PANAMA Law and Practice Contributed by: Rafael Rivera, Malvis Mina, Nicole Pérez and Carolina Lino, BDO Panama
3.4 Management Structures Corporate Governance in Panamanian Entities In Panama, Corporations are governed by two main bodies: the Shareholders’ Meeting, which is the supreme authority, and the Board of Directors. Both bodies are required to issue prior notices for meetings, although such notice may be waived before or after issuance. These bodies typically operate independently, with the Shareholders’ Meeting issuing directives or del - egating authority to the Board. Each shareholder is entitled to one vote per share, whether the shares are registered with or without par value, or bearer shares – provided the bearer presents the share certificate or com - plies with the bylaws. The Board of Directors, composed of at least three individuals, is responsible for the man - agement and administration of the company. It appoints officers (President, Secretary, Treas - urer, etc) and may amend the bylaws unless otherwise restricted. Corporations also designate a Legal Represent - ative, who holds judicial and extrajudicial author - ity to represent the company before third parties. In Limited Liability Companies, the supreme body is the Partners’ Assembly, which may adopt resolutions in writing, whether the part - ners are present or not. This body directs the company, appoints or removes managers, and may amend the bylaws. The Manager, who may be one or more individu - als appointed by the partners, is responsible for the company’s administration, convening part - ner meetings, and maintaining the partners’ reg - istry and corporate minutes.
3.5 Directors’, Officers’ and Shareholders’ Liability
Under Panamanian law, directors are subject to limited liability but remain personally and jointly responsible for the diligent and lawful adminis - tration of the company. This duty applies both to the company and to third parties and is rec - ognised in the legal framework governing both corporations and limited liability companies. The piercing of the corporate veil is an excep - tional legal mechanism, applicable only by court order and following due legal process. It allows authorities to disregard the company’s separate legal personality in cases of fraud or abuse, potentially extending liability to include criminal sanctions. For instance, fraudulent insolvency or liquidation intended to defraud creditors may constitute a criminal offence under the Panamanian Criminal Code, punishable by five to ten years of impris - onment and disqualification from commercial activity. These provisions reinforce the importance of transparency, good faith and legal compliance in corporate governance. 4. Employment Law 4.1 Nature of Applicable Regulations Panama’s labour law is fundamentally protec - tive, as established in the Political Constitution, which recognise labour as both a right and a duty. The legal system acknowledges the worker as the more vulnerable party in the employment relationship, warranting safeguards to ensure fair treatment. Collective bargaining agreements
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