Forming a Panama Corporation
Articles of incorporation, directors and officers, resident agent and registration with the Public Registry, preceded by advice on whether a corporation is the structure the project actually needs.
What is a Panama corporation?
The sociedad anónima is a legal entity governed principally by Law 32 of 1927. Panamanian law allows it to be formed for any lawful purpose and organises it around shares, shareholders, directors and officers.
It is the usual vehicle where there is business or commercial activity that should be carried on through a legal entity separate from its owners.
When a corporation makes sense
- A family business that needs to separate business assets from personal assets.
- A professional services or construction company.
- A real estate development, or a company holding and managing property.
- A rental operation run as a business.
- A company used to channel investments.
- Bringing in partners or investors who need a defined shareholding.
Formation requirements
- Two or more subscribers to the articles of incorporation, under Law 32 of 1927.
- A company name checked for availability at the Public Registry.
- Corporate purpose and authorised capital.
- A board of at least three directors, plus officers: president, secretary and treasurer.
- A resident agent, who must be an attorney or law firm admitted in Panama.
- Due diligence documentation for shareholders and the ultimate beneficial owner.
- Notarisation of the articles and registration with the Public Registry.
Ongoing obligations
Incorporating is the first step; keeping the company in good standing is what prevents problems later. The firm handles the annual franchise tax, resident agent services, accounting records, ultimate beneficial owner registration, minutes and resolutions of the board and of shareholders, and amendments to the articles when the shareholders or the purpose change.
Frequently asked questions
How many directors does a Panama corporation need?
The board must have at least three directors, and officers are also appointed: president, secretary and treasurer. One person may hold more than one officer position.
Is a resident agent mandatory?
Yes. Every Panama corporation must maintain a resident agent, who must be an attorney or law firm admitted in Panama. The resident agent is the channel for due diligence and ultimate beneficial owner registration obligations.
Can a foreign national be a shareholder or director?
Yes. Panamanian law does not require Panamanian nationality or residence to be a shareholder, director or officer of a corporation. The corresponding due diligence documentation is required.
Is a corporation useful for succession planning?
Only in part. The company organises the business, but the shares remain an asset of the shareholder and form part of the estate on death. Where the goal is to order the transfer of wealth, combining it with a Private Interest Foundation holding those shares is usually considered.
Should I buy property in the name of a company?
It depends. Holding real estate through a company affects transfer, liability and the annual cost of maintaining the structure. It is a decision to analyse before signing the purchase agreement, not after.