PANAMA Law and Practice Contributed by: Rafael Rivera, Javier José Vallarino, Juan Vallarino, Karen Y. Tejeira and Carolina Lino, BDO Legal Panama
Failure to comply with these licensing and regulatory requirements may result in administrative sanctions, including fines and the potential suspension or closure
Corporations are favoured for their shareholder ano - nymity, which may only be lifted by court order in cas - es involving unlawful activity. They are widely used for holding structures, real estate investments and cross- border operations, offering advantages in governance, tax planning and liability separation. The Board of Directors manages the company’s affairs, while the Shareholders’ Meeting serves as the Before proceeding with the incorporation of an entity in Panama, it is necessary to understand the purpose and the operation of the company, for example wheth - er it will be an operative or non-operative entity and whether it will be an onshore or offshore entity. The incorporation of a legal entity in Panama follows the following steps. Due Diligence (KYC) In accordance with Law No 23 of 2015 and its modi - fications, it is mandatory to conduct KYC procedures to verify client identity and ensure compliance with anti-money laundering and counter-terrorism financ - ing regulations, prior to the incorporation of the entity. Notarisation and Registration After completing the KYC with positive results, the articles of incorporation must be formalised before a Notary Public and registered with the Public Regis - try of Panama, along with payment of the corporate annual tax and registration fees. The process typically takes two to three business days. Tax Registration Once the company is registered in the Public Registry of Panama, a Tax Identification Number (RUC) must be obtained from the Panamanian Tax Authority (DGI). This obligation must be complied with by all entities governed by Panamanian law, regardless of whether the entity conducts operations in the country. Commercial Licence highest decision-making body. 3.2 Incorporation Process To operate commercially, a Notice of Operation or Commercial Licence must be obtained, depending on the business activity, in accordance with the Inter - national Standard Industrial Classification (ISIC). Cer -
of business operations. 2.4 Right to Appeal
Foreign investors will have the opportunity to chal - lenge the decisions made by the authority. At first instance, the foreign investor can appeal and request that the authority reconsider its decision. The next steps will depend on which authorities are responsible for authorising the investment. 3. Corporate Vehicles 3.1 Most Common Forms of Legal Entity Panama offers a flexible and investor-friendly legal framework for the incorporation of business entities. The two most commonly used corporate structures are Limited Liability Companies (LLCs or S. de R.L.) and Corporations (S.A.). Limited Liability Companies Governed by Law No 9 of 2009, LLCs require a mini - mum of two partners, who may be natural or legal entities. Contributions may be made in cash, in kind, or through services, with in-kind contributions required to be fully paid. While no minimum capital is mandated, a recommended amount of USD10,000 is suggested for registration purposes. In an LLC, partners’ liability is limited to the amount of their contributions. LLCs may engage in any lawful civil or commercial activity. The Partners’ Assembly is the supreme governing body and may delegate authority to an Administrator or designated officers. Corporations Regulated by Law No 32 of 1927, corporations require at least two subscribers, three directors, and the appointment of officers and a legal representative. A minimum of one shareholder is required. While no minimum capital is mandated, USD10,000 is recom - mended for registration; this amount does not need to be paid to any entity or deposited in a bank.
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