Panama Corporations

Investors and Entrepreneurs can be quite skeptical about investing in foreign markets for establishing a corporation in another country can be a daunting and complex process. Complicated legal regulations and unknown market situations always restrict offshore investment. However, Panama historically has always attracted business people and investors from all over the globe due to its incredible banking infrastructure and corporate shield protection laws.

Panama offers great opportunities for entrepreneurs to start a full-time or part-time business. Although it is comparatively easier to start a business in Panama, there are some basic rules that you should understand to avoid legal or financial disagreement.

In Panama, sole proprietorship, partnership and corporation are the three major business structures.

1. Sole Proprietor – Sole Proprietorship is owned by the person, spouse and family as a sole proprietor.
2. Partnership – In partnership, business is owned by two or more partners.
3. Corporation – There are two types of corporation in Panama: a) resident and b) non-resident.

To start a corporation, you are required to register with the government, have a Board of Directors and corporate offices. Following are some key points that you should always consider:

• To find a trustworthy law firm is very critical for the success of your business in Panama. Any error in your legal documents can make the documents legally null and void for the members of the corporation.
• Corporations in Panama are formed under the Law No. 32 of 1927 and the Commercial Code (Decree-Law No. 5 of 1997, Article 5).
  • Two or more individuals (nominees or subscribers) can start a corporation by executing legal documents called the Articles of Incorporation. However, once the corporation is formed, only one shareholder will be required.
  • The legal documents need to be filed with the Panama Public Registry office.
  • The corporation must have a resident registered agent or a registered Panamanian lawyer.
  • Corporate shares can be of various classes. They may be officially registered, or can be discreet bearer shares.
  • There should be at least three directors to start a corporation in Panama.
  • Directors’ names should be in the articles of incorporation.
  • If there is any change of directors then it should be filed with the Public Registry.
  • You are not required to file any change unless it involves change in the articles or merger or dissolution of the corporation.

The entire process to start a corporation in Panama can take 5 to 7 working days. You need to comply with many legal documents, government applications, contracts and laws to create a corporation in Panama. It is advisable to consult a Panamanian lawyer who is knowledgeable and well informed about the laws in Panama for a successful incorporation.