The Republic of Panama is consistently near the top of the list of countries with the best access to capital. The latest Milken Institute ‘Capital Access Index” published in 2008 looked at one hundred twenty-two countries worldwide. The Researchers gathered information from seven essential elements that facilitate access to capital. These extremely smart people then used 56 different variables drawn from these sectors to generate the index. The maximum index achieved was Canada (7.90). Panama’s index was 5.56, which ranked it in 38th position, placing it ahead of all of the BRIC economies.

This result should not surprise anyone. The Republic of Panama is a great place to do business, just as it has been for decades. I live here and I have the experience of doing business here every day. It’s a wonderful experience. This is a nation that does business on an international scale and accommodates the wants and needs of international businessmen. Panama has always respected the entrepreneur and the go-getter. Great places to do business attract investors who want to do business there. I know that sentence sounds like circular logic, but self-reinforcing phenomena often seem that way.

Panama has also been consistently ranked amongst the world’s freest economies with an open door policy for foreign investment that provides important incentives to business. In 2007, Panama attracted $6.2 billion in foreign direct investment… from the U.S. alone, says the Office of U.S. Trade Representative. Enactment of Law 41 in August of 2007 has made investment in Panama an even more attractive proposition. Through the first quarter of 2008, 15 companies had taken advantage of the benefits offered under Law 41. I see no reason why this trend would not continue.

The success of Panama as a place to do business is no accident. All the key elements are here – A stable constitutional government, an economy based on the U.S. dollar, low inflation, no foreign exchange restrictions, equal treatment of foreign and local citizens, and a favorable tax system. The workforce is literate (91.9% literacy) and largely bilingual / multilingual.

Panama has Free Trade Agreements with the United States, Europe, Asia and Latin America countries, and is a member of the World Trade Organization (WTO). Panama is active in the Caribbean Basin Initiative. The Economic Commission for Latin America and the Caribbean, the Organization of American States, and the Interamerican Development Bank have given Panama positive ratings. Panamanian government bonds are consistently graded B+ or higher by Standard & Poors ratings service.

The Republic of Panama does not simply rely on its strategic location, privacy haven reputation, and low cost of living to attract foreign investment. While the various political parties have their differences, they all recognize the goose that laid the golden egg is business. The Colon Free Zone and City of Knowledge initiatives, as well as Law 41, are major efforts to ensure that corporations of all sizes will find Panama an attractive place to do business for many more years into the future.

Panama has passed a new law that has entered into effect as of January 15 of 2009.  Such is Law 4 of January 9 of 2009 that regulates the Limited Liability Companies in Panama, replacing entirely Law 24 of 1966 that originally created and regulated this same type entity.

The new Law is more flexible than the old and although this type of company is not as popular as the well known Panama Corporation, is equally important to consider for some structures.

Among the most interesting features of the Panama SRL we find the following:

1. The new Law provides for an unlimited number of partners, who may be individuals or corporate bodies, with no restrictions as to their citizenships or country of residence. However, two is the  minimum amount of partners required. These may be nominees.
2. The new law does not provide for a minimum or maximum capital,  therefore leaving it open. The law also provides that the capital can be established in any currency. Note that the higher the  capital, the higher the registration fees will be, therefore we recommend for a standard capital of US$10,000 divided into the     quotas you deem convenient that will equate a value in total of US$10,000. No bearer certificates are permitted.
3. The SRL can engage in any type of civil or commercial activity anywhere in the world.
4. The names of the partners must be registered with the Panama Public Registry. Each time a transfer of a quota is done such transfer must be recorded at the Public Registry.
5. The economic liability of each partner for the obligations of the company will be limited to the amount of their participation made or promised.
6. One Manager can be appointed, in which case it can be an individual or a corporate body of any nationality or jurisdiction of incorporation. Also in this case his/her name must also be recorded on public records.
7. No meetings are required to be held, unless otherwise such is stated on the articles of incorporation.
8. If the articles permit it, the manager of a Panama SRL can represent the company in any judicial or extrajudicial proceeding,  but it will require a special power of attorney to carry on acts  that go beyond the normal course of business. He/she will need authorization to transfer assets and to encumber assets or secure   debts of the SRL.
9. Once the SRL is recorded it acquires a different legal personality from that of its members and managers.
10. An SRL can be converted at any moment into any type of company,  such as an S.A. and vice versa.
11. An SRL can also be re-domiciled to any jurisdiction and vice versa.
12. The SRL is not obliged to pay the Annual Government Fee.
13. For tax purposes, this is a transparent vehicle, so that at least in the United States it can be treated as a “disregarded entity”.
14. The name must bear one of the following two endings: “SOCIEDAD DE  RESPONSABILIDAD LIMITADA” or S. DE R.L. The name cannot be similar in any way or form to a name already registered, notwithstanding if it is a different type of company, like an S.A., for example.

Should you have any questions, please do not hesitate to contact us.