Panama company formation. Legal Business Structure
Panama company. There are 3 normal business entities here in Panama:
Panama company – Sole Proprietor: Where you and your spouse & family operate a business as sole owners.
Panama company – Partnership: Where you team up with one or more persons in running the business.
Panama company – Corporation: Where you register with the government as a company issuing stocks, having a Board of Directors and corporate officers.
The different legal structures in Panama:
Panama company: Corporation
(Sociedad Anonima) Corporations are formed under the Law No. 32 of 1927 and the Commercial Code (Decree-Law No. 5 of 1997, Article 5). A Panamanian corporation is formed by two persons (called Subscribers) or Nominees (who act on behalf of absent foreigners) who execute legal documents called the Articles of Incorporation. Those documents are filed with the Panama Public Registry office. After the corporation is formed, only one shareholder will be required. Corporate shares are issued which can be of various classes, can have par value or not, may be officially registered, or can be discreet Bearer shares. The corporation must have a resident Registered Agent (Panamanian lawyer). There must be at least three Directors whose names must be in the Articles of Incorporation. Any changes of Directors must also be filed with the Public Registry. Unless the Articles are changed or the corporation merges or dissolves there will be no other filing requirements.
Panama Company: General Partnerships
General Partner are permitted in Panama. As with most countries, the partners will have unlimited civil liability. That means every partner can be sued even if only one of them commits an error in the course of business.
Panama Company: Limited Partnerships
(called Sociedad de Responsibilidad) are also permitted in Panama. They are governed by the Commercial Code and Law No. 24 of 1966. There may be from 2 to 20 partners with no restrictions as to their nationalities or domicile. Their Capital must be at least $2,000 up to $500,000. The names of the partners must be registered with the Public Registry Office including the amount of Capital each contributed. Each partner’s civil liability for the Partnership’s debts is limited to the amount subscribed to but unpaid. If the Partnership appoints an independent administrator, his/her name must also be registered. No meetings are required if the Partnership has 5 members or less. Otherwise, a meeting must be held at least once a year. There are no requirements for annual returns or filing of any accounting. An alternative to a Sole Proprietorship is to create an Individual Limited Proprietorship (Empressa Individual de Responsibilidad Limitada). This is set up in the same manner as a Limited Partnership except having only one member. The individual transfers his/her assets to the business. Business civil liability is limited to the amount of the committed assets.
Panama Company: A Civil Partnership
(Sociedad Civil) is allowed by the Commercial Code and Law No. 24 of 1966. The liability of the partners is unlimited. This type of partnership is often selected by professionals such as lawyers and accountants.
Panama Company: The Commandite Company
(Sociedad en Commandita) is a hybrid partnership and corporation also governed by the Commercial Code and Law No. 24 of 1966. At least one partner must have unlimited liability, while the liability of the limited partners is limited to the amount of capital subscribed. This type of legal structure is seldom used in Panama.