Corporations
A juridical person constituted by two or more persons of legal age, of any nationality, even if they are not domiciled in the Republic of Panama, to carry out any lawful purpose, in accordance with the formalities prescribed in Law No. 32 of February 26, 1927.
What is the lawful object of a corporation?
The corporation may perform any act as long as it is in accordance with Panamanian laws, public order and good customs. Therefore, all lawyers and law firms are obliged to know the client (Due Diligence) and keep a record with the information of their clients, sufficient to identify them, before the competent authorities, if so required. This obligation is aimed at providing information required in the course of criminal investigations related to money laundering and drug trafficking.
What are the formalities to incorporate a corporation?
- The names and addresses of each of the subscribers of the corporate charter.
- The name of the corporation, which shall not be the same or similar to that of another pre-existing corporation in such a way as to cause confusion. The denomination will include a word, phrase or abbreviation that indicates that it is a corporation and that distinguishes it from a natural person or from a corporation of another nature. The name of the corporation may be expressed in any language.
The object or general objects of the corporation. - The amount of the capital stock and the number and par value of the shares into which it is divided.
- Type of shares. The designations, preferences, privileges and voting rights, or restrictions may be determined by resolution of the majority of the interested shareholders or by resolution of the majority of the directors.
- The number of shares that each subscriber to the corporate charter agrees to take.
- The domicile of the corporation and the name and domicile of its agent in the Republic, which may be a juridical person;
- The duration of the corporation.
- The number of directors who shall not be less than three with specification of their names and addresses.
Any other lawful clauses that the subscribers have agreed upon.
The corporation may perform any act as long as it is in accordance with Panamanian laws, public order and good customs. Therefore, all lawyers and law firms are obliged to know the client (Due Diligence) and keep a record with the information of their clients, sufficient to identify them, before the competent authorities, if so required. This obligation is aimed at providing information required in the course of criminal investigations related to money laundering and drug trafficking.
How is the corporation registered and recorded?
The corporate agreement is recorded by means of a public deed and must be presented for its registration in the commercial person section of the Public Registry of Panama. The incorporation of the corporation will not become effective with respect to third parties until the respective agreement has been registered.
– Liability to creditors is limited, which protects your personal assets.
– Any income obtained outside Panama does not pay income tax.
– The amount of the capital stock does not need to be paid in order to be incorporated.
– Unlike other legal entities, the corporation can continue to operate if a partner dies or decides to withdraw.
– It gives a better image and confidence when dealing with clients, investors and banks.
– Taxes are usually higher than for individuals.
– Regardless of whether the corporation performs or perfects activities outside the Republic of Panama, it must keep accounting records and maintain its supporting documentation in the Republic of Panama.
– An annual fee must be paid to the Public Registry of Panama and an annual fee must be paid to the resident agent.
