regulated by Law No. 32 of 1927 and the Commercial Code of the Republic of Panama. Among the advantages these corporations offer are the speedy formation procedure, privacy protection, full confidentiality, anonymity, absence of taxation on any income, business or transaction outside the territory of Panama and investment diversification.

Some relevant information regarding the formation of a Panamanian corporation is the following:
  • Speedy formation procedure,
  • Complete anonymity and confidentiality:
    • No disclosure of beneficial owners,
    • One or more persons (natural or legal), nationals or foreigners, may own a corporation,
    • Bearer shares may be issued,
    • No filing requirements of changes to ownership of the company,
  • Protection and limited liability:
    • The corporation’s assets are considered apart from the shareholders’ personal assets,
  • Accounting or Auditing:
    • No accounting or auditing from authorities,
    • No preparation, maintenance or filing of financial statements is required by authorities,
    • Accounting and corporate books may be kept outside Panama,
  • Capital:
    • No requirement of a minimum nor maximum capital and, no paid-in capital to incorporate the company,
    • Various categories and classes of shares are allowed,
    • Meetings of the Board of Directors or Shareholders:
    • No obligation to hold an annual meeting of the Board of Directors or Shareholders,
    • Directors or Shareholders may attend meetings by proxy,
    • Board of Directors or Shareholders meetings may be hold in any part of the world or by telephone or any other electronic means in absence of a formal meeting,
  • Officers and Directors:
    • Directors and Officers need not to be shareholders nor Panamanians or domiciled in Panama,
    • Panamanian corporations or from other jurisdictions may be Directors of the corporation,
  • Assets:
    • The corporation may own all kind of assets, including bank accounts in any part of the world, without having to be disclosed in Panama,
  • Transactions:
    • May carry on any international transactions or lawful businesses even if not similar to the ones indicated in the Articles of Incorporation,

Tax Benefits

Panama’s Income tax system is territorial, which means that only the income earned from operations made within the territory of Panama, (so called local-source Income) is subject to income tax in Panama. Therefore, those operations made outside of Panama or made from Panama to produce its effects outside of the country (Foreign Source income) are not subject to Panamanian income tax.

Some of the tax benefits and exemptions that our banking industry and corporate structure presents are the following:
  • No corporate income tax on the interests earned when a borrower, natural o legal person, with residence or offices outside of Panama and uses the borrowed funds outside of Panama, although there is reimbursement of capital and interest occurred within Panama,
  • On the Interest on all securities issued by the government,
  • On the interest recognized or paid on savings or time deposit accounts that are maintained on Banking Institutions established in Panama,
  • On the Income earned within the territory of Panama, from invoicing of merchandise abroad and distribution of dividends from foreign earnings,
  • No exchange restrictions, allowing a free exchange market with the possibility of unlimited transfers of capital and multi-currency operations,

Uses of the Corporation
  • For any commercial or financial activity or transactions and international trade in any country,
  • To hold ownership of real estate or any other type of assets, bank accounts, investments plans or any other commercial titles,
  • To transfer ownership of real estate through the endorsement of the company’s shares to the buyer, as long as the only asset the company owns is the real estate subject of the transaction,
  • To carry on private businesses transactions and transfer of funds to another jurisdiction for the protection of the assets,
  • To use as a tool for investing in mutual funds, bonds, shares, or other type of financial titles,
  • To create or settle international trusts or foundations,
  • To conduct all types of contracts with clients, contractors, suppliers and employees from any country,

Company Formation Process

The company formation procedure takes between 2 to 4 days, and it includes the following:
  • Check of name availability,
  • Preparation of articles of incorporation and registration forms,
  • Filing with the Panamanian Registrar of companies and payment of filing fees,
  • Obtaining certificate of incorporation,
  • Preparation of shares certificates,
  • Register Agent per year,
  • Maintenance and offshore flat tax per year,
We also provide the following additional services:
  • Preparation of minutes of board meetings authorizing all kind of legal and commercial matters, limited and unlimited power of attorney,
  • Preparation of all type of contracts,
  • Preparation of documentation to open bank accounts,
  • Nominee service through lawyers,
  • Creation of rubber stamp and corporate seal,

Company characteristics
  • Company name: may be in any language and must include a word or abbreviation indicating that it is a corporation, i.e. “S.A.”, “Corporation or Corp.”, “Sociedad Anónima”, “Inc.”,
  • Subscribers: Two nominee are appointed to act as subscribers of the articles of incorporation,
  • Officers and Directors: a minimum of three directors and three officers is required, who may be natural persons or corporations. Officers should be appointed as a President, Secretary and a Treasurer; however it is possible to appoint a Vice President, Sub Secretary and/or Sub Treasurer. Information regarding address and full name of each director and officer is necessary and will be part of the public record. Another option is to retain the services of nominee directors and officers if the client desires. A Director could be an Officer of the company and an Officer may hold more than one position, but the President and Secretary should be different persons,
  • Legal Representative: the corporation should appoint a legal representative who generally is the President of the company and, in his absence the Secretary or Treasurer. However, the client may choose the person he wants to be the legal representative,
  • Capital and Shares: it is not required a paid-in capital and there is no time limit in which the authorized capital must be fully paid. The standard capital is US$10,000.00 and it is possible to issue Par and Non-Par Value Shares as well as other classes or categories of shares. There is neither minimum nor maximum capital requirement. It is not necessary to have the capital deposited at a local bank,
  • Objects and Purpose: are indicated in the articles of incorporation. Whether a corporation is formed for a particular purpose it will be detailed at the beginning. However, it is a general practice to include other businesses purposes so to allow the corporation to undertake any other lawful businesses in the future,
  • Registered Agent: the corporation should have a Registered Agent who must be a Panamanian lawyer,
  • Shareholders and Directors meeting: meetings may be hold by telephone or any other electronic means and in any part of the world. There is no annual meetings requirement and shareholders or directors could attend the meetings by proxy,
  • Records and Accounts: full name and addresses of the directors is a matter of public record. There is no requirement to prepare, maintain or file annual financial statements, unless the corporation generates taxable income within the territory of Panama,
  • Annual Fees:
    • Government Franchise Tax: companies registered between January 1st and June 30th must pay an annual fee at the time of incorporation and by June 30th every year after the first year. Companies registered between July 1st and December 31st, must pay annual fee at the time of incorporation and by December 31st every year after the first year,
    • Registered Agent Fee: need to be paid annually at the same time the Government Franchise Tax is paid,
    • Nominee Directors: need to be paid annually if the client desires to retain this service,

Incorporation Requirements
  • Provide information regarding the corporation’s beneficial owner, purposes or businesses for which it is being formed and full name and addresses of the officers and directors may you wish to provide your officers and directors. Otherwise we can provide nominee officers and directors service.

Our services
  • Our law firm has shelf companies (ready made companies) which were incorporated specifically for our customers who want a vintage shelf company or just a shelf company for immediate use,
  • We also incorporate companies in other jurisdictions such as, British Virgin Islands (BVI), Bahamas, Costa Rica and Belize, among others,
  • Panamanian legislation enables the formation of other type of companies such as, Limited Liability Companies (LLC’s), Limited Partnership, Limited Share Partnership, among others.

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NOTE: The information herein provided could have varied due to recently approved regulations. Therefore, we suggest you contact our office for a formal legal opinion.
 
 

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