Every year, entrepreneurs from many countries choose Panama to set up their company. The Panamanian corporation (sociedad anónima) is a well-known, flexible and stable structure, and the good news is that you do not need to travel to Panama to form one. This guide explains, in plain terms, how it works and what to consider before taking the step.
What is a Panama corporation?
It is a legal entity separate from its owners, governed by Law 32 of 1927. It can hold bank accounts, sign contracts and own assets in its own name, which lets you keep your personal assets separate from your business.
How it is structured
Subscribers and shareholders
The articles of incorporation are signed by at least two subscribers. After that, the shares can be held by one or several people of any nationality.
Board of directors and officers
The corporation needs at least three directors and three officers: president, secretary and treasurer. One person can hold several of these roles, and they do not need to be Panamanian or live in Panama.
Capital
The law does not require minimum paid-in capital. It is usual to set an authorized capital in the articles, with no obligation to deposit it at formation.
What Panamanian law requires
- Registered agent: every corporation must have a lawyer or law firm in Panama as its registered (resident) agent, acting as its legal link with the authorities.
- Due diligence: the registered agent must know its client, so a valid passport and other documents are requested from each shareholder and director.
- Beneficial owner: the registered agent must record who actually owns or controls the corporation (Law 129 of 2020).
- Accounting records: the corporation must keep accounting records and make them available to its registered agent, even if it does not operate inside Panama.
What you need to start
- A valid passport for each shareholder, director and beneficial owner.
- Two or three possible names for the corporation, in case the first is already taken.
- A short description of the company's intended activity.
- Any additional documents requested during due diligence, depending on your case.
General steps
- Initial consultation to understand your project and check name availability.
- Due diligence on shareholders, directors and the beneficial owner.
- Drafting the articles of incorporation to fit your needs.
- Signing and sending documents from your country, coordinated remotely.
- Notarization and registration at the Public Registry of Panama.
- Delivery of the documents of your registered corporation.
Yearly obligations
Forming the corporation is only the beginning. To keep it in good standing you must:
- Pay the annual franchise tax of B/.300 (tasa única) to the DGI. Corporations registered in the first half of the year pay by July 15; those registered in the second half, by January 15. Late payment carries a surcharge, and three years without paying can lead to suspension of the corporation.
- Renew the registered agent service every year.
- Keep accounting records and beneficial owner details up to date.
Common mistakes
- Assuming the corporation by itself authorizes any activity. Some businesses need separate licences or permits.
- Assuming a bank account will be opened right away. Each bank decides based on its own requirements.
- Forgetting the annual franchise tax and building up surcharges.
- Not checking your tax obligations in your country of residence. Owning a Panama corporation does not exempt you from them.
Frequently asked questions
Do I need to travel to Panama?
No. The whole process can be handled remotely, coordinating signatures and document delivery according to your country.
Can I be the sole owner?
Yes. Although the articles are signed by two subscribers, the shares can later be held by a single person.
How long does it take?
It depends mainly on how quickly the due diligence documents are gathered. We give you a realistic estimate in the initial consultation.
This article is for information only and is not a substitute for personalised legal advice. Requirements and amounts may change; always confirm your case with a professional. SLN Express Panamá is a private law firm, not affiliated with any government agency.