Panamanian Corporation Blog Entries
Panamanian Corporation
Link: http://www.panamanian-corporation.com
Incorporation, formation and management of Panamanian corporation is regulated by the General Corporation Law 32 of February 26, 1927.
Shareholders have the ultimate power of the corporate control. They elect the Board of Directors and they can limit any powers of Board of Directors or officers. Their names can remain totally anonymous for the outside world. Shareholders can be natural persons or any other companies anywhere in the world without any restrictions.
The Board of Directors elects the corporate Officers. The names of the Board of Directors are public information. The Board of Directors can have limited powers according to wishes of Shareholders, Articles of Incorporation or By-Laws of the corporation.
The Board of Directors can issue Power of Attorney to any special officer or agent or representative. Such Power of Attorney need not be a public record.
Directors of the Corporation or corporate Officers can be any other company or natural persons anywhere in the world.
Corporate Officers’ names need not be a public record. Additional officers can be elected by the Shareholders By-Laws.
Visual Chart of Corporate Governance of Panamanian Corporation
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Why is Panama the preferred offshore jurisdiction?
Starting and running your own offshore business or offshore project isn’t easy. You may need specialist advice, such as help with legal and taxation issues or managing your finances. And you might want to talk about your ideas and problems with someone who understands the challenges you face.
When you come to the point where you have decided to incorporate a new offshore company, you shall next decide under which offshore jurisdiction you will want to operate your own offshore business. There are plenty of offshore jurisdictions and plenty of advices on Internet and in books covering the offshore subjects.
There are many things to consider in choosing the right offshore jurisdiction. For some residents of high taxation countries, the choice of the offshore jurisdiction can be critically important.
Further, there is no general solution for everyone in choosing the offshore jurisdiction. But for many, we want to present some of advantages and benefits in choosing Panama as offshore jurisdiction or domicile for your investment or offshore business.
Advantages of Panama as Offshore Jurisdiction
Panama is a free country. It is independent and sovereign state. Those facts make a big difference when your local taxation office begins to investigate the business you are running.
Panama has no information exchange agreements with other countries. That means that an official letter from the tax office in your country to any of Panamanian banks or government agencies, will fail to give the result. In most of cases, such a letter will remain unanswered. That is what is meant with sovereign country. Panama is independent and unlimited by any other country, it has its own government and is not subject to another power.
Stability of an Offshore Jurisdiction
What do we mean with stability as offshore jurisdiction?
By stability, we want to stress the point of the quality or attribute of being firm and steadfast offshore jurisdiction in regards to its own corporate and banking laws.
What is that?
Let us take an example of a company incorporated in the USA or anywhere in the EU. Such a company DOES enjoin the great stability in regard to its own corporate laws. Any attorney, lawyer, government agency or creditor, must first follow the local corporate laws in order to sue the corporation or get any informations in regards to such a local company. Local government of the USA or almost anywhere in the Europe and in many other countries, will support and protect the local company by its own corporate or company laws. It will not allow the piercing of the corporate veil, nor it will recognize any evidence against the corporation brought in an illegal manner.
Such is the Republic of Panama in regards to its company and business entities laws. But Panama laws give superior protection in comparison with USA or EU countries.
Small offshore jurisdictions, advertising and promoting their confidentiality or their far away positions, cannot really and practically stand the pressure of high taxation countries. Such small jurisdictions have been created by wealthy and rich people and as soon as you have low profile you will have a nice strong protection from a small offshore jurisdiction. But if it comes to some real liability, what can happen to any company in the world, small and instable offshore jurisdiction will not practically protect you as owner and such small offshore jurisdiction might even break its own laws of condfidentiality and corporate matters.
Panama is a big and strong and stable offshore jurisdiction. When it comes to corporate liabilities, Panamanian corporate laws will stand with you and offer you practical solution and protection. Such protection will not be just promoted protection or advertised protection but it will be real and practical.
Oppositely, the small offshore jurisdiction will not be able to help you when it comes to real corporate liabilities. In order to save their “tax haven”, small offshore jurisdiction will reveal the beneficiary behind the corporation to anyone asking for it. Attorney or lawyer working for such small offshore jurisdiction, might even try to sue you in your own home country. We do not call that piercing the corporate veil. We call that barbarity.
By using your Panamanian company and principles of Thetaworld™ Knowledge, you will gain the simple and stable tool for offshore investment and business which will stand pressure in the long run.
Corporate Advantages of Panama as Offshore Jurisdiction
Some well known corporate advantages of Panama as offshore jurisdiction are:
- that both registered and bearer shares can be issued,
- that shares of non-par value can be used,
- that shareholders, directors or officers can be other entities or companies,
- that shareholders, directors or officers can be of any nationality,
- that shareholders can remain totally private and confidential,
- that officers of the corporation can remain private and confidential,
- that company name can be in any language,
- that there is no exchange control in Panama.
- that local currency is Balboa, equivalent to US dollar,
- that no annual meetings must be held,
- that meetings can be held anywhere in the world,
- that corporate resolutions can be signed on different places and in different times,
- that facsimiles of signatures or digital signatures are recognized,
- that no accounts of the company need to be reported or filed with the government for offshore companies,
- that there is no tax on income gained outside of Panama, or inside of Panama in regards to other companies,
- that corporate veil cannot be pierced,
- that shares (stock) of the corporation does not require paid in capital,
- that consideration for shares can consist of services, goodwill or anything what directors deem to be enough,
- that there are no restrictions of funds coming to Panama or going out of country,
- that Panama has no mutual agreement treaties for sharing of the banking informations,
- that Panama does not recognize court orders from other countries, unless in cases of drug smuggling and drug money laundering,
- that Panama is business oriented country,
- that Panama is based on the Roman law system,
- that Panama has no military,
- that Panama is home to the second largest international distribution and trade center, Free Trade Zone, the Colon Free Zone,
- that Panama is well known and respected international trade and banking center,
- that Panama has virtually zero inflation over the years,
- that Panama is member of many Free Trade Agreements,
- that Panama has been ranked as first in the Central and South America for low cost of living and operational cost of labor,
- that Panama has the best risk-investments qualifications,
- that Panama has strictest banking secrecy laws.
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Panama’s official language is Spanish. However, English is widely spoken as a second language in the main cities. Panama has excellent local and international telephone services. Direct dialing is available to more than 150 countries worldwide. There are 170 radio stations and five television stations in Panama. Office space both permanent and temporary is readily available.
Health conditions in Panama are good, especially in the urban centers. Running water is available in almost all parts of the country and is usually potable. Use of bottled water or boiling before use is necessary only in some rural areas and small towns in the provinces.
There are several international level hotels, and furnished apartments are available for longer stays. Transportation from the International Airport into Panama City is by a special taxi service. Car rentals are available. There is no bus service at the airport. Buses and Taxis are readily available in urban areas. Taxi fares are low and usually range from one to five dollars depending on the trip’s length.
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U.S. citizens may enter Panama with a passport or a certified copy of
a U.S. birth certificate and an official picture I.D., (e.g. driver’s
license) and a Tourist Card purchased for US$ 5.00 from an airline serving
Panama. The Tourist Card is valid for 90 days and may be extended for
another 90-day period. The following are three types of Visas available
to businesspersons wishing to spend extended periods of time in Panama:
* Inversionista (Investor): A minimum of US$ 100,000 must be invested
and US$ 600 must be deposited in advance (US$ 500 with the Ministry of
Government and Justice and US$ 100 with the Ministry of Economy and
Finance).
* Visa de Visitante Temporal (Temporary Visitor’s Visa): For
executives or technicians working with a company in Panama for a limited
time. The Visa is valid for one year and is renewable.
* Temporal Especial
(Working Permit): For professional or skilled personnel transferred from
an overseas office to work in Panama temporarily. The applicant must
prove his earnings will come from outside of Panama. The Visa is valid
from three to six months.
There is a USD$ 20.00 departure tax on leaving
the country.
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Business practices and customs in Panama are a unique blend of North
American methods and traditional Latin style. Foreign corporations
operating in Panama are important in shaping the style and manner of
doing business.
Private business offices are open from 8:00 a.m. until
5:00 p.m., Monday through Friday, and Saturdays from 8:00 a.m. to 12 noon. Banks are open from 8:00
a.m. to 3:00 p.m., Monday through Friday. Most local banks open Saturdays
from 9:00 A.M. to 12:00 Noon. Government offices are open from 8:30
a.m. to 4:30 p.m., Monday through Friday.
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* Traditionally, Panama has maintained a rather liberal regime for foreign investment and investment
in financial instruments. The government and the Panamanian business
community actively encourage foreign direct investment (FDI). Laws in
general make no distinction between domestic and foreign companies.
*Panama has no legal restrictions on the transfer abroad of funds associated
with or capital employed in an investment. There are no restrictions on
capital outflows or convertibility. Panama uses the U.S. dollar as legal
tender. Currency conversion therefore is not an issue.
* Embassy is unaware of any outright expropriation of property by the Panamanian government
in recent years.
* The business community generally lacks confidence in the Panamanian judicial system as an objective, independent arbiter in legal or commercial disputes, especially when the case involves powerful local
figures with political influence. When disputes with foreign investors arise, as they do from time to time, the investors often choose not to pursue remedies available to them via the court system. In a few cases
the appearance of corruption has been so widely accepted as to constitute
conventional wisdom. The decision by investors to avoid the court system is moreover understandable, given massive case backlogs and the specter of corruption.
* An increasingly popular and viable alternative for settling disputes is the Center for Reconciliation and
Arbitration established by the Panamanian Chamber of Commerce. Rulings by arbitrators are generally fair and reasonable.
* There are no legal performance requirements such as minimum export percentages or significant
local procurement rules.
* With the exception of retail trade, the media, and a few professions, foreign and domestic entities have the right to establish, own, and dispose of business interests in virtually all forms of remunerative enterprise.
* Some of Panama’s business, corporate, and banking codes have been modernized and are, in general, enforced so as to strengthen confidence in property rights.
* Protection of intellectual property rights (IPR) in Panama has improved significantly over the
past several years.
* Panama’s relatively recent accession to the WTO, wholesale privatization, and overhaul of various laws that regulate economic activity created a fluid regulatory climate. Panamanian
regulators have been exposed only recently to complex issues, many of
them technical. Regulators’ responsiveness to the concerns of those they
regulate have been mixed, depending on the sector. U.S. businesses
have complained of arbitrariness or a lack of responsiveness by
officials responsible for issuing sanitary/phytosanitary permits for
the importation of agricultural products and, more recently, that those
same officials have applied unannounced and costly sanitary controls
upon arrival of various shipments of agricultural products that had
previously been pre-cleared for importation.
* Political violence in Panama is relatively rare, however, in 2002, there were several public
demonstrations, including a major public protest against corruption in
Panama City.
* Panama suffers from an expansive, unproductive labor force,
due, in part to, inflexible labor laws
* By regional standards, Panama is a strong advocate of trade liberalization, in part because a relatively
large proportion of its economy is outwardly focused: A.T. Kearney
ranked Panama as the most globalized country in Latin America on its
Globalization Index for 2003. Panama’s strong international thrust
was also evidenced by the fact that it served as Secretariat for the
Free Trade of the Americas from 2001-2003, and continues to lobby to
become the permanent headquarters of FTAA offices.
* Panama has bilateral investment agreements with the United States, the United Kingdom, France,
Switzerland, Germany and Taiwan.
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Membership in Free Trade Agreements
In 2003, Panama completed a
free trade agreement (FTA) with El Salvador. Negotiations are under way
for a FTA agreement with the rest of Central America. Another FTA is
being negotiated with Taiwan. Panama also has bilateral preferential
trade agreements with Costa Rica, Honduras, Guatemala, Nicaragua and
the Dominican Republic. These accords are limited in scope and for
some products are based on quotas. Panama also has limited preferential
agreements with Mexico and Colombia. Previous negotiations with Chile
and Mexico are now on hold. Panama has also agreed to negotiate a more
broad preferential agreement with the Andean Free Trade Agreement (Pacto
Andino). For the past three years Panama has shown a strong interest in a
FTA with the United States. Following a presidential visit to the U.S. in
June 2003, the U.S. expressed its willingness “to explore options for
free trade” with Panama.
Panama is a beneficiary of the Caribbean Basin
Economic Recovery Act, better known as the Caribbean Basin Initiative
(CBI), which provides for one-way free trade access for specific
Panamanian exports to the U.S. In 2000, the U.S. Government enacted
new legislation enhancing the CBI program. The new CBI Law permits more
liberal treatment of textile imports from CBI countries. Since Panama
is not an important textile exporter, the new legislation has limited
value for Panama.
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EPZs are well-defined areas for the
establishment of industrial, commercial and service facilities, which
operate in a free trade system. All or most production is exported. A
range of incentives has been established to attract companies into the
EPZs.
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The Colon Free Zone (CFZ), the largest in the Western
Hemisphere and second in the world to Hong Kong, is located in the
City of Colon, 90 kilometers from Panama City. The CFZ offers free
movement of goods and complete exemption from taxation on imports and
re-exports. There are no taxes on the export of capital or the payment of
dividends. In addition, there are reduced income tax rates on earnings
from re-export sales. Furthermore, firms located in the CFZ are exempt
from import duties as well as from guarantees, licensing, and other
requirements and limitations on imports. Due to its geographic location,
the CFZ is a major factor in channeling goods from large industrialized
countries to consumer markets in Latin America. Unfortunately, the CFZ
has also been used by the Colombian drug cartels for money laundering
and drug trafficking. Other problematic transactions include trade in
pirated intellectual property and stolen vehicles.
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The Government of
Panama designated the Comision Panamena de Normas Tecnicas (COPANIT),
an agency of the Ministry of Commerce and Industry, as the domestic
registering authority for participation in the International Standards
Organization ISO9000 program. There is no legal limitation in Panama
on participation in ISO-9000 by firms doing business here. In fact,
an increasing number of Panamanian firms are seeking or have already
obtained ISO-9000 certification. Panama is a member of the Pan American
Standards Commission (COPAN), headquartered in Venezuela.
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