for a list of "ready to go" shelf companies
I. ADVANTAGES OF PANAMANIAN
Panamanian corporation law
offers a wide variety of incentives for resident or non-resident
businessmen and investors due to the flexibility of the fiscal
In Panama the formation and
operation of corporations are regulated by Law N° 32 of
1927. The existing legislation provides, among others, the
- Taxation in the Republic of Panama is based
on the principle of the source of the income. Income obtained
from operations performed abroad is excluded from income
obtained from sources within Panama and therefore is not
taxable under Panamanian law.
- There are no currency restrictions in Panama.
The U.S. dollar is the circulating medium.
- There are no requirements
to file any reports with the Panamanian government regarding
any offshore activities, except for payment of the annual
government franchise tax of US$ 250 to remain in good standing.
- It is not necessary to subscribe all or
any percentage of the share capital.
- Two or more persons of legal age, even
though not citizens or residents of Panama, may establish
a corporation for any lawful purpose or purposes, in accordance
with the formalities prescribed by this law.
- It is not necessary for the interested parties
to be present in Panama for the purpose of organizing a
corporation. In this case, corporations are formed through
members of our law firm in Panama, who execute the basic
instrument for incorporation called the Articles of Incorporation.
- The Articles of Incorporation
are signed and protocolize before a Notary Public and recorded
at the Public Registry. After this the corporation is in
existence for practical purposes. Later, when the corporation
becomes legally established, the justifys which may be derived
from being a subscriber are assigned by a private document
to their real owners.
- If the interested parties (owners of the
corporation) wish to carry out any transaction in connection
with the corporation without appearing as directors or shareholders,
the Board of Directors may grant them a general power of
attorney to act in the name of and on behalf of the corporation.
- The Articles of Incorporation may be executed
anywhere within or outside the Republic of Panama, in any
language, and shall be in the form of a public document
or any other form, provided that the signatures appearing
thereon are certified by a Notary Public or before any other
public officer authorized for that purpose in the place
of the execution thereof.
II. THE PERSONS DESIRING
TO ORGANIZE A CORPORATION SHALL SIGN THE ARTICLES OF INCORPORATION
("PACTO SOCIAL") AND SAID ARTICLES OF INCORPORATION
- The name and domicile of each subscriber
to the Articles of Incorporation.
- The name of the corporation, which must
not be same as, nor deceptively similar to the name of a
The name must include a word, phrase or abbreviation indicating
that it is a corporation, to distinguish it from any individual
or company of another nature.
The name of the corporation may be expressed in any language.
- The general purpose or purposes for which
the corporation is formed.
- The amount of the share capital stock and
the number and par value of the shares into which it is
The amount of the share capital and the par value of the
shares may be expressed in terms of the legal currency of
Panama or the legal gold currency of any other country,
If there are to be shares of more than one class, the number
of shares in each class and the designations, preferences,
privileges and voting justifys and the restrictions or requirements
of each class may be determined by a resolution adopted
by a majority of the directors.
- The number of shares that each of the subscribers
to the Articles of Incorporation agrees to take.
- The domicile of the corporation, which
may be in the Republic of Panama or any other place, as
well as the name and domicile of its resident agent in Panama,
who must be an attorney or a law firm in Panama.
- The duration of the corporation, which
may be perpetual.
- The full names and addresses of at least
- Any other lawful clauses to which the subscribers
may have agreed.
III. POWERS OF CORPORATIONS
Every corporation organized
in accordance with this Law shall have, in addition to the
other powers herein bestowed, the following:
- To sue and be sued in any court.
- To adopt and use a corporate seal and alter
it at its convenience.
- To acquire, purchase, hold, use and transfer
property and chattels of any kind and to make and accept
pledges, mortgages, leases, liens and encumbrances of all
- To appoint officers and agents.
- To execute contracts of all kinds.
- To enact by-laws ("estatutos")
not incongruent with any existing law or its Articles of
Incorporation, for the management, regulation and administration
of its affairs and properties, for the transfer of its shares
of stock, for the calling of shareholders' or directors'
meetings or for any other lawful purpose.
- To conduct its business and to exercise
its powers in foreign countries.
- To dissolve itself in accordance with the
law, whether voluntarily or for any other reason.
- To borrow money and incur debts in relation
to or connection with its business or for any lawful purpose,
to issue bonds, promissory notes, bills of exchange and
other documents of obligation (which may or may not be converted
into stock of the corporation) payable on a specified date
or dates or upon the happening of a certain event, whether
secured by mortgage, pledge or otherwise, or unsecured,
for money borrowed or in payment for property purchased
or acquired or for any other lawful purpose.
- To guarantee, acquire, purchase, hold, sell,
assign, convey, mortgage, pledge or otherwise deal in or
dispose of shares, bonds, or other obligations issued by
other corporations or by any municipality, province, state
- To do and perform anything and everything
that may be necessary in carrying out the purposes enumerated
in the Articles of Incorporation or any amendment thereto,
or whatever becomes necessary or desirable for the protection
and benefit of the corporation, and in general to carry
on any other lawful business whether or not said business
is set forth its Articles of Incorporation or in any amendment
IV. SHAREHOLDERS' MEETINGS
Generally, the management of
the affairs of a corporation is vested in a Board of Directors
and few administrative functions are assigned to the shareholders;
however, the shareholders constitute the supreme power of
The main functions of the shareholders'
meetings are as follows:
- To appoint the directors.
- To make amendments to the Articles of Incorporation.
- The sale, lease, exchange or disposal of
The holding of shareholders'
meetings on certain dates or at fixed times is not required
by law; this is to be provided by the Articles of Incorporation.
If not so provided therein, the shareholders' meetings may
be held at any time and place, within or outside the Republic
V. THE BOARD OF DIRECTORS
The management, administration
and business of the corporation is vested in a Board of Directors,
composed of at least three individuals of legal age, and subject
to the provisions of the law and of the Articles of Incorporation,
the Board of Directors has absolute control over the management
of corporate affairs, including the adoption, amendment and
repeal of by-laws.
In the absence of a provision
to the contrary in the Articles of Incorporation, it is not
necessary that the members of the Board of Directors be shareholders.
Additionally, if expressly authorized by the Articles of Incorporation,
directors may be represented at meetings of the Board of Directors'
through proxies, who need not be directors and who must be
appointed by public or private instrument, with or without
the power to substitute.
VI. SHARES AND CAPITAL
Corporations shall have the
power to create and issue one or more classes of shares of
stock, with designations, preferences, privileges, voting
powers, restrictions, qualifications and other justifys thereof
as may be provided by the Articles of Incorporation.
Corporations must have a President,
a Secretary and a Treasurer, who are elected by the Board
In the absence of a provision
to the contrary in the Articles of Incorporation or the By-laws,
such officers may be replaced at any time by a resolution
adopted by the majority of the members of the Board of Directors
VIII. REGISTERED AGENT
Panamanian corporations must
have a registered agent in the Republic of Panama.
In accordance with Panamanian
law, the registered agent must be an attorney or a firm of
The registered agent may be
replaced by means of an amendment to the Articles of Incorporation.
When the corporation's operations
are not performed in Panama, only a Minutes Register and a
Stock Register are required, which may be kept in any part
of the world.
Income tax in Panama is levied
upon net income derived from operations within the territory
of the Republic of Panama.
Profits and dividends arising
from activities outside of Panama are not subject to taxation
under Panamanian law.
XI. FOREIGN CORPORATIONS
A foreign corporation may have
offices or agents and engage in business within Panama after
having presented the following documents for inscription at
the Public Registry :
1. Notarized deed protocolizing
the Articles of Incorporation.
2. Copy of the last balance
sheet, together with a statement as to the amount of capital
to be engaged in business in Panama
3. A certificate stating that
the corporation is incorporated and organized in accordance
with the laws of its respective country. This certificate
must be issued by the Panamanian Consul in said country, or,
if there be no such representative, by the Consul of a friendly