Elements of a Panama IBC
Important elements that make up a Panama IBC
1. The Capital
There is no minimum capital or time limit within which the so-called authorized capital has to be paid. The standard practice will specify an authorized capital of US$10,000, divided in 100 common voting shares at a par value of US$100 each. However, it may consist of 500 shares without par value. In both cases, the minimum registration tax would apply.
2. The Shares and Share Certificates
A corporation has the ability to create and issue one or more classes of shares, with designations and preferences. Privileges, voting powers, restrictions or requisites and other rights may be provided by the Articles of Incorporation. The shares may have a nominal value but the corporation may also issue shares without par value.
Shareholders identity is not registered at the Panama Public Registry. The Panama Corporation’s shares are issued through private documents; nevertheless, the Resident Agent of the corporation is obliged to know at all times the identity of the shareholders. This information is for the lawyers’ and law firm’s private files.
Bearer share certificates are still valid in Panama. However, due to a “Bearer Shares immobilization law” (law 47 of 2013) all corporations issuing bearer shares shall state on its Articles of Incorporation that they “commit into the custodial arrangements of its bearer share certificates according to the law 47 of 2013.″ They shall also deliver to an authorized custodian (such as our law firm) the original share certificate(s) along with a sworn declaration signed by the shareholder.
3. The Shareholders
The shareholders constitute the supreme power of the corporation. Their approval is required for:
- The amendments of the Articles of Incorporation
- The sale, lease, exchange or disposal of capitals assets
- The approval of mergers or consolidation agreements with other corporations
- The dissolution of the corporation
4. The Board of Directors
The management, administration and business of a Panama corporation is administered and conducted by a Board of Directors, which, according to our laws, requires a minimum of 3 Directors / Officers. They may be of any nationality and a resident of any part of the world.
The Board of Directors usually are the ones in charge of the day-to-day control and management of the affairs of the corporation. It is not necessary for the members of a Board to be shareholders or Panama Residents.
Additionally, if expressly authorized by the articles of incorporation, it is possible for directors to be represented at meetings of the Board of Directors through proxy holders, who don’t need to be directors, and who must be appointed by public or private instruments, with or without power to substitute.
5. Directors and Officers
Corporations must have a President, a Secretary, and a Treasurer, who are elected by the Board of Directors. The standard practice is that the same persons are appointed as Directors / Officers. For example, Director-President, Director-Secretary and Director-Treasurer.
In absence of a provision to the contrary in the Articles of Incorporation, such officers may be replaced at any time by a resolution adopted by the majority of the members of the Board of Directors or shareholders. If there is a change to the Officers / Directors, minutes must be recorded at the Panama Public Registry to be legally binding.
Due to the fact that the names of the 3 Directors / Officers must be recorded at the Panama Public Registry, some clients prefer to have an appointed nominee board and to control the corporation without disclosing the identity of the shareholders or real owners. Mata & Pitti Attorneys at Law provide this service. In this case, the 3 Directors appointed would be from our staff and will not participate in any way in the activities of the corporation.
6. The Registered Agent or Resident Agent
Panama Corporations must have a Registered Agent, also called Resident Agent in the Republic of Panama. According to our laws, the Registered Agent must be an Attorney in Panama or a Panama Law Firm. The Resident Agent may be replaced by means of an amendment to the Articles of Incorporation.
7. Corporate Books
When company operations are not performed in the Panama territory, our law requires only a Minutes Book and a Stock / Shares Register Book as well of accounting records, which may be kept in any part of the world and can also be kept by electronic means.
8. The Annual Franchise Tax
The only payment that Panama Offshore Corporations are required to pay annually is the Annual Franchise Tax of US$ 300.00. Additionally, our firm fees for being the Resident Agent of the Corporations are US$ 250 per year.
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Is this the right move for you company? Is it time to take some of your business offshore?
This brief description of the elements of a Panama corporation should give you a basic understanding of how they work, you can contact the specialists at Mata & Pitti Attorneys at Law for a consultation on our services and how we can help you reach your corporate goals.