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Doing Business in Panama


Most businesses in Panama are corporations – Sociedades Anónimas (SA). A Limited Liability Company (Sociedad de Responsabilidad Limitada) is another option in Panama, although this is rarely used.

There are three normal business entities here in Panama:

• Sole Proprietor (you and your spouse & family operate a business as sole owners);
• Partnership (you team up with one or more persons in running the business);
• Corporation (you register with the government as a company issuing stocks, having a Board of Directors and corporate officers.

While a sole proprietorship can be an oral agreement between close family members, the other two entities need the assistance of a Panamanian lawyer. That's because legal documents need to be prepared forming a Partnership or Corporation. If they are wrongly prepared, they will be legally null and void causing a business legal nightmare for its members.

In terms of business and communications infrastructure, the long-term US influence on Panama has been very beneficial, Panama City in particular having the highest international standards. The well-established banking sector, however doubtful some of its antecedents, has also demanded high standards.

Forms of Business Organisation

Corporation (Sociedad Anonima)

This company is the most frequently made choice for offshore business purposes. After the company is incorporated only one shareholder is necessary. Shares can be either registered or bearer. There are no minimum capital requirements. The Articles of the company should contain the names of three directors of the company and a resident Panamanian lawyer. No other filing requirements are necessary to conduct unless a company is merged or wound up.

Foreign Corporation

It is possible for a foreign company to be registered with the Panama Public Registry Office, submitting a list of required documents. Capital taxes on formation and annual fees should be paid in accordance to the rules of Panamanian Corporation.

A foreign company can transfer its 'seat' (meaning roughly speaking the place from where its directors control the company) to Panama, and will then be subject to Panamanian laws regarding public policy, while remaining under its originating law in other respects. A foreign company operating in Panama but not registered there may be sued in the courts of Panama but does not have the right to sue.

General Partnership

The partners of this structure have unlimited liability and it is regulated under the Commercial Code.

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