Panama Corporate Law Corporations in Panama are governed by Law 32 of February 26, 1927. Two or more persons of legal age, not necessarily Panamanian citizens or residents of the Republic of Panama,
may form a corporation for any lawful purpose. It is not necessary that
the capital be even partially held by Panamanians. Under Panama's
Corporation Law it is possible to organize a corporation owned by only
one person. Subscription to all or any percentage of the capital stock
is not required. It is acceptable for incorporators to agree to the
subscription of stock shares. The usual practice is to state that each
incorporator agrees to subscribe to one share each.
Law 32 of 1927 requires a minimum of three officers (a president, a
treasurer, and a secretary) and three directors. However, one person may
hold two or more offices. It is not necessary that the directors or
officers be Panamanian nominees or shareholders. Finally, it is not even
necessary for the interested parties to be present in Panama for the purpose of organizing a corporation.
The major advantages of a Panamanian Corporation can be summarized as follows:
The freedom to appoint directors and officers of a any nationality and
country of residence.The freedom to appoint nominee directors and
officers (provided by by our associates in Panama).The
legal protection afforded for the confidentiality of business and
banking transactions. The tax exemption status provided to offshore
companies.The complete anonymity afforded to owners of Panamanian
Corporations through the use of bearer shares of stock.The freedom of
capital movement in and out of Panama and
the absence of regulatory supervision. The absolute confidentiality of
banking transactions under accounts belonging to corporations with
nominee directors and bearer shares in the hands of the owner.
According to Panama's
Corporation Law 32 of 1927 ("the Panama Corporation Law"), corporations
may be created by any two persons of any nationality. The Panama
Corporation Law is based on the Delaware Business Corporation Law of
1926. Unlike the laws of many offshore jurisdictions, there is no
difference between domestic and offshore companies in Panama. All corporations pay taxes only on income derived from Panama.
Panamanian Law requires a minimum of three (3) directors and three (3)
officers. These three directors may also act as officers of the company
i.e. President, Secretary and Treasurer, or other positions as desired.
Directors and officers need not be shareholders and they may be
non-resident aliens. Directors may be companies or natural persons.
Nominee Directors are provided by Maritime International Ltd. if
desired, at no additional cost.
The following names may not be used without a licence or special permission:
Bank, Building Society, Savings, Insurance, Assurance, Re-Insurance,
Fund Management, Investment Fund, Trust or their foreign language
equivalent.
All Panamanian corporations must end with the suffix "Corporation",
"Incorporate", "Sociedad Anonima" or the abbreviations "Corp". "Inc" or
"S.A". They may not end with the suffix Limited or the abbreviation Ltd.
The standard authorised share capital is US $10,000 divided into 100
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. Higher capitalization
requires higher government fees.
The advantages of incorporating in Panama are:
Total secrecy and anonymity, protected by statute.No requirement to
disclose beneficial owners.No requirement to file annual
return/financial statements or hold annual general meetings of
shareholders or directors. Full exemption from taxation on any business
activity or transaction carried on outside of Panama.
Reasonable formation and maintenance costs and fees.No minimum nor
maximum capital requirements.Minimum registration fee on capital.
Corporations may engage in any lawful business in any country and may
carry on transactions in whatever currencies they choose. Companies may
issue Registered or Bearer shares, preferred shares and non-voting
shares. The shareholders, directors and officers may be of any
nationality and may be residents of any country. Neither the directors
nor the officers need be shareholders. Shareholders and/or directors may
hold their meetings in any country and they may attend such meetings by
proxy.
General Information
The Republic of Panama, with an area of approximately 76,900 square kilometres, is located between Costa Rica and Colombia, and forms the narrowest and lowest portion of the Isthmus that links North and South America. The population of Panama is
approximately 3.1 million, about 52 percent of which is urban, and
Spanish is the official and spoken language. English is also spoken
widely in urban areas and is used daily in commerce and international
trade.
The Isthmus of Panama was discovered in 1501 by Rodrigo de Bastidas who
played a leading part in the establishment of Santa Maria La Antigua del
Darien in 1510; the first permanent settlement on the mainland of the
Americas. In 1513, Balboa led an expedition, in Panama, that discovered the Pacific Ocean. Panama City was founded by Pedro Arias Davila on 15th August 1519, almost a hundred years before Jamestown, the first permanent English settlement in North America was founded. Panama was a Spanish colony until 1821 when it became part of the Gran Colombia of Simon Bolivar. In 1903, Panama broke its alliance with Colombia and became an independent republic.
Government
There are free and democratic elections with universal suffrage. The
executive branch of the goverment is at present composed of a President
and one Vice- President, elected for a five year term by direct
election.
Legal Structure
The legal system is based on Spanish Civil Law with many Common Law
influences; particularly regarding Company Law which is based on the Delaware model. Generally, corporations are incorporated under the Corporation Statute Law 32 of the 1927 Commercial Code.
Panama Private Interest Foundations
The PIF vehicle is relatively new in Panama, becoming law in 1995, but
the Foundation concept has existed in Liechtenstein for many years, and,
although based upon the well established Liechtenstein legislation, the
Panamanian structure has additional attributes, and is more flexible.
A Foundation is generally used to hold cash, investments and shares in
private, commercial, or holding companies, particularly with a view to
Estate planning; in which area it is an eminently suitable vehicle.
Beneficiaries can validly include the Founder, family members, third
parties or institutions. The
Founder or client may generally retain full control over the assets
held by the Foundation throughout his lifetime, and the Founder may at
all times amend his disposition or dissolve the Foundation; the
Foundation Council may be required by the Regulations to act only upon
the First Beneficiary's instructions.
Protected Confidentiality
The Panamanian law on Foundations imposes strict sanctions on
the members of the Foundation Council and associated bodies, as well as
on any private or public employees, which may have any knowledge of the
activities, transactions, or operations of a Foundation in case of any
unwarranted breach of confidentiality. These
penalties are without prejudice to any corresponding civil liability.
This implies that, as a matter of law, all information regarding a
Foundation is strictly the property of the Foundation itself, no
unauthorized parties having access to same, and any knowledgeable
persons being liable to sanctions should any information regarding the
Foundation be unduly shown to others. Therefore, access to documentation
regarding the Foundation is strictly limited, which may not be the case
in Foundations established in other jurisdictions.
Panama PIFs can usually be created for around US$950.00, while the cost
of a Liechtenstein Foundation may exceed US$10,000.00 while offering no
advantage to justify the extra expense. In Panama, the annual PIF maintenance is similarly less costly than Liechtenstein.
The PIF can be created by three or more natural persons or by a
juridical entity, such as a corporation. The founder can be nominee. A
foundation charter is created, which in essence, is similar to IBC
incorporation, and like IBC incorporation documents, the foundation
charter document is public record.
The Foundation is directed by a Council of three or more members which
can also be nominee. In addition, like a trust, a private protector may
be named to have special oversight authority. The client may wish to
take this position, especially if nominee council members are being
used. The position of 'Protector' is not required, but it is advisable.The
position of protector can be applied by private agreement between the
Foundation and the person acting as protector, but there is extra
protection for the client if the position is spelled out in the
foundation charter.
Panama Private Interest Foundation Charter Requirements
Name of the Foundation - The name of the foundation can
be expressed in any language, but must contain the term 'foundation' as
part of the title to indicate that the entity is in fact a foundation
structure.
Initial Patrimony - The initial patrimony is the amount
used to fund the foundation. The foundation can be funded in any
currency, but the initial patrimony cannot be less than the equivalent
of US$10,000.00. The initial funding or contribution does have to be
done at the time the foundation is created. There is no public record of
the foundation assets other than the fact it was originally funded with
ten thousand dollars.
Council Members - The foundation structure must have a
minimum of three council members who are natural persons, or a juridical
person, such as a corporation that has three directors. The names and
addresses of the council members is public record.
Purpose of the Foundation - The foundation may be
created for any lawful purpose, such as the maintenance and welfare of
minor children, a college tuition or scholarship funding for any person,
the maintenance and welfare of the founder upon his or her retirement,
the maintenance of a building or property, the benefit of any charitable
foundation or organization, or any other purpose the founder desires
within the confines of the law.
Beneficiaries - Like a trust document, the foundation
structure must name beneficiaries and the basis of distribution
entitlement for each beneficiary. The foundation charter must also
indicate the manner in which any assets are to be disposed of upon its
dissolution. The founder of the foundation, or the client, may be named
as a beneficiary.
Domicile - The domicile of the foundation can be
located or indicated as any desired jurisdiction, but IMT suggests that
Panama, or another 'civil' law jurisdiction, be used. Resident Agent -
The foundation must have a local Resident Agent which is ordinarily a
duly authorized lawyer or law firm, with a physical presence in Panama.
Foundation Duration - The foundation can have a specified life span if the client so desires.
Practical Uses
The practical uses and strategies possible through the PIF are many, and
for asset protection, there is probably no better entity available in
any jurisdiction at this time.
Assets placed in a PIF are sole and separate property and cannot be
seized or attached to satisfy the personal debts, or judgments,
including divorce judgments, or lawsuits, or any other liabilities, or
obligations of the founder or the beneficiaries.
Although a PIF cannot technically engage in business activities, it can
be used through the beneficial owner of the shares of onshore, or
offshore, companies engaged in business activities. It is also
permissible for the PIF to engage in any activity, which will increase
the value of its assets. The
PIF can own bank accounts, securities, brokerage accounts and real
estate holdings, and since there are no ownership shares in a PIF, the
founder does not own the foundation, and thereby may benefit in areas
such as tax reporting and asset protection.
For more information contact:
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