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Incorporate a Panama Corporation: How To

Apr 29, 2008
In Panama most entities are governed by public notaries that are under the direction of the government. The law in Panama allows any two people who are acting as organizers and their subscribers to go before a pubic notary to organize and legalize a corporation.

For people that want to incorporate a Panama company without visiting Panama this is very possible. The services of a Panama law firm or management services company with access to legal services will be required to facilitate the completion of all required documents as well as act as your representative and sponsor. In order to meet the due diligence required by law in Panama a law firm will ask you for; 3 name choices for your company.

The name that is registered can be in any language but it must end with one of; Corp., Corporation, S.A. or Inc. A Panama company can be registered for just about any purpose with ease and without the need to explain in great detail what it is for to anyone. There are no capital requirements to pay in making it relatively inexpensive to set up.

A Panama corporation will cost about $300 per year to remain in good standing with the government. When incorporating you will need a minimum of 3 directors which you can choose yourself or can be supplied to you by a law firm. If you are setting up your corporation to be anonymous you will require nominee directors supplied by a law firm. Make sure that resignation letters from these nominee directors is included in any Panama corporation package you choose otherwise you run the risk of losing control of your company (albeit it's a very small risk).

You will also need to supply a president, treasurer and secretary by Panama law which again, can be anyone including someone supplied by a Panama law firm if you want anonymity. You can base your head of operations for this country anywhere in the world and transact business using your Panama corporation anywhere in the world including Panama. Many other tax haven countries will allow IBC incorporation but will not let you use the IBC in the country it was registered. A Panama IBC can be used in Panama or anywhere else. There is one legal stipulation to note: in order to have a Panama company in good standing you need to have a Registered Agent that resides in Panama which must be a practicing lawyer or law firm.

Corporations in Panama can be of limited or unlimited life with the more common option being unlimited life. A Panama lawyer can generally set up a corporation and register it within 3 - 5 business days once he has all of the notarized documents from the client in hand. Be careful who you let incorporate your company especially if you need a bank account with your corporation. Many banks know the nominees that law firms use and if you utilize one where they have given the bank a bad client before then getting a bank account will not be easy or even impossible. Panama is all about who you know.

Normally it is not advisable to purchase an "off the shelf" corporation in Panama because it begs the question "why is the person who registered it not using it anymore and what were they doing with it". In certain cases you may want your company to appear older than it really is but this starts to get into a dark world of half truths and lies that can get you thrown in jail if you are not careful.

When working with a law firm make sure to select one that is upfront about all of the costs associated with incorporation. The total to register a company including legal fees should not exceed $2500 US no matter what. The total cost for the annual tax to the Panama government is $300. Throw in $150 for each nominee director giving a total of $750 / year to maintain and operate your Panama company.

As with anything, there are a number of companies and lawyers that will charge excessive amounts of money to both set up and maintain your foundation or company. Its is very important to know what you are getting into, so that you don't fall victim to unsavory practices.
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