Law 32 of February 26, 1927 regulates all in connection with Panamanian corporations. It is a law of liberal characteristic that it has distinguished throughout the years for its clearness and simplicity. Among the several advantages that the Republic of Panama offers to incorporate share corporations the following are emphasized: a tax system that is governed by the principle of territory, an international financial center, currency at par value with the American dollar and a privileged geographical position.

A Panamanian corporation may be incorporated by two or more persons; whom must sign in the presence of a Notary Public the incorporation articles of the Articles of Incorporation, (the subscribers need not be nationals of residents of Panama). Then the Public Deed must be filed at the offices of the Panamanian Public Registry for its respective registration. Once this is carried out, the corporation may begin its operations.

Having the necessary information, which may be provided by telephone, telefax, a corporation may be incorporated in forty-eight (48) hours and have same sent by courier to any part of the world in less than a week. The information that must be provided is the following:

Name in any language not similar or like another existing corporation. The abbreviations INC., CORPORATION or S.A. are normally used. The general objects of the corporation. The amount of corporate capital authorized and the type of shares, with or without nominal value. The full name and addresses of the first directors and officers.

Although there are no statistics confirming the number of corporations incorporated under the Panamanian Law, it is esteemed that they exceed five hundred thousand (500,000) and that presently some three hundred thousand (300,000) are maintained active.

The immense majority of said corporation belongs to foreigners that have found in same a trustworthy and capable vehicle to resolve problems of very different nature.

ADVANTAGES OF A PANAMANIAN CORPORATION

In our legislation on corporations there is no kind of restrictions on the shareholders, same may be foreign citizens or legal persons, furthermore, it is possible that a sole person be owner of the corporate shares.

All the shares of the corporation may be issued to bearer or in the nominative form. The authorized capital must be established in the Articles of Incorporation and may be expressed in the legal currency of any country. It is not obligatory that the capital of the company be paid at the time of its incorporation.

There are no dependencies of the Panamanian government demanding information on the activities of a Panamanian corporation, that performs operations outside of the territory of the Republic of Panama.

Moreover, the Ministry of Economy and Finance of our country does not demand the filing of Income Statement for these enterprises. It is not a legal requirement that the assets of a corporation be equal to the authorized capital stock stipulated in the Articles of Incorporation.

Thus, a corporation with TEN THOUSAND DOLLARS (US$10,000.00) of declared authorized capital stock, may have a bank account of millionaire amounts or be owner of real estates valued in hundreds of thousands dollars.

In a Panamanian corporation there must be at least (3) natural persons of any nationality as Directors. For the Officers, the Law stipulates that the corporation must have at least a President, a Treasure and a Secretary.

Given than a person may hold two positions, a minimum of two persons may act as Officers. The officers may be directors and vice-versa. The Directors or Officers of the corporation need not be shareholders of the company. The meetings of the Board of Directors may be held in any part of the world and the Directors may attend personally or by proxy.

The corporation may be dissolved by Resolution of the majority of the shareholders, and in the case there is any provision or resolution date established in the Articles of Incorporation, it shall be dissolved by full right.

The Dissolution Resolution must be notarized in any Notary Public and registered in the Mercantile Section of the Public Registry and, once registered, the Certificate of Dissolution must be published in any local newspaper.

If no share has been issued, the Resolution of the corporation may be approved by the subscribers of the shares.

ORGANIZATION

For the organization of a corporation, the interested parties need not be physically in Panama. The usual procedure is that two Panamanian natural persons act as subscribers of the Articles of Incorporation and they sign it before a Notary Public of Panama.

Each subscriber usually subscribes the right to a share of the authorized capital mentioned above. Once the Articles of Incorporation have been registered, the respective Subscriber shall assign in blank the subscription rights to the interested parties, and so transfer the control on the corporation.

FACTORS DETERMINING SUCCESS OF PANAMA AS A FINANCIAL CENTER.

Good location.
Experience.
Physical presence of an international community.
A favorable and protecting attitude of the government.
There are no exchange controls.
Confidentiality.
Banking Secret.
To have a trustworthy currency.
Effective legal, administrative and accounting systems.
An active free zone.
Good communications and transportation.
The ability to perform commercial activities without restrictions.
Bearer shares.
Flexibility of entrance and departure.
Operations subject to fewer local taxes.
Favorable attitude towards trusts.
Possibility to maintain local directors.
No succession taxes.

The Republic of Panama complies with all and each one of the requisites above mentioned and, unlike many other places, Panama is a real center with the physical presence of more than one hundred and thirty foreign banks. These are more than incorporated banks seeking favorable special legislation, inasmuch as they have offices and participate in the development of the country.

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