Choosing the right legal structure for a company is crucial for its success and sustainable development, which is why corporations are required in Panama. Incorporating a corporation (SA) is a highly attractive option for national and international entrepreneurs due to its flexibility, tax benefits and the privacy it offers its shareholders.

to constitute corporations in Panama, it is essential to understand the precise legal requirements that govern this process. One of the key aspects is strict compliance with the regulations established by Panamanian legislation, which guarantees the validity and legality of the entity. These requirements range from the choice of name to the appointment of directors and the issuance of shares.

In this article we are going to investigate the fundamental legal requirements for the creation of this type of entities and the rights and responsibilities that they imply for one of its parties, the shareholders.

Requirements for the incorporation of corporations in Panama

Name of the Society: The first step is to choose a unique name not registered in Panama. The Law requires that the name of the corporation include the words “Sociedad Anónima” or its abbreviation “SA.”

Social capital: A minimum share capital of $10,000 USD is required. This capital can be represented by bearer shares or registered shares.

Actions: Shares must be issued that represent the shareholders' participation in the company. Shares can be of different types: registered shares, bearer shares, with or without par value.

Shareholders meeting: A meeting of shareholders must be called for the adoption of the bylaws, election of the board of directors and other important matters. The bylaws must be drafted and must detail the internal functioning of the company.

Directors and officers: At least three directors must be appointed who will be responsible for the management of the company. The directors can be foreigners and do not have to reside in Panama.

Resident Agent: A legal resident agent in Panama must be designated, whether a natural or legal person, to act as an intermediary between the company and local authorities.

Rights and responsibilities of shareholders in a Panamanian corporation

Limited liability: The shareholders of the corporations in Panama They have a liability limited to the capital invested in the company, which means that they are not personally responsible for the company's obligations and debts, but they can be affected by them.

Right to vote: Shareholders have the right to vote on important company decisions during shareholder meetings. Common shares grant voting rights, while preferred shares may or may not have this right depending on the bylaws.

Economic benefits: Shareholders may receive dividends based on the company's profits, in accordance with the dividend distribution policy established by the board of directors.

Duty of information: The shareholders have the right to receive timely information and truthful about the relevant matters of the company, including financial statements and strategic decisions.

Normative compliance: Shareholders have the responsibility to comply with legal and statutory provisions, as well as to respect the agreements made at shareholder meetings.

In summary, the constitution of corporations in Panama It involves complying with a series of legal requirements for its establishment and operation. Shareholders, for their part, have specific rights and responsibilities that they must comply with to guarantee the proper and transparent functioning of the Panamanian corporation.

Trusted legal advice in Panama

At Panama Legal Business we are a law firm in Panama Since 2005 we have strived to provide the best legal advice to companies and entrepreneurs in the main economic sectors in Panama. Our main values are discipline, dedication and commitment.

We represent local and international clients of important companies in the sectors of Administrative law, Corporate and Commercial, Litigation, Real Estate Law, Regulated Commercial Activities (energy, telecommunications, others), Labor and Immigration, as well as Intellectual Property Rights.

If you require legal advice and legal support for any matter related to the previously mentioned sectors, you can contact us. You can call or send a message to WhatsApp +507 6430 7051. We have three strategic locations in Panama City, David and Boquete.