Panama, “bridge of the world and heart of the universe”, offers great opportunities, both geographically and economically. Among the latter, we have the Panamanian International Business Companies (Sociedades Anónimas). Regulated by Law 32 of 1927, these are legal entities formed by the shares of stockholders, who are only liable up to the amount of their contributions.
The legislation offers a variety of benefits given the flexibility of its principles and its easy and simple administration.
Main elements
Subscribers: those are the people that request the creation of the company. Panamanian law establishes that they must be two legal age persons and can be from any nationality.
Articles of Incorporation: this is the main document of the company, the one through which the entity is created. This document contains important clauses such as the name of the company, its objective, the capital, the amount and type of shares, as well as the members of the Board of Directors.
Objective: Companies can engage in any type of activity not forbidden by law.
Capital: It’s not necessary for companies to have any paid-in capital.
Shares: shares can be either nominative, when they are issued specifying the name of the owner, or bearer shares, when they are issued without indicating the name of the owner. As a result, they belong to the person holding them. Also, the corporation can issue preferred shares, with voting privileges or restrictions, as established in the Articles of Incorporation.
Board of Shareholders: it’s the number one authority of the company and its main tasks, among others, are to choose the members of the Board of Directors and to reform the Articles of Incorporation if needed. The law doesn’t establish a minimum amount of meetings to be held during a year nor the necessity of holding them in Panama. They can be in any place of the world.
Board of Directors: this is the body in charge of the representation and management of all the company’s business affairs, carrying out the tasks established in the Articles of Incorporation. They can be of any nationality and it’s not necessary that they be shareholders.
Advantages
- 1. They allow the possibility of running, from Panama, offshore operations that take place abroad. The revenues coming from these activities are not considered to be produced in the country; therefore, they are tax exempted.
- 2. Shareholders, directors and officers can be of any nationality, without the need of living in Panama.
- 3. The possibility that Shareholders´ meetings be celebrated in any place of the world and without the need of a minimum amount of annual meetings.
- 4. If the company’s operations are outside Panama, the law doesn’t oblige the Board of Shareholders to present any financial reports. No public office supervises offshore companies.
- 5. For higher confidentiality, it’s not necessary that directors also be shareholders of the company.
- 6. According to Panamanian law, the identity of shareholders is not registered in the Articles of Incorporation, nor in any governmental office. Share certificates are issued through private documents.
- 7. The Board of Directors can provide a third party, not director nor shareholder, with a power of attorney so that he can run the company’s activities.
- 8. It’s not necessary for companies to have any paid in capital.
- 9. Normally, shares follow an equality principle in relation to the rights and obligations that they confer to their owners. Nevertheless, privileged stocks and other type of differentiated ones can be issued.
Uses
- 1. Commercial affairs and international business: According to Panamanian law, companies can engage themselves in any legal commercial activity, even if it isn’t explicitly mentioned in the Articles of Incorporation. Panamanian fiscal system follows the territorial criteria, which means that only economic revenues produced inside the country are subject to taxes. If the company’s activities take place outside Panama, revenues are completely tax exempted.
- 2. Holder of real estate property and other type of goods: The company can own any type of goods, such as real estate, in Panama or in any part of the world. This allows the possibility of giving privacy to that ownership as well as to separate those assets from the personal patrimony, therefore, protecting it from any eventual legal disputes.
- 3. Owner of trademarks, patents and other intellectual property rights: The company can own any type of intellectual property rights. In case of royalties coming from outside the country, those revenues would be completely tax exempted.
- 4. Asset protection and privacy tool: Together with other legal instruments, such as Private Interest Foundations or trusts, companies allow an optimal administration, disposition and protection of the patrimony.
- 5. Holder of bank accounts: The company can hold bank accounts, which interests are tax exempted.
