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THE PANAMANIAN CORPORATION

1. Legal Status
Panama was the first country to introduce an adequate legislation that permits the creation of offshore companies. Our Corporation Law was introduced by Law No. 32 of 1927 and the same has been uninterruptedly effective since its enactment.


2. Incorporation Procedure
Panamanian corporations are fast and simple to incorporate. The elaboration of the charter or articles of incorporation before the Public Registry is required. The time needed for incorporation is one to three days from the filing of the incorporation documents.


3. Articles of Incorporation
The charter must contain the objectives of the company, as widely set out as possible, and should mention that it may engage in any lawful business.


4. Name of the Company
The name of the corporation may be in any language but it must include a word or an abbreviation which indicates that the company is a corporation such as: "sociedad anónima", "corporation", "incorporation", "incorporated", "S.A.", "Inc.", "Corp.", etc. The word "limited" may be used provided that one of the words or abbreviations mentioned before, are included at the end of the name. For purposes of forming the corporation, several names should be furnished in order of preference in case there may be another corporation with an identical or similar name.


5. Capital and Shares
The authorized capital of the company may be expressed in any currency. There is no minimum pay in capital required. The capital does not have to be deposited in any banking or financial institution or proven to have been paid in any manner.
The shares may be issued to the bearer or in the name of its owner, and then may be issued in any currency. They can also be issued with or without nominative value. There may be different classes of shares, ordinary or preferential, with different rights with respect to dividends and voting rights.

6. Shareholders
The nationality of the shareholders is immaterial. Under Panamanian Corporation Law it is feasible that all shareholders of a company be foreign residents outside Panama.
The Board of Shareholders meeting may be held anywhere in the world and there is no legal requirement to hold a regular or annual meeting. Minutes must be registered at the Public Registry in cases in which the charter of incorporation is amended. The issuance of the transfer of shares does not have any restrictions, or require authorization.

7. Anonymity
All shares may be issued as bearer shares.

8. Directors
Three Directors must be appointed as a minimum. Their nationality is immaterial and does not affect the status of the company in any way. Local directors may be appointed for a nominated annual fee, and their removal is in the hands of the shareholders. The Members of the Board of Directors do not need to be shareholders.
Board meetings may be held at any time in any country of the world and in case where the deed of incorporation is amended it must be registered. The Directors may vote by a proxy issued in a private or public document.

9. Officers
The officers may be appointed by the Board of Directors of the shareholders. The officers may be of any nationality or domicile. Any officer may hold several positions but it is recommended that the President and the Secretary be a different person. Any minutes changing the officers must be registered at the Public Registry to be legally binding.

10. Resident Agent
The law provides that Panamanian companies must have an attorney or law firm to act as Resident Agent. The Resident Agent is granted power to obtain notarization and registration of those corporate documents that must be registered at the Public Registry. Panamanian Resident Agents are not authorized to serve notice of any judicial proceeding against the corporation. A nominated fee of US$150.00 is charged annually for this service.

11. Income Tax Returns
Corporations not conducting business in Panama are not subject to any tax as such. Income from foreign operations is tax exempt. There is no need to file annual reports or income tax returns.

12. Management of the Corporation
Power of the corporation is vested in the shareholders and in the Board of Directors as provided in the minute. Notwithstanding the foregoing, either the shareholders or the Board of Directors may grant a Special or General Power of Attorney in favor of a third party with broad powers, so that the business of the corporation may be conducted through such attorney in fact. Power of attorney does not need to be registered at the Public Registry.

13. Procedure for Incorporation
Any two person, (usually members of the law firm who are acting for the formation of the company), subscribe the memorandum of the articles of incorporation and later transfer or waive their subscription rights to the actual shareholders through a letter. There is no need to obtain authorization or permission from any governmental entity for this procedure.

14. Required Particulars
In order to proceed with the formation of Panamanian Company, our law firm requires the following information:

a. A desired company name (more than one name should be given).
b. Amount of authorized capital.
c. Name and address of 3 persons who will serve as directors of the company, acting as President, Treasurer and Secretary.

15. Advantages of Panamanian Corporations

a. Shares may issued to the bearer or in registered form.
b. Shares may be issued in any currency.
c. There is no minimum capital required, and may be issue with or without nominative value.
d. The corporation may have an office anywhere in the world.
e. There is no need to file annual reports or income tax returns.
f. Income from foreign operations are tax exempt.
g. Shareholders meetings and Board of Directors meetings may be held in any part of the world.
h. There is no requirement to hold regular or annual directors or shareholders meetings.
i. Panama has no exchange controls nor money restrictions.

16. Maintenance Cost
There is a corporation tax fee of $250.00 plus a surcharge of $50.00 to be paid to the government every year. If our Law firm provides the Directors and Officers, a charge of US$100.00 will be assessed annually per Director and Officer.

17. Amendment to our Corporation Law
On July 2nd, 1997, the Republic of Panama enacted a new Law with the purpose of modernizing our Corporate Law of 1927 and making it more flexible, efficient and in position to compete with the new offshore centers that have arised around the world lately.


The notables features of Law No. 5 of 1997 are the following:

Names of companies may be reserved in advance for a period of thirty days.
The Minutes Book and the Stock Register Book of companies may be kept in any form, including by electronic means, provided that the contents thereof can be printed.
Meetings of board of directors or shareholders may be held by phone, fax or other electronic means, and decisions may be adopted by written consent even though signed in different places and on different dates.
Companies may have corporate directors or officers as well as corporate liquidators.
Power of Attorney does not have to be registered to be effective vis-a-vis third parties. They may be granted by public deed or by private document but the signature has to be authenticated by a public notary.
Companies that were formed before the enactment of the above referred law may amend their articles of incorporation and agree to adopt the provisions that are contained in said law.

 

 
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