PANAMA Law and Practice Contributed by: Rafael Rivera, Malvis Mina, Nicole Pérez and Carolina Lino, BDO Panama
sory authority, such as the Superintendency of Banks or the Superintendency of Insurance and Reinsurance. In the case of public utility services, including telecommunications, electricity, and broadcast - ing, investors are required to obtain a licence from the Public Services Authority (ASEP) prior to commencing operations. Failure to comply with these licensing and regu - latory requirements may result in administrative sanctions, including fines and the potential sus - pension or closure of business operations. 2.4 Right to Appeal Foreign investors will have the opportunity to challenge 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 busi - ness entities. The two most commonly used cor - porate structures are Limited Liability Compa - nies (LLCs or S. de R.L.) and Corporations (S.A.). Limited Liability Companies Governed by Law No 9 of 2009, LLCs require a minimum 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 registra - tion 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 Admin - istrator or designated officers. Corporations Regulated by Law No 32 of 1927, corporations require at least two subscribers, three direc - tors, and the appointment of officers and a legal representative. A minimum of one shareholder is required. While no minimum capital is man - dated, USD10,000 is recommended for registra - tion; this amount does not need to be paid to any entity or deposited in a bank. Corporations are favoured for their shareholder anonymity, which may only be lifted by court order in cases 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 highest decision-making body. 3.2 Incorporation Process 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 whether 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.
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