EpiphyCorp

One of the most common uses for Panamanian corporations at an international level is to enable their shareholders to manage their private and public stock and bonds.

Law 32 of 1927, in article 19, number 10, enables properly constituted Panamanian corporations to:

Article 19: Every corporation constituted accordingly with this Law will have, besides the faculties this Law allows, the following characteristics:
1….
10. To guarantee, obtain, purchase, have, sell, grant, trespass, mortgage, pledge or dispose in any way, stocks or bonds issued by other corporations or by any municipality, province, state or government;

Because there is no rule that forbids a Panamanian corporation from having a single shareholder, this makes it the ideal instrument for people to manage their securities, stocks and bonds, enabling them to keep them separate from their personal property, with the advantage that any obligation they may contract on their own behalf, in case of personal problems or fulfillment issues, will not affect the titles managed by means of a corporation.

Another important advantage is that the administration of securities through a corporation, allows the shareholder to maintain his/her privacy and anonymity when dealing with government bonds or other instruments registered before state law officials.

Lastly, through these simple control mechanisms and decision making through a Panamanian corporation, the shareholder can administrate, invest, buy/sell security titles in a fast, safe and effective way.

EpiphyTips

At EpiphyCorp we’re specialists in the constitution and registration of Panamanian corporations, used in the purchasing and management of securities, including private and public stocks and bonds.

Our corporate service packages give our clients the necessary elements to constitute a corporation with all of the permits and documents required in order to purchase and manage securities immediately, as soon as they are received.

For more information, visit our Panama Corporations section.

Photo by: Katrina Tuliao

Panamanian corporations are not the only ones that can make business transactions within and from the Republic of Panama. People and companies alike, as well as foreign corporations are able to do business in Panama.

Requirements

The Law’s Article 90 that regulates Corporations in Panama (Law 32, 1927) states the process and the requirements that any foreign corporation needs to present in order to develop any type of commercial activity within and from Panama.

Article 90. A foreign corporation can have offices or agencies and do business within the Republic of Panama after having filed the following documents at the Mercantile Registry:

1. Certificate of the Public Incorporation Deed of the corporation
2. Copy of the latest balance along with a statement in terms of the social capital that will be used or that is being used in business within the Republic of Panama.
3. Certificate of the constitution and authorization in accordance to the laws of the respective country, submitted and authenticated by the Republic of Panama’s respective Consulate in that country and in its defect, of a friendly nation.

As you can see, all foreign corporations require before they begin operations in Panama, that they file a copy of their Public Incorporation Deed, an asset and liability sheet as well as a statement of the capital it will invest in Panama, along with a registry certificate from its country of origin, at the Mercantile Registry of Panama.

These documents must return duly notarized or authenticated by the Panamanian Consulate located in the country of origin.

Process

The certification of these documents is done by means of a Public Incorporation Deed that must be executed by a lawyer and presented before the authorized Notary Public, so it may then be filed in Panama’s Public Registry. The entire process, once the documents have been received will take from 3 to 5 workdays.

Judicial Consequences

Article 91 of Law 32, 1927,, states the legal limitations that foreign corporations face if they are not filed accordingly to the process described in the Law.

Article 91 Foreign corporations that operate within the Republic of Panama and have not met this Law’s requirements may not engage in judicial or any other type of procedures in tribunals or before any authority in the Republic of Panama, but may be subject to lawsuits and would be subject to face judicial or administrative authorities and will also be forced to pay a fine of up to US$5,000.00, which will be enforced by the Ministry of Finance.

As you can see, any foreign corporation that does not file its documents as stated by the Law in the Public Registry, will face legal limitations when trying to exercise its rights or when it has a situation to deal with where Panamanian judicial authorities are involved, especially if trying to
enforce fulfillment issues or contracts in its favor. However, the Law states they are subject to lawsuits, which is a serious inconvenience.

Another judicial effect that can hurt foreign corporations that are not incorporated into Panama’s Public Registry is that they will not be able to obtain their RUC Number, or Personal Tax Number, which implies they will not be able to present taxes, but are subject to fines and charges on behalf of Panamanian fiscal authorities.

Lastly, it states a fine for foreign corporations not incorporated in Panama’s Public Registry, for up to US$5,000.00.

EpiphyTips

Not only is it important and necessary for foreign corporations to be registered correctly in order to do business in Panama, but also notice that by not doing so, the company is left in a state of legal abandon, defenseless in cases of lawsuits and claims, subject to large fines for not meeting the requirements stated by the Law.

If you need legal advise regarding an inscription of foreign corporations in Panama, Contact Us.

When planning to open a business in Panama, something that always comes up are the legal procedures needed to obtain all the permits and licenses required to begin operations. If you think that these procedures involve many appointments and long waits in government offices, filling out forms and complicated applications while awaiting the proper authorizations, well you’re very much mistaken.

Panama’s government, through the Ley 5, established on January 11th 2007, made these procedures much easier. The law dictates that: “the process of opening a company is sped up and establishes other dispositions”, a way of reworking and unifying all of the required paperwork that you need to operate a business in the country, thus creating the “Operation Notice”, or Aviso de Operaciones. This document is now “the only required process to start a commercial or industrial activity in Panamanian territory”.