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15 frequently asked questions about corporations in Panama

Panama is a tropical country with one of the most encouraging projections of economic growth in Latin America thanks to its democratic institutions, peaceful environment, the friendliness of its people and a business attractive scenario.

More and more people around the world want to live in the pleasant Panamanian scenario and more and more entrepreneurs want to invest protected by Panamanian law.

How to incorporate a company in Panama?

At Candanedo Correa Abogados, we can help you with immigration procedures, residence visas, incorporating your company and compliance with legal and accounting obligations before Panamanian institutions and authorities.

In order to pave the way to personal, family or business establishment, here are some frequently asked questions related to the creation and operation of corporations in Panama.

What is needed to incorporate a company in Panama?

In accordance with the provisions of the law number 32 of Public Limited Companies Act of 1927, incorporating a corporation requires the conclusion of an agreement between two or more persons of legal age. They must subscribe at least one share each.

Do I have to be present at the time of the incorporation?

Not necessarily. It does not matter what your nationality or address is. It only requires that two lawyers appear before the notary to sign the protocol and initiate the incorporation proceedings.

What’s the minimum amount of money I must invest?

The incorporating a company does not require the subscription of capital nor to invest any sum of money. In order for the company to enter into operation, only the amount of the capital must be specified in the articles of incorporation. The capital stock is represented in shares.

What types of corporations exist in Panama?

The objectives are very broad and it can be said that a corporation can engage in any kind of lawful activity.

How long a corporation can exist?

That is determined by the shareholders. The Law allows companies to be incorporated perpetually, that is, for an indefinite period of time.

How many directors do I need?

A Panamanian corporation must be constituted by a minimum of three natural persons. They do not need to be shareholders of the company and can be any national. Now, of course, the names of the directors are public and must be included in the articles of incorporation. A firm like ours can provide the service of three nominal directors, if the client requires it.

What are the articles of incorporation?

The articles of incorporation act as a charter to establish the existence of a corporation. It must be public deed and it must be registered in the Public Registry of Panama.

What kind of shares does a corporation require?

They can be nominative, bearer, with nominal value, without nominal value, common shares or preferred shares.

How long does it take to incorporate a company?

Four to five business days are required for the company to be incorporated.

What’s the minimum capital required to incorporate a company?

Registered capital, or authorized capital, is a nominal figure that projects an estimated value of the company. The minimum is $10,000, but it is not necessary to be paid or deposited.

Is it possible to create a company with a capital greater than $10,000?

Yes, but you must pay an additional (very low) tax at the time of registration. You can also increase the registered capital in the future, but you must make changes in the articles of incorporation.

Should I present income tax returns to the Panamanian authorities?

If it is an offshore company, that is to say, that it carries out its commercial and physical activities outside Panamanian territory, income statements are not required.

Can I keep the books of the society in my country or should they be in Panama?

If the company does not operate physically in Panama, it is not necessary that the books to be issued or sealed in Panama. You can buy those books in a bookstore or on the internet and keep accounts in your own country.

What is a Resident Agent of a corporation?

The resident agent is normally responsible for paying the company’s annual rates in Panama. The companies must have a resident agent in Panama. It can be a lawyer or a Panamanian law firm.

What is the annual cost to maintain the corporation in force?

Corporations must pay an annual fee of $300. In addition to that, there’s the fee charged by the lawyer or the law firm that serves as resident agent.

If you have other questions related to corporations in Panama, do not hesitate to contact us through the e-mail info@ccabogados.com or our website. We will be pleased to assist you!