The Panamanian corporation
A Panamanian corporation is commonly used to carry on business, structure investments, hold assets and develop commercial projects. Its principal legal framework is Law 32 of 1927. Once registered with the Public Registry, it becomes a legal entity separate from its shareholders.
The company may enter into contracts, own assets and assume obligations in its own name. Separate legal personality does not, however, remove liability arising from unlawful conduct or breaches of applicable law. The structure should be designed around the company’s intended purpose and management needs.
Corporate structure and key participants
Before drafting the articles of incorporation, the parties should establish who will own the shares, how share ownership will be structured, who will sit on the board and who will have authority to represent the company. These are distinct roles.
A corporation must have at least three directors and appoint a president, secretary and treasurer. Subject to applicable rules, one person may hold more than one officer position. Shareholders need not serve as directors: for example, a sole shareholder may own all the shares while appointing three individuals to the board.
Corporate roles at a glance
| Shareholders | Own the shares; they do not necessarily serve as directors. |
|---|---|
| Directors | Serve on the board and oversee company management. |
| Officers | President, secretary and treasurer. |
| Legal representative | Acts within the powers established in the articles. |
| Resident agent | Qualified Panama attorney or law firm with statutory responsibilities. |
| Share capital | Authorized capital and share structure stated in the articles. |
Information required for incorporation
The articles of incorporation specify the company name, corporate purposes, registered domicile, authorized share capital, share structure and rules governing administration and representation. A resident agent must also be appointed in Panama; this role is performed by a qualified attorney or law firm.
Identification and due-diligence documentation is required for the relevant persons, including beneficial ownership information. Specific requirements depend on the ownership structure, activity and risk profile of those involved.
Registration process
The process starts by defining the corporate structure and gathering the necessary documents. Counsel then prepares the articles of incorporation, completes the notarial formalities and files them with the Public Registry. The company acquires legal personality upon registration.
Registration alone does not authorize every business activity. Depending on the proposed operations, tax registration, a business operation notice, municipal registration or sector-specific permits may be required. Opening a bank account is a separate process subject to the bank’s compliance requirements.
Ongoing legal obligations
A corporation remains subject to legal obligations even if it has not started trading. These include maintaining a resident agent, paying the annual franchise tax and meeting applicable accounting-record, supporting-document and beneficial-ownership requirements.
Changes to directors, officers, legal representation or resident agent may require corporate resolutions and registry filings. Companies operating in Panama must also comply with relevant tax, employment, municipal and regulatory obligations.
Annual franchise tax and maintenance costs
The annual corporate franchise tax is B/.300.00, with a B/.50.00 late-payment surcharge. The due date depends on the semester of registration: July 15 for companies registered between January and June, and January 15 for those registered between July and December.
Resident-agent fees, notarial and registration expenses and other services are separate. A quotation should distinguish one-time incorporation costs from recurring annual obligations.
| Item | Amount |
|---|---|
| Annual franchise tax | B/.300.00 |
| Late-payment surcharge | B/.50.00 |
| Resident-agent fees | As agreed |
| Incorporation and registration expenses | As quoted |
Planning before incorporation
A company intended to hold real estate may have different needs from an operating business with employees, invoices and commercial activity. Its purpose, representation powers and future compliance costs should therefore be considered before incorporation.
I provide advice on Panamanian corporate incorporation, drafting articles of incorporation, organizing directors and officers, resident-agent services and subsequent corporate matters.
General information subject to current law and the circumstances of each case.
