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
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",
"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.
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.
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.
All shares may be issued as bearer shares.
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.
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
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
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.
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.
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.
In order to proceed with the formation of Panamanian
Company, our law firm requires the following information:
A desired company name (more than one name should
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.
Advantages of Panamanian Corporations
Shares may issued to the bearer or
in registered form.
b. Shares may be issued in
c. There is no minimum capital
required, and may be issue with or without nominative
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
i. Panama has no exchange controls
nor money restrictions.
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.
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
The notables features of Law No. 5 of 1997 are
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.