Frequently Asked Questions
Forming a Corporation
Is it necessary for the shareholders to travel to Panama in order to form the corporation (SA)?
No, it isn’t necessary. Our firm takes care of every step of the process and will send all the paperwork done via Courier to the address you supply so you can use immediately you corporation.
What is the approximate time frame required to form a corporation (SA)?
It takes a period of 4 to 6 business days, once all the information is received and the payment of the service fee is submitted.
Could the corporation name be expressed in any language?
Yes, as long as it has the corresponding abbreviations (S.A. Corp. or Inc.)
Is there any difference between the abbreviations S.A., Corp. or Inc.?
All three have the same meaning, they stand for corporation.
What role do the subscribers have within the corporation?
In order to create a corporation, the law requires two people to come before a Public Notary. For the client’s convenience, in order for him not to sign any documents in Panama, since many of them are abroad, our subscribers are members of our staff. The subscribers do not have any rights or attributions within the corporation, and we supply the corresponding resignation of their charges with the rest of the documents we send to our clients.
Social Capital
What is the registered capital in a corporation?
The registered capital is that which appears in the Public Incorporation Deed of the corporation. There are no fixed amounts or limits to the assigned capital value and it may or may not be fully cancelled at the date of incorporation. The social capital is a formality, which means that in reality, the corporation may have in terms of assets, much less or much more, or nothing at all.
Can a corporation be registered with more than US$10,000.00 in capital?
That is correct, however in this case, the client must pay an additional cost for the inscription of the corporation in Panama’s Public Registry, depending on the range of the selected capital to be registered, adding to our offered price.
Can the social capital be increased afterwards?
The social capital may be increased at any time. That decision can be made through a board of directors meeting or a shareholder’s assembly.
Shareholders
What is the minimum number of shareholders needed in a corporation?
A corporation indeed can have just one shareholder.
Can shareholders be of any nationality?
Shareholders may be any living or corporate being, of any nationality, living anywhere in the world.
What is the responsibility of the shareholders in a corporation?
The responsibility of the shareholders is limited by the amount due in terms of their shares.
Is it possible to issue bearer share certificates?
Our legislation is one of the few that allows this figure.
When bearer share certificates are issued, must the total capital be paid?
According to our laws, bearer shares must be paid in full and liberated to be issued.
What is the difference between bearer shares and nominative shares?
In the case of bearer shares, the name of the shareholder does not appear on the certificate, therefore the person in possession of the share is considered the owner; in the case of nominative shares, the owner’s name appears in the certificate regardless who has it the expressed name will indicate the ownership.
Which type of shares are better, bearer or nominative?
Both types of shares have their benefits. Bearer shares are easier to transfer, however nominative shares offer more security because they identify the owner.
Can the shares be transferred at any moment?
Yes, but the rule of thumb is that they be offered to the rest of the shareholders and then to other people.
Directors and Dignitaries in a corporation
Who are the members of the board of directors in a corporation?
The Board of Directors is the entity responsible for the administration of the business aspect in a corporation.
Must the directors in a corporation be Panamanians?
Our law allows the members of the Board of Directors to be people or foreign corporations of any nationality, residents in any part of the world.
What is the minimum number of members that a Board of Directors must have?
Our law requires a minimum of three (3) members, there is no maximum number established.
Can a single member of the Board of Directors occupy the position of President, Secretary and Treasurer within the corporation?
A single person can occupy more than one title, but may also represent all available titles in a corporation.
What is the difference between appointing my own directors and choosing the option where you provide the service of nominee directors?
By selecting the service of nominee directors, you will be protecting your identity as well as that of your business partners, since the names that will appear registered in the public document will be our directors, providing you with a margin of confidentiality and anonymity.
Do the nominee directors appointed by you participate in any way in the corporation’s activities?
Nominee directors do not participate in the corporation’s activities and only hold board meetings when the trustees or the shareholders request it.
Must shareholders be members of the Board of Directors of the corporation?
In order to avoid any type of confusion in this matter, we must clarify that the Board of Directors is an administrative organ, the shareholders are the true owners of the corporation. The board of directors consists of 3 directors that are not necessarily shareholders.
Resident Agent
What are the main tasks performed by the resident agent?
The resident agent is the lawyer or law firm that registers the public deed at the moment the corporation is created. By law, every corporation registered in Panama must be represented by a registered resident agent in the Republic of Panama. For offshore corporations, those that operate outside of Panama or those whose directors and shareholders are abroad, the resident agent will be responsible before the government, for all the activities the corporation engages in.
Does the resident agent have any type of participation in the decisions made within the corporation?
No. The only ones that have the power to make any type of decision are the shareholders, trustees or directors, depending on the case in question. The resident agent will just be responsible for registering the actions requested by the aforementioned participants.
Can the resident agent be replaced at any moment perhaps by one of the shareholders of the corporation?
The resident agent may be changed or replaced by whomever the shareholders or directors decide.
Corporation’s inscription and publicity
What is the Public Registry of Panama?
The Public Registry is the government institution where corporations constituted within Panamanian law, are registered as well as foreign corporations that perform any type of operations in Panama. It is considered the most organized, efficient and modern system in all Latin America.
What is the registration data for a corporation?
The registration data for a corporation are those numbers with which the Public Registry of Panama identifies a corporation internally. The system automatically assigns an index and a document.
These numbers will be printed on the last page of the document that constitutes the corporation, by means of an official stamp issued by Panama’s Public Registry.
Once the corporation is registered can its entire content be seen by a third party?
Yes, the Public Deed is registered in the Public Registry and it may be seen by anyone (nationals or foreigners). The Public Registry currently has two systems that work through the Internet and that are everyone’s disposal worldwide. One is called “Redi” and it allows the person to see a scan of the Public Deed or an emulation system where the person can access a summary with the most important data regarding the corporation.
It is important to note that by law it is impossible to register information about the corporation’s shareholders in the Public Registry, which guarantees the confidentiality in terms of the owner’s identity.
What information appears within the document where the corporation is constituted that is submitted to the Public Registry?
The information that will appear registered in the corporation’s constitution document are: the subscribers of the Public Deed, the name of the corporation, the registered social capital, the complete name of the directors, the complete address of the directors or dignataries, the titles held by the dignataries and the general power of attorney in case the client selects this option in the public document.
Are the names of the shareholders published in the document in which the corporation is constituted within the Public Registry of Panama?
The shareholders only appear registered in private documents, such as the company shares certificate (in case they are emitted nominally) and the share registry book.
How is a corporation with nominee directors controlled?
If you opt for the service of nominee directors, the person or people requested by the client will be given a power of attorney in a private document, granting them the authorization to act on their behalf without a prior consent of the board of directors.
Taxes
What is the annual tax rate that must be paid by corporations?
The annual tax rate paid by corporations to the government is US$300.00.
Does the tax or annual fee begin to be taken into account from the date of constitution or are specific fiscal dates determined for payment?
Yes, there are specific fiscal periods, which are pre-determined; our office will contact you regarding this annual payment.
Your corporation’s resident agent is responsible for making the payment in the corresponding government office. Once the payment is submitted, you will receive a copy of the receipt.
Will we have to pay any type of tax on the profit if I have a corporation in Panama but it’s business is conducted abroad?
If the profit is made abroad, the corporation will not have to pay taxes in Panama for that particular income.
Does an offshore corporation or a company that conducts business abroad has to present an income tax statement in Panama?
In this case, the client has the option to present the income tax statement and not have to pay anything, or simply not present any document.
Do I have to pay taxes in Panama?
You only have to pay taxes on income generated by activities that are held in Panama, those that are generated abroad are not subject to taxes.
What is the income tax rate for corporations in Panama?
Corporations that generate income in Panama must pay 25% of the profit made.
If I have a bank account in Panama on behalf of a corporation, will I have to pay income over the interest generated by this account, even though the source of that income is generated by commercial activities held abroad?
No, you will not have to pay any type of tax on the interest generated by money deposited in a Panamanian bank account.
In order for billing to be made on behalf of a corporation from Panama, is a local office in Panama a requirement?
No, it is not necessary.
¿Are people who do not reside in Panama, but are hired by a Panamanian corporation or company, subject to pay for taxes in Panama?
No. If these people’s income is produced outside national territory, they would not have to pay an income tax in Panama, even though the company that hires them has been incorporated in Panama and is considered Panamanian.
Corporation commerce and activities
What type of assets can a corporation own?
A corporation can be the owner of any type of asset, such as stocks, bonds, money or real estate.
Can a corporation be the owner of real estate outside of Panama?
A corporation can own real estate anywhere in the world, but it also depends on the country where the property is located, since some countries have specific legislation on the matter. In some cases they may consider it goes against their fiscal interest to have the property in title of an offshore corporation.
What type of activities can a Panamanian corporation perform?
A Panamanian corporation can perform any type of activity that is not considered illegal or that goes against the law. Among these activities that are allowed we can mention commerce, acting as a holding, possess all kinds of assets, including real estate, brands, patents and many others.
What types of activities are considered illegal?
Activities related to money laundering, drug trafficking, terrorism or human trafficking.
Aside from illegal activities, what other activities are restricted?
There are certain activities that need certain patents or licenses in order to be done in Panama; these are subject to permits granted by the competent authorities. Among these we can mention banking activities, fiduciary activities, insurance and reinsurance. This only applies if the aforementioned activities will be held in Panama.
Corporation Payment
Is the corporation-mailing fee included in the payment for your services?
Correct, the mailing service is included.
How can I pay for your service when I want to constitute a corporation?
You would pay through an international wire transfer directly into our bank account.
If you need any further information about setting up a corporation, feel free to contact us.