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Panamanian Corporations
[Benefits] [General
Details & Characteristics] [Requirements
for Incorporation] [Ongoing Services &
Charges] [Schedule
of Fees]
Part of my day-to-day practice involves the incorporation of Panamanian
companies for clients. Clients use corporations for a number of purposes,
for example:
- Holding company for real estate in Panama or elsewhere;
-
Holding assets internationally on a favourable
tax basis whereby assets can be transferred between persons in a private
transaction through the delivery of shares rather than an exchange of the
underlying assets themselves;
- Business start-up in Panama, such as a consulting service internationally
or a hotel in the tourism industry;
-
Conduct business in any jurisdiction in which a
local or domestic corporation may conduct business;
- Investment and banking; and
-
Borrow or lend money.
A Panamanian corporation offers the following benefits:
 | No reporting requirements (since Panama has a territorial tax system,
while the income is earned offshore or from exempt sources, such as interest
on bank accounts, then the corporation is not required to present tax returns
or audited accounts). |
| While the income earned by the company is not Panamanian-source income,
there will not be any income tax due in Panama and hence no tax returns
necessary here. |
| Funds and accumulated offshore profits can be deposited or invested in any
country in the world without becoming subject to taxation in Panama. |
| It is possible to keep a business under direct control while maintaining
complete confidentiality. This is possible because the names and details of
the beneficial owners are not publicly available, since they are not filed at
the public registry. |
| The company is not required to file any changes to ownership schedule,
after the registration is complete, which means that only the directors of the
company will know who the shareholders are (since they maintain the company
records and will be responsible for the issuance of the share certificates). |
| It is not required to maintain a legal address, such as a Registered
Office in Panama. Nevertheless, every Panamanian corporation has a Registered
Agent in Panama, which must be a lawyer or a law firm. |
| There are no Citizenship or residency requirements or restrictions with
respect to Owners, Directors and Officers of the company. |
| Shareholders' and Directors' meetings may be held anywhere in the world. |
| Shares of the company may be issued in a registered form or to "Bearer",
known as bearer shares. |
| One person may hold all three offices of the President, Corporate
Secretary and Treasurer of the Company. |
Other common advantages of Panama's IBC's are:
| Asset Protection |
| Income Tax Reduction or elimination |
| No inheritance, succession or gift taxes |
| Protection from inflation, since Panama's currency (the Balboa) is pegged
to the US dollar, in Panama there is no inflation upon the devaluation of the
Balboa. Nevertheless, the Panamanian economy is subject to the
fluctuations of the US Dollar, particularly against the Euro. |
| Freedom from currency exchange control |
| Reduction in legal liabilities, since the company has limited liability |
| Reduction in operating expenses |
| Easy access to North American and European Capital Markets |
| No International Trade Tariffs |
| No annual tax return requirements |
| No import/export quantity limitations |
A Panamanian Corporation has the following general characteristics:
- The Company name - for help in deciding on the corporation name, please
have a look at Choosing the
Company Name, which outlines for you some of the possible alternatives as
well as the restrictions of what can and cannot be used.
- The corporation is usually established by two nominee subscribers, who are
the people that sign the Articles of Incorporation. Any rights which the
subscribers have to subscribe to the shares of the company are then signed
over to the ultimate beneficial owner of the Company.
- The standard capital is US$10,000.00, divided into either: 100 shares of
US$100.00 each or 10,000 shares of US$1.00 each. It is also possible to
have shares of no par value. A share capital of no par value as well as
a higher authorised capital will increase the cost of incorporation, so please
inquire regarding the cost.
- The purposes for which the corporation has been established are usually
detailed in the Articles of Incorporation. Where the company has been
established for a particular purpose, this is usually listed first and then is
followed by other possible business purposes. It is standard practice to
use a catch-all purpose at the end of the article, which ensures that the
corporation may undertake any and all legitimate business purposes, including
those not expressly listed. This ensures flexibility, should the
corporation change its focus later on.
- The corporation must have at least 3 directors, who may be natural or
legal persons. It is necessary to provide for each of these people their
full name and address. The details of the directors of the corporation
will be filed at the Public Registry and are therefore publicly available.
Many clients prefer to retain the services of nominee directors for this
reason.
- The corporation must also have at least 3 officers - a President, a
Secretary and a Treasurer. It is also possible to appoint such
Vice-Presidents, Sub-Secretaries, etc. as the client desires. It is
usual practice for the three directors to be assigned the respective offices
of President, Secretary & Treasurer. However, the client may wish for a
single person to hold all of these offices.
- The corporation should have a legal representative. Generally, the
legal representative of the company is the President, and in his absence the
Secretary and/or Treasurer. However, the client can indicate who should
be the legal representative of the company.
- The company must have a Registered Agent, who should be a Panamanian
lawyer or law firm. Usually this service is provided by the lawyer or
firm that incorporates the company. For more information see:
Translation of Decree 147 (1966) which regulates the filing of corporate
documents in the Public Registry and the Registered Agent.
- A company seal is optional, and most Panamanian Corporations do not adopt
one. If a company seal is adopted, then this should be used on all
official company documents, including resolutions of the Board of Directors.
If you would like to incorporate a corporation, then please
request an application form and schedule of fees. We will require
general information regarding the beneficial owner of the corporation, the
business purposes for which it is being established and the general details of
the directors to be appointed. The application form is pretty
self-explanatory in terms of the information requested.
We will also require that our due-diligence requirements be met, in order to
proceed.
Incorporation of the company usually takes 3 working days. However,
during the holiday season the registry is usually not as responsive to client
requests and therefore your patience is requested. Depending on where the
client is located, documents can be dispatched overnight or delivered in 48-72
hours.
After the corporation has been established, you will need to consider the
costs of maintaining the corporation in good standing. This means that you
will need to pay the Annual Renewal Fees of the corporation for the Government
Franchise Tax (US$300.00) and the Registered Agent fees. If the company
has nominee directors, then there will also be fees payable for this service.
Annual renewal fees for companies are payable in two periods annually.
Companies incorporated between January and June must pay before the end of June.
Companies incorporated between July and December must pay in December. I
invoice the annual renewal fees in January and July, to provide clients ample
opportunity to get the payment to our office on time. Reminders will be
sent out monthly, so that you do not forget.
Should you require further services, such as mail forwarding, please let us
know at the time of incorporation. After the company has been established,
we can assist with the preparation of company resolutions, as well as
shareholder agreements, etc. which may be required for the corporation.
See also: Corporate
Law Resources where you will find a translation of the Companies Act (Law 32
of 1927), guidelines for choosing the corporation name and information regarding
opening corporate bank accounts.
[ Up ] [ Due Diligence ] [ Panama Corporations ] [ Panama LLC ] [ BVI Companies ] [ Anguilla Corporations ] [ Hybrid & Guaranty ] [ BVI Co. - Guarantee ] [ LLCs ]
Last
modified
08-May-2009 12:07 -0400
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