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Types of Companies in Panama

Updated on Tuesday 10th September 2019

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Types-of-Companies-in-Panama.jpgPanama has an established financial sector and it offers a number of advantages to investors, among which easy and fast company formation, favorable tax policies and liberalized trade, to name only a few.
 
There are several types of companies in Panama that can be incorporated by investors and each has its own characteristics and advantages. Our team of Panama incorporation agents presents these business forms and can assist investors who wish to open one of these business types. 
 
The companies set up in Panama are incorporated as per the Corporations Law and follow different types of other regulations.
 
Entrepreneurs can choose between simple forms of business, such as the sole proprietorships or more complex business forms, such as the corporation.
 
The usual forms of business in Panama are the following:
 
  1. sole proprietorships: owned by a single individual who is fully liable for the business with his own assets.
  2. partnerships: two or more people who start a business together; there are two types of partnerships, detailed below.
  3. corporations: the most commonly used business form, the company is a separate legal entity; it is also used for Panama offshore company formation.
  4. the commandite company: this is a hybrid that combines the characteristics of the partnership and those of the company.
 

Company types, described by our Panama company formation agents

 
Investors are advised to understand the particularities of a certain business form before they commence the incorporation procedure. This is because each business form has its own requirements and it allows for different degrees of liability. 
 
A sole proprietorship is a basic form of business, operated by a single member, with unlimited liability on the company’s debts. His personal assets are not protected if the business cannot cover its debts.
 
The individual limited proprietorship (known as Empressa Individual de Responsibilidad Limitada) is a more complex form of business, where the investor has the liability limited by the assets invested in the business.
 
The general partnerships in Panama are forms of business registered by two or more members, with unlimited liability to the company’s debts. The profits are divided equally among the partners and if one partner cannot be a part of this arrangement, the partnership may be dissolved. The decisions are taken by all the members of the partnership.
 
A limited partnership (Sociedad de Responsibilidad) is formed by at least two members and maximum of twenty. It is regulated by both the Commercial Code and the Law no 24 of 1966.  The partnerships major decisions are taken by the general meeting in case there are more than five members. The annual accounting and financial statements are not mandatory. The name of the members and details regarding the owned shares must be registered in the Republic of Panama Public Registry. The liability of the partners is limited to the amount of unpaid but subscribed capital.
 
A civil partnership is formed especially by professional members with unlimited liability in the company.
 
A corporation (also known as Sociedad Anonima) is formed by at least two founders and must have after registration at least one shareholder. The Articles of Association must be notarized and then registered at the Public Registry. A Notice of Operation is necessary in order to perform certain business and commercial activities. The management of this type of company is assured by at least three managers organized in a Board of Directors and with the name stipulate din the Articles of Incorporation. The capital of the corporation is divided into shares which describe the rights and the obligations of the owners. Even the right to vote is attached to the shares. It has at least three directors and must have a resident agent.
 
The limited liability company (LLC) is another popular business form along with the corporation. These two business forms are commonly used for Panama offshore company formation. The LLC has a minimum of two shareholders and at least one administrator as well as a registered agent.
 
A commandite company is a form of business is based on the model of the organization of the partnership and corporation. At least one member must have limited liability, while another one has unlimited liability. It’s a rare form of business in Panama.
 

How to choose the type of company in Panama

 
As previously mentioned, foreign entrepreneurs prefer the corporation and the private limited company as it can be easily used for offshore activities. When choosing the business form, investors should consider the following:
 
  • - the purpose of the future business, whether it will be engaged in trade financial services or other activities. 
  • - the size of the business.
  • - the number of founders and the capital.
 
Apart from the considerations regarding the type of company, once they choose a particular business form investors are also advised to check any other additional requirements that may exist for the business field in which the company will activate, for example, special requirements for tourism or financial businesses. 
 

Panama company formation

 
As seen below, investors can choose between several business forms, however, for the purpose of offshore company formation, the corporation, as well as the limited liability company, are preferred business forms. Below, our team describes the main requirements for those who open a company in Panama.
 
  • The name: the company will have a unique business name that does not infringe other existing ones and it will include an abbreviation indicating the business form.
  • Directors: both companies must have directors, with the corporation having at least three directors; they can be legal o natural persons.
  • Resident agent: this is mandatory for incorporation and local services can be used for this purpose.
  • Fee: companies are required to pay an annual fee to the Government; this applies for the purpose of maintaining an active company. 
 
Please remember that these requirements for Panama incorporation apply to the corporation or the limited liability company. They are only general ones and do not refer to specific issues that can be different between these two business forms, such as the share capital. 
 
One of our agents can help investors who wish to open a company in Panama. We can provide complete incorporation assistance, from drawing up the Articles of Association to making the necessary submissions for registration. 
 

Panama offshore company advantages

 
Investors who open an offshore company in Panama, whether in the form of a corporation or a limited liability company have a series of advantages. We mention the following:
 
  • - Easy and fast procedure: the company incorporation process is a simple one that can be accomplished in three days when all of the documents are in order.
  • - No restrictions: the company shareholders and directors have no restrictions in terms of nationality.
  • - Easy transfer: the company’s shares are easily transferable.
  • - Confidentiality: companies in Panama are subject to a high degree of confidentiality. 
 
The Panama Public Register provides the following data on registered legal entities in 2019:
 
  • - 8,465 registered corporations.
  • - 100 registered limited liability companies.
  • - 56 registered foreign companies.
 
Investors who are interested in Panama offshore company formation can contact us for complete services related to company incorporation. 

 

 

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