Legal Basis

Panama Corporations in Panama are governed by Law 32 of February 26, 1927. The Panamanian 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.

Two or more persons of legal age, may form a corporation for any lawful purpose. It is not necessary that the capital be even partially held by Panamanians. 100% foreign ownership and management is allowed.

Under Panama’s Corporation Law it is possible to organize a corporation owned by only one person (single subscriber corporation). 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. However, the usual practice is to state that each incorporator agrees to subscribe to one share. It is not necessary for the interested parties to be present in Panama for the purpose of organizing a corporation.

Officers of Panama Corporations

The law requires a minimum of three officers – a President, a Treasurer, and a Secretary. However, one person may hold two or more offices.

You may appoint directors and officers of a any nationality and country of residence. These may be natural persons or corporations.

Typical in Panama is for the law office involved in the incorporation to provide three professional nominee officers, whose names appear on the public registry.

Public Records

Unlike the laws of many offshore jurisdictions, there is no difference between domestic and offshore companies in Panama. All corporations are registered at the Central Public registry and these records may be viewed free of charge online, only in Spanish, at: https://www.registro-publico.gob.pa/

Taxation

All corporations pay taxes only on income derived in Panama. The corporation may do business outside Panama without restriction, and without incurring any Panamanian tax liability. It may also open an office in Panama which derives only foreign sourced income – for example e-commerce, consulting, or import-export.

Naming of Panama Corporations

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 corporation names must end with one of the following suffixes:

• Corporation
• Incorporated
• Sociedad Anonima
• or the abbreviations “Corp”. “Inc” or “S.A”.

They may not end with the suffix Limited or the abbreviation Ltd. It is possible, however, to end with the words Limited Liability Corporation which is commonly abbreviated to L.L.C. Of course the words Limited Liability in this case form part of the corporate name, and do not have any legal significance.

Standard Authorized Share Capital of Panama Corporations

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 but is typically expressed in US dollars. The minimum issued capital is either one share of no par value or one share of par value. Higher capitalization requires higher government fees.

Restrictions on Business for Panama Corporations

Corporations may engage in any lawful business in any country and may carry on transactions in whatever currencies they choose. Some activities, like banking or insurance, will require special licenses or permits. In this regard, Panama- licensed Financial Services Companies are of particular interest for international business.

Ownership and Share Certificates

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, by internet or by telephone.

Companies may issue Registered or Bearer Shares, preferred shares and non-voting shares.