Jurisdictions: Republic of Panama

Background Company Formation | Shares, Taxation and other mattersManagement Structure |  Corporate Highlights

BACKGROUND

The Republic of Panama, with an area of approximately 76,900 sq km, is located between Costa Rica and Colombia, forms the narrowest and lowest portion of the isthmus that links North and South America. Panama is famous for its Canal, which joins the Atlantic and Pacific Oceans. With a population of about 3.3 million and due to the importance of the Canal, Panama has excellent telecommunications as well as international airline links. There is a sophisticated banking and financial system together with a major Free Trade Zone. Now firmly established as a democracy, the Country has legal system based on a constitution and is politically stable with a continuously growing economy.

CURRENCY
The Panamanian currency is the Balboa, but the United States Dollar circulates freely at an exchange rate of 1 Balboa = 1 US Dollar.

EXCHANGE CONTROL
None.

TYPE OF LAW
Based on Spanish Civil Law with many Common Law influences, particularly regarding Company Law, which is based on the Delaware Model.

PRINCIPAL CORPORATE LEGISLATION
Corporation Law No. 32 of 1927, Decree No. 130 of 1948, Decree No. 147 of 1996, Law No. 32 of 1978, Decree Law No. 5 of 1997 and Executive Decree 296 of 1997.

COMPANY FORMATION (Back)

TYPE OF COMPANY FOR INTERNATIONAL HOLDING, TRADE AND INVESTMENT
In substance, identical to IBCs. Generally, corporations are incorporated under the Corporation Law 32 of the 1927. Limited Liability Companies and Limited Partnerships are used also.

PROCEDURE TO INCORPORATE
By 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.

RESTRICTIONS ON TRADING
Cannot undertake 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.

LANGUAGE OF LEGISLATION AND CORPORATE DOCUMENTS
Spanish and certified English translations.

REGISTERED OFFICE REQUIRED
Yes, must be maintained in Panama at the address of the Registered Agent.

NAME APPROVAL REQUIRED
Name availability should be done in advance or at incorporation.

TIME TO INCORPORATE
Three to five days.

NAME RESTRICTIONS
A name that is similar to or identical to an existing company. Names of well known companies incorporated elsewhere or a name that implies government patronage.

LANGUAGE OF NAME
Names may be expressed in any language using the Latin alphabet. A Spanish or English translation may be requested by the Registrar.

NAMES REQUIRING CONSENT OR A LICENCE
Bank, building society, savings, insurance, assurance, reinsurance, fund management, investment fund, financial companies, trust or their foreign language equivalents.

SUFFIXES TO DENOTE LIMITED LIABILITY
All Panamanian corporations must end with the suffix Corporation, Incorporated, Sociedad Anonima or the abbreviations Corp, Inc or SA. They may not utilize the suffix Limited or Ltd.

DISCLOSURE OF BENEFICIAL OWNERSHIP TO AUTHORITIES
No.

CHANGE OF JURISDICTION
Companies organized under a foreign law may opt to be governed by Panama law and continue their existence as a Panama Corporation, and viceversa.

SHARES, TAXATION AND OTHER MATTERSS (Back)

AUTHORIZED AND ISSUED SHARE CAPITAL
The standard authorized share capital is US$ 10,000 divided in to 100 common voting shares of US$ 100 each or 500 common voting shares of no par value. The capital may be expressed in any convertible currency. The minimum issued capital is either one share of no par value or one share of par value.

CLASSES OF SHARES PERMITTED
Non-voting shares, common shares, preferred shares, bearer shares and registered shares, par value and no par value shares.

TAXATION
A Panama Corporation does not pay any tax on its worldwide profits.

DOUBLE TAXATION AGREEMENTS
None.

LICENSE FEES
Annual Tax of US$ 350 is payable in the first year. From there on there is an annual fee of US$ 300.00

FINANCIAL STATEMENT REQUIREMENTS
No requirement if income is of non-Panamanian sources.

MANAGEMENT STRUCTURE (Back)

DIRECTORS
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. Panamanian companies are also required to appoint a minimum of three officers (president, secretary and treasurer) who may also be the directors.

COMPANY SECRETARY
A company secretary must be appointed, who may be a natural or corporate person. The company secretary may be of any nationality and need not be a resident of Panama.

SHAREHOLDERS
The minimum number of shareholders is one.

CORPORATION HIGHLIGHTS (Back)

GENERAL

Type of Company

Non-resident

Political Stability

Stable Democracy

Common or Civil Law

Civil

Disclosure of Beneficial Owner

No

Change of Domicile Permitted

Yes

Tax on Offshore Profits

Nil

CORPORATE HIGHLIGHTS

Minimum Number of Shareholders

One

Minimum Number of Directors

Three

Bearer Shares Allowed

No

Corporate Directors Permitted

Yes

Company Secretary Required

Yes

Standard Authorized Share Capital

US$ 10,000

LOCAL REQUIREMENTS

Registered Office/Agent

Yes

Company Secretary

No

Local Directors

No

Local Meetings

No

Government Register of Directors

Yes

Government Register of Shareholders

No

ANNUAL REQUIREMENTS

Annual Return

No

Submit Accounts

No

ANNUAL GOVERNMENT COSTS

Minimum Annual Tax/License Fee

US$ 350

Annual Return Filing Fee

N/A