Panama is a great place for offshore businesses. Panama’s friendly business environment, strong economy and large workforce make it an ideal place for foreign companies to do business and base their operations.

While the government has revised and laxed the rules and regulations for foreign off-shore businesses, there are still requirements and laws that every off-shore company must abide by in order to carry out business in Panama.

The many of the laws that govern how foreign companies are to run and operate in Panama are captured in the Republic of Panama law of 1927, also sometimes called Law 32.

Back in the 1920s, the Panamanian government created the law in an effort to revitalize the country’s economy by attracting foreign investors, businessmen, entrepreneurs and multi-national business owners to do business in Panama. The Panama Corporation Law of 1927 has 96 articles broken into 11 sections that range from company incorporation to stocks and stockholder meetings to sale of assets to mergers to the dissolution of a company.

This Law 32, which has been revised over the years, has played a big role in making Panama an economic powerhouse that has become an ideal place for foreign and international companies of all sizes to conduct their business operations.

Here is a brief outline of the Republic of Panama Corporation Law of 1927:

Section 1: Articles of Incorporation

  • Company Formation and Name Regulations
  • Powers of the Corporation
  • Stocks and Shares Requirements, Valuation and Distribution
  • Accepted Forms of Articles of Incorporation
  • How to Legitimize the Articles of Incorporation

Section 2: Corporate Powers

  • To Sue and Be Sued
  • Acquire, Hold and Purchase Property
  • Appoint Officers
  • Make Contracts
  • Make By-Laws
  • Carry on Business
  • Dissolve Itself
  • Borrow Money
  • Hold, Sell, and Purchase Stock

CHAPTER 3: Stocks

  • Create and Issue One or More Classes of Stock Shares
  • Nominal and Par Value Stock Shares
  • Role of the Company Board of Directors in the Valuation and Distribution on Stock Shares
  • Conditions of Par Value Stocks
  • Voting on Stocks
  • Payment of Stocks
  • Certificate of Stocks Requirements
  • Transfer and Delivery of Stocks in Certificate
  • Articles of Incorporation and Stockholders
  • All Corporations Must Keep a Stock Register
  • Payment of Stock Dividends

CHAPTER IV: Stockholders’ Meetings

  • Written Record of the Meetings
  • All Meetings to be Held in Panama
  • Stockholder Waiving of Meeting Notice
  • Shareholder’s Rights and Meeting Responsibilities
  • Meeting Voting Requirements

CHAPTER 5: Board of Directors

  • Minimum Number of Directors
  • Powers of the Board of Directors
  • Board of Directors and Shareholder Meeting Quorums
  • Election and Vacancies of Board of Directors
  • Committees
  • Removal of Board Members

CHAPTER 6: Officers

  • Every Corporation to Have a President, Secretary and Treasurer
  • Election and Limitations of Officers

CHAPTER 7: Sale of Assets and Franchises

  • Stockholder Approval of Sale of Assets and Voting of Directors
  • Transfer of Assets Can’t Be Used for Pledges

CHAPTER 8: Mergers

  • Requirements For Mergers
  • Notification to Stockholders
  • Signatures From President, Vice Present or Secretary of Each Organization is Required
  • Filing for A Merger
  • Responsibilities of a Merged Entity

CHAPTER 9: Dissolution

  • Requirements for Dissolution
  • Publication of the Dissolution
  • Board of Directors
  • Settling Suits and Debts After Company Dissolution
  • Compensation of Board of Directors

CHAPTER 10: Foreign Corporations

  • Filing a Deed of Protocolization With Mercantile Registry
  • Articles of Incorporation

CHAPTER 11: Miscellaneous Provisions

  • Corporations Operating Before Law Goes Into Effect
  • Corporations Organized at the Time of Law Effective Date
  • Recently Dissolved Corporations
  • Law Effective Date

The Panama Corporation Law of 1927 is still in effect today and is used by the Panamanian government to regulate the lawful operation of offshore companies who conduct most of their business in Panama.

If you’re thinking of moving your business’ operations to Panama, take a deep look at the 1927 Law. Business owners who have additional questions can contact the Panamanian lawyers at Mata & Pitti for help and more information.