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The Panamanian Company 

by Luis Alberto Hincapie, Partner and Director of the International Unit

Published: June, 2009

Submission: June, 2009


Since the introduction of Law 32 of 1927, the Law on Corporations of the Republic of Panama has remained virtually unchanged, serving both Panamanians and well as foreigners to put in order, protect and plan the transfer of their patrimony in an orderly fashion.

Panama’s corporation is an instrument whose characteristics are easy to comprehend and its main aspects are as follows:


The incorporation process requires that the articles of association be made into a notarial deed that is thereafter filed at the Public Registry for registration.  This makes it effective before third parties.

Two or more persons of legal age, regardless of nationality, and whether or not residents of Panama, may organize a corporation for any lawful purpose, as per the formalities of the law.


• Panamanian law does not require a minimum capital.  The law only demands that the total amount of stock, the number and par value of the shares of the capital be stated, and whether the corporation will issue shares without nominal value.

• All the shares of stock may be issued in nominative form or to the bearer, and shareholders are not required to be nationals or residents of the Republic of Panama.

• A correlation between the paid-in capital and the value of the corporation assets is not required; this means that the par value of the shares does not necessarily corresponds to the book value of the corporation.


• In respect of the object, Panamanian law is very flexible since, in addition to allowing the development of the object described in the articles of incorporation, it also allows carrying out any legal business even if not similar to the objects listed in said articles of incorporation or its amendments.

• The business may be performed in Panama or anywhere else in the world.

Board of Directors

• The directors and officers are not required to be Panamanian or Panamanian residents.

• The Board of Directors must be composed of at least 3 members, the minimum established by the law, who may be natural or juridical persons.

• Meetings of the Board of Directors of a Panamanian corporation may be held in any country, personally, by proxy, or by electronic means.

Assembly of Stockholders

• Meetings of stockholders may be held in any country and they may attend meetings personally or by proxy.

• A fixed number of stockholders in not required by law, therefore, a single person may be the owner of all the shares and in consequence, of the corporation.

Corporate Records

The stock registry and the register of minutes may be kept not only in books, but also by electronic or other means, provided they can be printed.

Powers of Attorney

Powers of attorney, both general and special, granted in a notarial deed or private document, with a legally certain date, will be effective in respect of third parties on the date of their execution and may be registered in the Public Registry at the discretion of the interested party.

Income Tax

• Corporations will only pay taxes in Panama on income from profitable activities within the territory of the Republic of Panama.

• Panamanian legislation does not tax dividends received by corporations if said dividends are paid from income produced outside the Republic of Panama.

• Employees, officers or directors of a Panamanian corporation residing in foreign countries do not have to pay income tax on the compensation they receive for their services to the corporation.

Tax Treaties or Agreements

Panama has not entered into any tax treaties or agreements with other countries.

Annual Tax

The sole tax assessed on corporations by the Republic of Panama is US$300.00 payable annually.

Transfer of Jurisdiction

Any foreign company may continue its existence under the laws of the Republic of Panama and any Panamanian corporation may likewise continue its existence under a foreign legislation provided that the laws of that country so allow it.

Resident Agent
Under the corporation law of 1927, companies incorporated in Panama are required to have a Resident Agent.

The said Resident Agent must be a licensed lawyer or law firm, duly admitted to the practice of law in the Republic of Panama, who is entrusted with the filing of some documentation and the payment of the corporation’s annual tax.  Thus, the Resident Agent acts as a link between the corporation and the government of the Republic of Panama.






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