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Incorporation of the
Corporation
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| Incorporation |
Article 1. |
Two or more persons, of
any nationality, although not domiciled in the Republic of Panama, may
incorporate a corporation for any lawful purpose, in accordance with the
formalities established in this law. |
| Articles of Incorporation |
Article 2. |
The persons who desire
to incorporate a corporation shall subscribe to Articles of Incorporation
which shall contain: |
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1. |
The name and domicile
of each subscriber to the Articles of Incorporation; |
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2. |
The name of the corporations,
which shall not be identical or similar to another pre-existing corporation
in such a way as to cause confusion.
The name shall include a word,
phrase or abbreviation which indicates that it is a corporation and which
distinguishes it from a natural person or a legal entity of another nature.
The name of the corporation may
be expressed in any language; |
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3. |
The purpose or general purposes
of the corporation; |
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4. |
The amount of the authorised
capital and the number and par value of the shares into which it is divided;
and if the corporation may issue no par value shares, the declarations
mentioned in article 22 of this law.
The amount of the authorised
capital and the par value of shares may be expressed in the currency of the
Republic or in the gold value of currency of another country, or in both; |
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5. |
If there are shares of various
classes, the number of each class, and the designations, preferences,
privileges and voting rights, as well as the restrictions or requirements of
the share of each class; or the provision that such designations,
preferences, privileges and voting rights, or the restrictions or
requirements may be determined by the resolution of the majority of the
interested shareholders or by the resolution of the majority of the
directors; |
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6. |
The number of shares which each subscriber agrees to take; |
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7. |
The domicile of the corporation and the name and domicile of
the agent in the Republic, which may be a legal person; |
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8. |
The duration of the corporation; |
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9. |
The number of directors which shall not be less than three,
specifying their names and addresses; |
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10. |
Any other legal clauses which the subscribers may agree
upon. |
| Execution and language |
Article 3. |
The Articles of Incorporation may
be executed in any place, inside or outside of the Republic, and in any
language. |
| Formalities for execution |
Article 4. |
The Articles of Incorporation may
be evidenced by way of a public deed, or in another form, so long as they
are attested to by a Notary Public or by any other public servant that is
authorised to make attestations in the place of execution. |
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Formalities before
registration |
Article 5. |
If the Articles of Incorporation
are not in a public deed, they must be formalised by protocol in a Notary's
office in the Republic.
If said document was issued
outside the Republic, it must, in order to be formalised by protocol, be
previously authenticated by a Panamanian Consul, or in lieu thereof by a
friendly nation's Consul.
If said document is in a language
which is not Spanish, it should be formalised by protocol together with an
authorised translation by an official or public translator of the Republic. |
| Registration at the Public
Registry |
Article 6. |
The public deed or the
protocolised document containing the Articles of Incorporation shall be
presented for filing in the Commercial Registry.
The incorporation of the
corporation shall not have effect with respect to third parties until
corresponding Articles of Incorporation have been registered. |
| Amendments to Articles of
Incorporation |
Article 7. |
A corporation incorporated
according to the provisions of this law may reform any article of the
Articles of Incorporation, insofar as the amendments are done in accordance
with the provisions of this law.
Consequently, the corporation
may: vary the number of shares or any class of the shares subscribed
to at the time of the amendment; vary the par value of the subscribed shares
of any class; exchange subscribed shares of par value of one class the the
same or a different number of shares of the same class or another class of
shares with no par value; exchange shares of no par value of one class for
the same or a different number of shares of the same class, or of another
class of shares with a par value; increase the quantity or the number of
shares of the authorised capital; divided its authorised capital into
classes; increase the number of classes of the authorised capital; vary the
denomination, rights, privileges, preferences, voting rights, and the
restrictions or requirements of the shares.
But it may not reduce the capital
unless in accordance with the provisions of articles 14 and following of
this law. |
| Persons authorised to make
Amendments |
Article 8. |
The amendments to the Articles of
Incorporation shall be done by the persons determined herein and in the form
established in this law for the execution of the Articles of Incorporation. |
| Amendments prior to issuance of
shares |
Article 9. |
Amendments to the Articles of
Incorporation which are agreed upon before the issuance of shares shall be
signed by all the subscribers to the Articles of Incorporation, and by any
other persons who agreed to subscribe to shares thereof. |
| Amendments following
issuance of shares |
Article 10. |
Where shares have been issued,
the amendments to the Articles of Incorporation shall be signed by: |
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a. |
By the holders or the proxies of
all issued shares with voting rights, provided that to the amending document
the Secretary or an Assistant Secretary of the corporation provides a
certification to the effect that the persons who executed said amendments,
in their own name or by proxy, represent the entirety of the holders of the
issued shares with voting rights; |
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b. |
By the President or one of the
Vice Presidents and the Secretary or one of the Assistant Secretaries of the
corporations, who shall sign and include in the amending document a
certification in which they attest: that they were authorised to issue said
document by a resolution adopted by the owners or the proxies of the
majority of said shares and that said resolution was adopted in a
shareholders meeting in which they verified the date of notice given or in
which notice was waived. |
| Amendments of share rights |
Article 11. |
Where the amendments to the
Articles of Incorporation alter the preferences of the issued shares of any
class or authorise the issuance of shares with preferences which in some way
are more advantageous than those shares issued in another class, then in the
certification referred to in subsection b. of the previous article, the
officers of the corporation who execute shall attest that they were
authorised to execute the amending document by a resolution adopted by the
owners or the proxies of the majority of the shareholders of each class with
voting rights, and that this resolution was adopted in a shareholder meeting
in which they verified the date of the notice given or in which notice was
waived. |
| Special majority requirement for
Amendments |
Article 12. |
If the Articles of Incorporation
provide that more than a simple majority of the issued shares or any class
of shares is required in order to amend the Articles of Incorporation, then
the certification referred to in subsection b. or article 10 shall attest
that the amendment has been authorised in this manner. |
| Pre-emptive rights to subscribe
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Article 13. |
Unless the Articles of
Incorporation of the amendments thereto provide otherwise, each shareholder
shall have the pre-emptive right to subscribe proportionately to his
shareholding to the new shares issued in accordance with an increase in
capital. |
| Decrease of authorised capital |
Article 14. |
The corporation may reduce the
authorised capital by an amendment to the Articles of Incorporation; but it
may not make a distribution of any assets as a result thereof if the
remaining assets do not represent at least the total value of the
liabilities of the company, considering the reduced capital as part of the
latter.
A certification under oath shall
be made by the President or the Vice President and the Treasurer or one of
the Assistant Treasurers to the document containing the respective
amendment, in which they attest that the distribution does not breach the
above requirement.
The appraisal of the value of the
assets or liabilities by the Board of Directors shall be deemed to be
correct, except in the case of fraud. |
| Acquisition of own shares |
Article 15. |
Unless otherwise provided in the
Articles of Incorporation, the corporation may acquire its own shares.
If the acquisition is made with funds or assets which are not part of the
excess assets over liabilities or net profits, the acquired shares shall be
paid for by a reduction of the issued capital; nevertheless, said shares may
be sold again is the authorised capital is not reduced upon the cancellation
of said shares. |
| Shares acquired from assets or
net profits |
Article 16. |
The shares of a corporation
acquired with funds derived by the excess assets over liabilities or from
net profits, may be retained by the corporation, or sold by it for corporate
purposes, and may be cancelled and reissued by resolution of the Board of
Directors. |
| Treasury shares |
Article 17. |
The shares acquired by the
corporation may not, directly or indirectly, be represented at a
shareholders' meeting. |
| Prohibitions against acquisition |
Article 18. |
No corporation may acquire its
own shares with funds, unless they are derived from the excess assets over
liabilities or net profits, if such acquisition will result in the decrease
of the actual value of the assets to an amount which is less than the total
value of the liabilities, considering the reduced capital as part of the
latter.
The appraisal of the value of the
assets and liabilities by the Board of Directors shall be deemed to be
correct, except in the case of fraud. |
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Powers of the Corporation
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| Powers of the Corporation |
Article 19. |
Every corporation incorporated in
accordance with this law shall have, in addition to the powers which the law
provides, the following powers: |
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1. |
To sue and be sued in court; |
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2. |
To adopt and use a corporate seal and to modify it when
deemed expedient; |
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3. |
To acquire, purchase, hold, use and transfer real and
personal property of any kind and to make and accept pledges, mortgages,
leases, liens and encumbrances of every kind; |
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4. |
To appoint officers and agents; |
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5. |
To execute contracts of every kind; |
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6. |
To issue, without breaching the current laws or the Articles
of Incorporation, Bylaws for the management, regulation and government of
its business and assets, for the transfer of shares, for the calling of
shareholders' and directors' meetings for any legal purpose; |
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7. |
To conduct business and to exercise its powers in foreign
countries; |
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8. |
To agree upon the dissolution in accordance with the law,
whether voluntarily or for other reasons; |
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9. |
To borrow money and to incur debts in relation with its
business or for any legal purpose; to issue bonds, promissory notes, bills
of exchange and other debt instruments (which may or may not be convertible
into shares of the corporation) payable on determined date or dates,
or payable upon the occurrence of a specific event; whether secured by a
mortgage or pledge, for money borrowed or in payment of acquired assets, or
for any other legal consideration; |
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10. |
To guarantee, acquire, buy, hold, sell, assign, transfer,
mortgage, encumber, or otherwise dispose or trade in shares, bonds or other
debt instruments issued by other corporations or by any municipality,
province, state or government; |
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11. |
To do anything necessary for the execution of the purposes
established in the Articles of Incorporation or in any amendments thereto,
or what is necessary or convenient for the protection and benefit of the
corporation and, in general, to undertake any legitimate business although
not similar to any of the purposes specified in the Articles of
Incorporation or its amendments. |
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Shares and Capital
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| Classes of shares |
Article 20. |
The corporation shall have the
power to create and issue one or more classes of shares with the
designations, preferences, privileges, voting rights, restrictions or
requirements and other rights which the Articles of Incorporation determine,
and subject to the redemption rights which the corporation has reserved in
the Articles of Incorporation.
The Articles of Incorporation may
provide that the shares of one class be converted into shares of one or more
other classes. |
| Par value |
Article 21. |
Shares may have a par value.
Such shares may be issued as fully paid and non-assessable, as well as
partially paid, or even without any payment being made therefore.
Unless the Articles of Incorporation otherwise provide, par value shares may
not be issued as fully paid and non-assessable, nor bonds or shares
convertible into par value shares which are fully paid and non-assessable,
in exchange for services or goods which, in the judgement of the Board of
Directors, have a lesser value than the par value of said shares or the
shares which are convertible from said bonds or shares. Certificates
for partially paid shares may not indicate that a greater sum has been paid
than the value, in the Board of Directors' judgement, of what was really
paid. The payment may be in cash, work, services or in property of any
kind.
The appraisal of the Board of
Directors regarding the values shall be held to be correct, other than in
the case of fraud. |
| No par value |
Article 22. |
Corporations may create and issue
share of no par value, provided that the Articles of Incorporation state: |
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1. |
The number of shares that the corporation may
issue; |
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2. |
The number of shares with par value, if any, and
the value of each one; |
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3. |
The number of shares of no par value; |
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4. |
One or the other of the following declarations: |
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a. |
That the capital shall be at least equal to the total sum
represented by the par value shares, plus a determined amount for each share
of no par value which is issued, and any amounts which are incorporated into
the capital by a resolution or resolutions of the Board of Directors, from
time to time; or |
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b. |
That the capital shall be at least equal to the total value
represented by the par value shares, plus the price received by the
corporation for the issuance of the no par value shares, and any amounts
which are incorporated into the capital by a resolution or resolutions of
the Board of Directors, from time to time. |
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The Articles of Incorporation may also include
an additional declaration to the effect that the capital will not be less
than an amount specified therein. |
| Equality of rights |
Article 23. |
All shares of a given class,
whether par value or no par value, shall have equal rights with respect to
shares of that same class, subject, however, to any designations,
preferences, privileges, voting rights, restrictions or requirements
conferred or imposed on that class of shares. |
| Price of no par value shares |
Article 24. |
The corporation may issue and sell
the no par value shares which it is authorised to issue, for the sum
specified in the Articles of Incorporation; the price which in the judgement
of the Board of Directors is considered fair; the price which is determined
from time to time by the Board of Directors, if permitted by the Articles of
Incorporation; or the price determined by the holders of the majority of the
shares with voting rights. |
| Liability of holders of no par
value shares |
Article 25. |
All; shares referred to in articles
22, 23, and 24 of this Law, shall be considered to be fully paid and
non-assessable. The holders of said shares shall not be liable neither
to the corporation nor to the creditors thereof. |
| Payment for shares |
Article 26. |
Payment of the share
price shall be made on the dates and in the manner determined by the Board
of Directors. In the event of default, the Board of Directors may opt
to proceed against the delinquent shareholder to collect the portion of the
capital which is unpaid and the damages which the corporation has suffered
or to rescind the contract with the delinquent shareholder, with the right
in this latter case to retain for the corporation the amounts which said
shareholder would be due from the corporate assets.
In the event that
they opt to rescind the contract with respect to the delinquent shareholder
and to retain for the corporation the sums which correspond to that
shareholder, the Board of Directors shall give notice of this to said
shareholder with at least sixty days anticipation.
The shares which the
corporation acquires as a result of the provisions of this article may be
reissued and offered again for subscription. |
| Share certificates |
Article 27. |
The share instrument or certificate
shall contain: |
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1. |
The registration details of the corporation in
the Mercantile Registry; |
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2. |
The capital; |
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3. |
The number of shares which correspond to the
holder; |
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4. |
The class of share, where there are different
classes, as well as the special conditions, designations, preferences,
privileges, premiums, advantages and restrictions or requirements that one
class of shares may have other the others; |
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5. |
If the shares which the certificate represents
are fully paid and non-assessable, said certificate shall express this fact;
and if they are not fully paid and non-assessable, the certificate shall
indicate the sum which has been paid. |
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6. |
If the share is registered, it should indicate
the name of the shareholder. |
| Bearer shares |
Article 28. |
No bearer shares shall be issued
unless they are fully paid and non-assessable. |
| Transfer of registered shares |
Article 29. |
Registered shares shall be
transferable in the company's registers according to the provisions of the
Articles of Incorporation or the Bylaws. Transfers shall not be
binding on the corporation until their recording in the Share Register.
If the holder of the certificate
is indebted to the corporation for any sum, the corporation may oppose the
transfer until the amount owed has been paid. In any case, the
transferor and transferee are jointly responsible for the payment of the
amounts due to the corporation for the transferred shares. |
| Transfer of bearer shares |
Article 30. |
The assignment of bearer shares
shall be effected simply by the delivery of the instrument. |
| Exchange of shares |
Article 31. |
If the Articles of Incorporation so
provide, the holder of a bearer share certificate may exchange said
certificate for a certificate in his name for the same number of shares; and
the holder of registered shares may exchange his certificate for a bearer
share certificate for the same number of shares. |
| Pre-emptive purchase of shares |
Article 32. |
The Articles of Incorporation may
provide that the corporation or any of the shareholders shall have the
preferential right to purchase the shares of the corporation from another
shareholder that wishes to transfer.
It is also possible to impose
other restrictions on the transfer of shares; but any restriction which
absolutely prohibits the transfer of shares shall be null and void. |
| New share certificates |
Article 33. |
The corporation may issue new share
certificates to replace those which have been destroyed, lost or stolen.
In such an event, the Board of Directors may require that the owner of the
destroyed, lost or stolen certificate, post a bond to respond to the
corporation for any claim or damages. |
| Voting rights |
Article 34. |
The Articles of Incorporation may
provide that the holders of a determined class of shares shall not having
voting rights, or may restrict or define this right with respect to
different classes of shares.
These provisions of the Articles
of Incorporation shall prevail in all voting which takes place and in all
cases where the law requires the voting or written consent of the holders of
all the shares or of a part thereof.
The Articles of Incorporation may
also requires the vote of more than a majority of any class of shares for
specific purposes. |
| Voting trusts |
Article 35. |
One or more shareholders may agree
in writing to transfer their shares to one or more Trustees for the purpose
of granting to them the right to vote in the name and stead of the owner,
for a determined period and in accordance with the conditions indicated in
the agreement. Other shareholders may transfer their shares to the same
Trustee or Trustees, becoming, by virtue of said transfer, parties to the
agreement. The share certificates so transferred shall be delivered to
the corporation and cancelled by the corporation and new certificates issued
in favour of the Trustee or Trustees, in which it is expressed that they are
issued in accordance with the aforementioned agreement, and these
circumstances shall be noted in the Share Register. In order for the
provisions of this article to take effect, it shall be necessary for the
corporation to receive an authenticated copy of the aforementioned
agreement. |
| Share register |
Article 36. |
The corporation shall maintain in
its office in the Republic, or in any other place in which the Articles of
Incorporation or the Bylaws provide, a book called the "Share Register", in
which the names of all persons that are shareholders of the company shall be
noted, except in the case of bearer shares, in alphabetical order, with an
indication of the domicile, the number of shares which each one has, the
date of acquisition and the sum paid for them and whether the shares are
fully paid and non-assessable.
In the case of bearer shares, the
Share Register shall indicate the number of shares issued, the date of the
issuance and that the shares are fully paid and non-assessable. |
| Dividends |
Article 37. |
The shareholders may be paid
dividends from the net profits of the company or from the excess of the
assets over liabilities, but not otherwise. For shares which are only
partially paid, the company may declare and pay dividends proportionately to
the amount actually paid. |
| Dividends paid in shares |
Article 38. |
When the Board of Directors so
decides, they may pay dividends in shares of the company, provided that the
shares issued for this purpose have been duly authorised and provided that
if the shares have not been previously issued, a sum at least equal to the
shares which are being issued has been transfers from the surplus account to
the capital of the corporation. |
| Shareholder liability |
Article 39. |
The shareholders are only liable
to the creditors of the company up to the amount owed on their shares; but
no law suit can be filed against a shareholder for debts of the company
until a judgement has been rendered against the company for an amount which
has not been collected following the liquidation of the corporate assets. |
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Shareholder Meetings
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| Notice of shareholder meetings |
Article 40. |
Whenever the approval or
authorisation of the shareholders is necessary according to the provisions
of this law, the notice for a Shareholders Meeting shall be given in writing
in the name of the President, Vice President, Secretary or Sub-Secretary, or
any other person or persons authorised to this effect by the Articles of
Incorporation or the Bylaws.
The notice shall include the
purpose or purposes for which the meeting is being called and the place and
time it will be held. |
| Location of shareholder meetings |
Article 41. |
Unless the Articles of
Incorporation or Bylaws otherwise provide, all shareholder meetings shall be
held in the Republic. |
| How notice is to be given |
Article 42. |
Notice shall be given in advance
in the manner provided in the Articles of Incorporation or the Bylaws, but
if these do not provide otherwise, it shall be given by person or mail
delivery of the notice to each registered shareholder with voting rights, no
less than ten and no more than sixty day before the day of the meeting.
If the corporation has issued
bearer shares, the notice shall be published in accordance with the
provisions of the Articles of Incorporation or the Bylaws. |
| Waiver of notice |
Article 43. |
The shareholders or their legal
representatives may waive notice of any meeting in writing, either prior to
or after the meeting. |
| Validity of shareholder
resolutions |
Article 44. |
Resolutions adopted at any meeting
in which all the shareholders are present, whether personally or via proxy,
shall be valid; and the resolutions adopted in a meeting in which there was
a quorum, those absent having waived notice, shall be valid for all those
ends indicated in the waiver, even if in these cases notice has not been
given in the manner prescribed by the Law, the Articles of Incorporation or
the Bylaws. |
| Right to vote |
Article 45. |
Unless the Articles of
Incorporation provide otherwise, every shareholder has a right to vote at
the Shareholders Meeting for each share registered in his name, regardless
of the class of said share or whether it be of par or no par value. It
is understood, nonetheless, that unless the Articles of Incorporation
otherwise provide, that the Board of Directors may establish a period of no
more than forty days before the date of a Shareholders Meeting, during which
no transfer of shares shall be recorded in the registers of the company, or
may establish a date, which shall not be more than forty days before the
date of the meeting, as the date on which the shareholders of the company
who have a right to be given notice and to vote at said meeting shall be
determined (other than the holders of the bearer shares). In this case
only those registered shareholders at said date shall have the right to be
given notice of the meeting and to vote at said meeting. |
| Bearer share voting rights |
Article 46. |
In the case of bearer shares, the
bearer shall have the right at a Shareholders Meeting to one vote for each
share with voting rights, to which end they shall present in said meeting
the corresponding certificate or certificates, or the proof of this right,
in the manner prescribed in the Articles of Incorporation or the Bylaws. |
| Proxy |
Article 47. |
In all shareholder meetings any
shareholder may be represented by a proxy, which need not be a shareholder,
who many be appointed by a public or private document, with or without
powers of substitution. |
| Cumulative voting |
Article 48. |
The Articles of Incorporation may
provide that in the elections of members of the Board of Directors the
shareholders with voting rights to elect a director shall have a number of
votes equal to the number of shares which they hold multiplied by the number
of directors to be elected, and they may cast all of their votes in favour
of a single candidate, or distribute them between the total number of
directors to be elected or between two or more as they deem convenient. |
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Board of Directors
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| Board of Directors |
Article 49. |
The business of the corporation
shall be administered and directed by a Board of Directors composed of
at least three members, of legal age, without distinction of sex. |
| Control of corporate affairs |
Article 50. |
Subject to the provisions of this
law and that provided in the Articles of Incorporation, the Board of
Directors shall have absolute control and full management of the
transactions of the corporation. |
| Powers of the Board of Directors |
Article 51. |
The Board of Directors may exercise
all of the powers of the corporation, except those that the law, the
Articles of Incorporation or the Bylaws confer or reserve to the
shareholders. |
| Number of directors |
Article 52. |
Subject to the provisions of this
Law and that provided in the Articles of Incorporation, the number of
directors shall be established in the Bylaws. |
| Quorum of directors |
Article 53. |
The presence of the majority of the
members of the Board of Directors shall be necessary to form a quorum to
decide about the business of the corporation. Nevertheless, the
Articles of Incorporation may provide that a determined number of directors,
whether more or less than the majority, is necessary to form a quorum. |
| Resolutions of the Board |
Article 54. |
The resolutions of the majority of
the directors present in a meeting in which the required quorum was present
shall be considered as resolutions of the Board of Directors. |
| Directors need not be
shareholders |
Article 55. |
Unless the Articles of
Incorporation provide otherwise, the Directors need not be shareholders. |
| Directors power to amend Bylaws |
Article 56. |
The Directors may adopt, amend,
reform and revoke the Bylaws of the company, unless the Articles of
Incorporation or the Bylaws adopted by the shareholders provide otherwise. |
| Election of directors |
Article 57. |
The Directors of the company shall
be elected in the form, date and place which the Articles of Incorporation
or Bylaws establish. |
| Vacancies |
Article 58. |
Vacancies in the Board of Directors
shall be filled in the manner prescribed in the Articles or the Bylaws. |
| Appointment of Directors by
Directors |
Article 59. |
Subject to the provisions of the
two previous articles the vacancies which occur in the Board of Directors,
whether due to an increase in the number of Directors or any other cause,
shall be filled by the votes of the majority of the members of the Board of
Directors. |
| Directors in office until
replaced |
Article 60. |
The actual directors shall continue
in office until their successors are elected, if the directors are not
elected on the date set for this purpose. |
| Board Committees |
Article 61. |
Unless the Articles of
Incorporation of the Bylaws provide otherwise, the Board of Directors may
appoint two or more or its members to form a committee or committees, with
all the powers of the Board of Directors for the management of the business
of the company, but subject to the restrictions mentioned in the Articles of
Incorporation, the Bylaws or in the resolutions in which they were
appointed. |
| Proxy |
Article 62. |
If the Articles of Incorporation
expressly permit it the directors may be represented and vote at meetings of
the Board of Directors by a proxy who need not be a Director and may be
appointed by private or public documents, with or without power of
substitution. |
| Removal of Directors, Officers,
Agents and Employees |
Article 63. |
The directors may be removed at any
time by the votes, cast for this purpose, of the holders of the majority of
the issued shares with voting rights for the election of directors.
The Officers, Agents and employees may be replaced at any moment by a
resolution adopted by the majority of the directors, or en any other manner
prescribed by the Articles of Incorporation or the Bylaws. |
| Liability of Directors |
Article 64. |
If any dividend or distribution of
assets, which reduces the value of the assets of the company below the value
of the liabilities including the capital in this latter, is declared or
paid; or if the capital is reduced; or if any declaration is made or any
false report is given in a substantial matter, the directors who have given
their consent to such acts, with knowledge that this would affect the
capital, or that the declaration or report was false, shall be jointly and
severally liable to the credits of the company for the damages which result. |
|
|
Officers
|
| Officers of the corporation |
Article 65. |
The corporation shall have a
President, a Secretary and a Treasurer who shall be elected by the Board of
Directors; and may also have the officers, agents and representatives
that the Board of Directors, Bylaws or the Articles of Incorporation
determine, and shall be elected in the manner established therefore. |
| Holdings two or more offices |
Article 66. |
The same person may hold two or
more offices if the Articles of Incorporation or the Bylaws to provide. |
| Officers not required to be
directors |
Article 67. |
It is not necessary for a person to
be a member of the Board of Directors of the company in order to be an
officer, unless the Articles of Incorporation or the Bylaws so require. |
|
|
Sale of Assets
and Rights
|
| Sale of assets |
Article 68. |
Every corporation may, by virtue of
a resolution of the Board of Directors, sell, lease, transfer or in any
other way dispose of all or part of its assets, including its clients and
privileges, franchises, and rights, in accordance with the terms and
conditions that the Board of Directors deems expedient, provided that they
are authorised to do so by a resolution of the holders of the majority of
the shares with voting rights in the matter, adopted in a meeting duly
convened for this purpose in the manner prescribed in the articles 40 and 44
of this Law, or by the written consent of said shareholders. |
| Consent of other classes |
Article 69. |
Notwithstanding the previous
articles provisions, the Articles of Incorporation may require the consent
of any class of shareholders in order to confer the authorisation mentioned
in that article. |
| Assets in trust or encumbrances |
Article 70. |
Unless the Articles of
Incorporation provide otherwise, neither the vote nor the consent of the
shareholders is necessary to transfer assets in trust or to encumber them
with a pledge or a mortgage, in guarantee of the debts of the corporation. |
| |
Merger with other
Corporations
|
| Merger agreement |
Article 71. |
Subject to the provisions of the
Articles of Incorporation, two or more corporations incorporated in
accordance with this law may consolidate in order to form a single
corporation. The directors or the majority thereof, of each of the
corporations which wish to consolidate, may execute an agreement to this
effect, which they should sign and in which they should establish the terms
and conditions of the merger, the manner in which it will be effectuated,
and any other facts and circumstances which are necessary according to the
Articles of Incorporation or the provisions of this Law, as well as the
manner of conversion of the shares of each one of the constituent
corporations into shares of the new corporation, and any other details the
lawful provisions which they deem convenient. |
| Contents of the merger agreement |
Article 72. |
The agreement may establish the
distribution in cash, promissory notes or bonds, in all or in part, rather
than the distribution in shares, provided that, after this distribution the
liabilities of the new corporation, including all of those acquired from the
constituent corporations, and the capital which is issued in the new
corporation, do not exceed the assets. |
| Approval by shareholders |
Article 73. |
The merger agreement shall be
submitted to the shareholders of each of the constituent corporations, to a
meeting called specially for this purpose, in accordance with the provisions
of articles 40 to 43 of this law. This meeting shall consider the
agreement and shall vote as to whether or not to approve or reject it. |
| Execution of the merger agreement |
Article 74. |
Without prejudice to the provisions
of the respective Articles of Incorporation, if the votes of the holders of
the majority of the shares with voting rights of each corporation were in
favour of the merger agreement, this shall be attested to by a certification
of the Secretary or Sub-Secretary of each corporation, and the merger
agreement so approved and certified shall be executed by the President or
the Vice President and the Secretary or Sub-Secretary of each constituent
corporation in accordance with the provisions of article 2 of this law
regarding the execution of Articles of Incorporation. |
| Registration of the merger
agreement |
Article 75. |
The merger agreement so executed
shall be presented to the Mercantile Registry for filing, as provided for
Articles of Incorporation, and once filed shall constitute the consolidation
act of the respective corporations. |
| Rights and obligations of the
consolidated corporation |
Article 76. |
Once the merger agreement has been
executed and filed in the Mercantile Registry in accordance with the two
previous articles, each of the constituent corporations shall cease to exist
and the consolidated corporation, so constituted, shall succeed the
extinguished ones in their rights, privileges, powers and franchises as
owner and holder of the same, subject to the restrictions, obligations and
duties which corresponded to the constituent corporations respectively, and
the encumbrances on assets shall not be prejudiced by the merger, but such
encumbrances shall only affect those assets encumbered at the date of the
execution of the merger agreement. The debts and obligations of the
extinguished constituent corporations shall fall upon the new consolidated
corporation and the fulfilment and payment may be enforced against it as if
it had contracted for these directly. |
| Articles may establish conditions |
Article 77. |
In addition to the requirements
established in the law, the Articles of Incorporation of any corporation may
determine and fix the conditions which must be fulfilled for the merger of
the corporation with another. |
| Law suits |
Article 78. |
In judicial or administrative
proceedings in which one of the extinguished corporations or either of them
was a party, the new consolidated corporation shall continue acting as a
party. |
| Prior rights and duties |
Article 79. |
The liabilities of corporations
and their shareholders, directors or officers, as well as the rights and
legal recourses of the creditors thereof or the persons who had business
dealings with the consolidated corporations, shall not be diminished in any
way or for by the merger. |
|
|
Dissolution
|
| Dissolution Agreement |
Article 80. |
If the Board of Directors of any
corporation subject to this law deems it convenient that the corporation be
dissolved, they shall propose a dissolution agreement to the shareholders,
adopted by a majority of the directors, and shall, within the following ten
days, call or cause to be called a shareholders meeting of those
shareholders with voting rights in accordance with articles 40 to 43, to
decide about the Board of Directors' resolution. |
| Approval of the dissolution
agreement |
Article 81. |
If in the shareholders meeting so
called, the holders of the majority of the shares with voting rights in this
matter adopt a resolution approving the dissolution agreement, a copy of
said resolution of the shareholders shall be issued with a list of the names
and addresses directors and officers of the corporation, certified by the
President or a Vice President and the Secretary or Sub-secretary and the
Treasurer or a Sub-Treasurer, and said certified copy shall be formalised by
protocol and presented to the Mercantile Registry, in the manner prescribed
in article 2. |
| Publication of the dissolution
agreement |
Article 82. |
Once said copy has been presented
at the Registry, it shall be published at least once in a newspaper of the
Republic in the place of its registered office, or if there is no newspaper
in that place, in the Office Gazette of the Republic. |
| Dissolution by unanimous consent |
Article 83. |
If all the shareholders with voting
rights in the matter provide written consent to the dissolution, neither a
meeting the Board of Directors nor a shareholders meeting shall be
necessary. |
| Registration and publication of
unanimous consent |
Article 84. |
The instrument evidencing the
consent of the shareholders shall be formalised by protocol, filed at the
Mercantile Registry, and published in the manner prescribed in article 82.
Once said formalities are complete, the corporation shall be considered
dissolved. |
| Existence following dissolution
or expiration |
Article 85. |
Every corporations whose existence
is terminated by expiry of the date established in the Articles of
Incorporation or by dissolution, shall nevertheless continue for a period of
three years thereafter for the specific purposes of initiating any special
proceedings considered convenient, defending its interests as a defendant,
arranging its affairs, transferring and disposing of its assets and dividing
its capital; but in no case may it continue for the purposes for which it
was incorporated. |
| Directors acting as trustees |
Article 86. |
When the existence of a corporation
is terminated by expiry of its duration, or by dissolution, the directors
shall act as trustees of the corporation with powers to arrange its affairs,
collects it loans, sell and transfer its assets of all kinds, divide its
assets between the shareholders after paying the corporation's debts; and
shall also have the power to begin legal proceedings in the name of the
corporation with respect to its loans and assets, and to represent it in all
proceedings which may be started against it. |
| Liability of trustee directors |
Article 87. |
In the aforementioned case, the
Directors shall be jointly and severally liability for all debts of the
corporation, but only to the value of the assets and funds whose management
and holdings they were entrusted. |
| Remuneration of trustee directors
and vacancies |
Article 88. |
Said directors are authorised to
apply funds and assets of the corporation to the payment of a reasonable
compensation for their services and may fill any vacancy which occurs in
their number. |
| Majority decision of trustee
directors |
Article 89. |
The directors, when acting as
trustees in accordance with the provisions of articles 86, 87, and 88, shall
adopt their decisions by a majority of votes. |
|
|
Foreign
Corporations
|
| Foreign corporations operating in
Panama |
Article 90. |
A foreign corporation may have
offices or agencies and do business in the Republic, after presenting to the
Mercantile Registry for their filing the following documents: |
| |
|
1. |
Public deed, formalised by
protocol, of the Articles of Incorporation; |
| |
|
2. |
Copy of the latest balance sheet
accompanied by a declaration of the part of the capital which will be
utilised or which it proposes to utilise for business in the Republic; |
| |
|
3. |
Certificate stating that it has
been incorporated and authorised in accordance with the laws of its
respective country, issued and authenticated by the Consul of the Republic
in that country, or in the absence thereof, by a friendly nation. |
| Foreign corporations which breach
these requirements |
Article 91. |
The foreign corporations which
operate in the Republic and which have not fulfilled the requirements of
this law may not start legal or other proceedings before the courts or
authorities of the Republic, but may be sued in all classes of trials before
the judicial or administrative authorities, and furthermore may be liable
for a fine of up to five thousand balboas(*) imposed by the Secretary of
Economy and Finance(**).
*1 balboa = 1 US
dollar
** the law
actually states "Public Finance & Treasury" - but the name of the Ministry
was later changed to the Ministry of Economy and Finance |
| Registration of amendments,
consolidations and dissolution |
Article 92. |
Foreign corporations registered in
the Mercantile Registry in accordance with this law shall present for filing
at the Mercantile Registry the amendments of their Articles of
Incorporation, as well as any instruments of consolidation and dissolution
which may affect them. |
|
|
Miscellaneous
Provisions
|
| Laws applicable to corporations
in existence prior to law |
Article 93. |
National or foreign corporations
which are established in the Republic or which have agencies or branches
therein at the time this Law enters into force, shall be governed as to
their corporate charter by their founding public deeds, their Bylaws and by
the laws in force at their time or incorporation or their establishment in
the Republic, as the case may be. |
| Application of this law to prior
corporations |
Article 94. |
National corporations
incorporated prior to the entry into force of this law may at any time be
governed by the provisions hereof, for which it will be necessary to
evidence this decision by a resolution adopted by the shareholders which
shall be filed at the Public Registry.
The shareholders of national
corporations actually dissolved but not liquidated, may, for the effects of
the liquidation, adhere to the provisions of this article, provided that
this be resolved by at least as many shareholders as required to agree to
the dissolution of the corporation before the expiry of the period
established for its term of existence. |
| Repeal |
Article 95. |
All current provisions regarding
corporations are hereby repealed. |
| Entry into force |
Article 96. |
This law shall enter into force as
of the 1st of April of nineteen twenty seven. |
