Company Incorporation
The principal corporate legislation is Corporation Statute Law No. 32 of the 1927 Commercial Code, Decree 5 of 1997 and Executive Decree 296 of 1997. The types of Company used for international trade and investment are the Limited Liability Company and Limited Partnership. The language of legislation and corporate documents is Spanish, and certified English translations are required.
Trading and business activities are subject to the following restrictions:
• A Company has no right to engage in the business of banking, trusteeship and trust administration, insurance, assurance, reinsurance, fund management, investment funds, collective investment schemes, or any other activity that would suggest an association with the banking, finance, fiduciary or insurance businesses.
Incorporation procedure involves the presentation of the proposed corporation’s signed Articles of Incorporation before a notary public who creates a Public Deed for registration at the Public Registry.
There is no requirement under Panamanian law for a registered office to be maintained in Panama, but the company must maintain a Resident Agent who must be a Panamanian lawyer or firm of Panamanian lawyers. The minute book of the company and stock register which is required under Panamanian law, can be maintained in any part of the world. Off-the-shelf Companies are available.
Company names are subject to the following requirements and restrictions:
• Names may be expressed in any language that uses the Latin alphabet. A Spanish or English translation may be requested by the Registrar.
• A name similar to that of an existing company is not acceptable.
• Names of well-known companies incorporated elsewhere or a name that implies government patronage are not acceptable.
• Names containing the following words: Bank, Building Society, Savings, Insurance, Assurance, Reinsurance, Fund Management, Investment Fund, Trust or their foreign language equivalents, require consent or a licence.
• All Panamanian corporations must end with the suffix Corporation, Incorporated, Sociedad Anonima or the abbreviations Corp, Inc or SA. They may not utilise the suffix Limited or Ltd.
Details of the directors must be registered on the public file. Both corporations and natural persons may act as directors and the minimum number of directors is three. They may be of any nationality and need not be residents of Panama. The directors of a Panamanian company must appoint a president, secretary and treasurer. This can be one person, but may not be either a director or a shareholder. The directors may equally appoint themselves. A company secretary must be appointed, and this may be a natural person or corporate body. The company secretary may be of any nationality and need not be a resident of Panama. A company should have a minimum of one shareholder, and the names of subscribing shareholders will appear on public record. They can, however, be nominees. Panamanian law does not require details of any changes of shareholders to be lodged after incorporation.
The standard authorised share capital is US$ 10,000 divided into 100 common voting shares of US$ 100 each or 500 common voting shares without par value; the capital may be expressed in any convertible currency. The minimum issued capital is either one share without par value or one share with par value.
The following classes of shares are permitted: non-voting shares, preferred shares, bearer shares and registered shares. Bearer shares must be paid in full.
Annual Taxation and Fees
Taxation in Panama is strictly territorial. If the company’s activities are run outside Panama, no tax will be levied other than an annual franchise tax which is payable to maintain the good standing. There is no requirement to file financial statements if income is from non-Panamanian sources. There is no requirement to file returns with the Panamanian authorities or to lodge any financial or other information unless the company is being wound up.