Registration of Trademarks and Patents in The Republic of Panama.

The Republic of Panama is signatory of multiple International Agreements that regulate Trademarks and Industrial and Intellectual Property matter.
Our lawyer’s firm has a Department specialized in the processing, registration, and opposition of trademarks and has close collaboration with its representation and correspondent’s offices worldwide, which allows us to register for our customers their different signs in any country of the world.  This is done with the only purpose of giving all our customers the security of having their creations protected in the most adequate manner.

Requirements to request The Registration of a Trademark In Panama:

• Power of attorney granted by the President or the person authorized to represent the corporation, by means of which we are authorized to request the registration of the trademark. The power of attorney should be granted before a Notary Public, who will attest that the grantor is a person authorized by the corporation to represent it in such act.
• Sworn Statement of the President or person authorized to represent the corporation with respect to the proprietary rights of the corporation on the trademark that he wishes to register. The Sworn Statement should be signed before a Notary Public.
  Certified copy of the Registration of the Trademark in its country of origin. In case that the trademark is object of a request abroad, but the Certificate of Registration has not been granted, the Panamanian legislation allows to request the registration of the trademark in Panama, by enclosing a Certified Copy of the Foreign Request.
• When it is a request of Panamanian registration based on a foreign request, the Foreign Basic Registration Certificate should be presented in the Republic of Panama within the period of a year subsequent to the date of presentation of the Panamanian Request. Otherwise, the Panamanian Request will expire. 
  If you wish to register any particular design or style of the trademark, or if you wish to claim the colors, ten (10) copies of the trademark should be enclosed.
• The Panamanian Consulate should legalize the first three documents in the place of issue. Nevertheless, if the issue country is signatory of The Hague Convention of 1961, the documents can be duly annotated instead of being legalized by the Panamanian Consulate.

Requirements to Request The Registration of Patents:

Any person, natural or juridical, national or foreign, can obtain an Inventor’s Patent in Panama that will insure the exclusive use over his /its invention for a maximum term of twenty (20) years, in the case of National Patents, or for a maximum of fifteen (15) years, in the case of Foreign patents.

The foreign patents can be registered in the Republic of Panama as Patents of Confirmation or Revalidation for a period that does not exceed fifteen (15) years. In case that the Foreign Patent that serves as basis for the Panamanian request has been issued for a period of less than fifteen (15) years, the privilege will be granted for this lesser period. In the case of Pharmaceutical Patents, the registration is granted generally for five (5) years; and extensions are seldom granted.

The documents required for the Registration of an Inventor’s Patent in the Republic of Panama are the following:

• Power of Attorney. If the inventor has assigned its rights to a company, a Power of Attorney with an assignment signed both by the inventor and the requestor is necessary.
• Two(2) copies of the specifications and claims of the invention in Spanish. 
• A design or drawing of the invention.   
• Certified copy of the Registration of the Patent in the country of origin. If the title has not been issued in the country of origin, we can proceed with a certified copy of the Request for Registration of the invention in the country of origin.

If the request for patent is presented in the Republic of Panama, based on a foreign request, the corresponding Foreign Basic Registration Certificate should be presented in the Republic of Panama in order that the corresponding Panamanian Certificate of Registration is issued.

If the Foreign Patent is not issued and is not enclosed to the Panamanian Request, within the period of one (1) year subsequent to the presentation of the Request, the same will expire, unless evidence is presented that the invention continues being processed in its country of origin.

All the documents issued abroad should come duly translated into Spanish and duly legalized by the Panamanian Consulate in the country of origin or duly annotated.

Migration

Infante & Pérez Almillano has experts in migration topics, whereby we can offer our clients advising related to the authentication of their migration “status” in our country and, at the same time, guide them about the kind of visa they can choose, according to their needs.

System of Visas

The provisions regarding migration which regulate the entry, the stay and the departure of the foreigners at Panama, and they provide for he following visas: 

• Visas for Temporary Visitors;
• Visas for Immigrants and;
• Short stay.

The immigrant visas grant the residence to the foreigner at two (2) stages: Provisional and Permanent.

• Provisional Stay: Once the immigrant visa request has been submitted and if it is approved by the Migration National Service, the provisional stay for two (2) years is granted to the foreigner.
• Definitive Stay: Once the term of two (2) years has expired, the foreigner shall have to submit to the Migration National Service the request to obtain the definitive stay, which will give him the right to indefinitely reside at Panama, and to obtain its personal identity card, the concept thereof we shall explain later.

Types of Visa.

They are requested depending on the activity and the time that the foreigner wishes to stay at the Republic of Panama:

Immigrant Visas (Which grant Definitive Stay)

• Immigrant Visa and Residence Permit for Being Married to a National.
• Immigrant Visa and Residence Permit for Having own Economic Solvency.
• Immigrant Visa and Residence Permit for Depending on a Residing Relative.  
• Immigrant Visa and Residence Permit for Being an Investor of the Macro Company.
• Immigrant Visa and Residence Permit for Being a Forest Investor of the Macro Company.
• Immigrant Visa and Residence Permit for Being a Retired person who lived off the income from investments.
• Immigrant Visa and Residence Permit for Being a Retired Person who receives a Pension.
• Immigrant Visa and Residence Permit for Being Staff hired by the Panama Canal Authority.
• Immigrant Visa and Residence Permit for Being an Investor of the Economic Panama – Pacific Area.
• Immigrant Visa and Residence Permit for Being permanent Staff hired by the developer, operator or by the Agency of the Panama – Pacific Economic Area within the ten per cent of the regular workers. 
• Immigrant Visa and Residence Permit for Being an Investor at Processing Zones.
• Immigrant Visa and Residence Permit for Being an Investor at Call Centers for Commercial Use, “Call Center” for Exportation.
• Immigrant Visa and Residence Permit for Being an Investor of the Cinematographic and Audiovisual Industry.

Temporary Visitors (Temporary Residence Permit)

• Temporary Visitor for foreigners hired by private companies within the ten per cent of the regular workers.
•  Temporary Visitor in accordance with the Marrakech agreement.
• Temporary Visitor for being manager, trusted workers, technician or expert.  
• Temporary Visitor for being a student.
• Temporary Visitor for being a missionary or a member of a religious order at the service of the catholic and orthodox church.   
• Temporary Visitor for being ministers, rabbis, leaders of other associations or religious congregations.
•  Temporary Visitor due to humanitarian reasons.
• Temporary Visitor due to family relocation.
• Temporary Visitor hired by the State.
• Temporary Visitor for being personnel of companies which have made agreements with the State.
• Temporary Visitor for being personnel hired by Ambassadors, Consulates or delegations of foreign governments which work without diplomatic status.  
• Temporary Visitor for being correspondent of written, radial or television press, paid Abroad.   
• Temporary Visitor for being an agriculturalist.
• Temporary Visitor  for being forest investor.
• Temporary Visitor for being an executive at the Colón Free Zone.
• Temporary Visitor for being personnel hired by companies of the Agency of the Panama – Pacific Area.
• Temporary Visitor for being personnel hired by companies addressed to the call center of commercial use for exportation “Call Center”.
• Temporary Visitor for being personnel hired by multinationals.   
• Temporary Visitor for being personnel hired by the Panama Canal Authority.  
• Temporary Visitor for being personnel hired by the Ciudad del Saber [City of Knowledge] in the capacity of: Researcher, scientist, professor, technician.
• Temporary Visitor for being students at Ciudad del Saber.
• Temporary Visitor for being foreigner personnel hired by companies of the cinematographic and audiovisual industries.

Short Stay Visa

This visa is granted to those foreigners whose term of stay at the country is not longer than nine (9)  months, and who enter the national territory due to different interests or matters, whether:

• Business
• Family
• Researchers or scientists
• Medical treatment
• Businessmen and investors due to special laws
• International Humanitarian Assistance
• Banking Sector
• Passengers or members of the crew of vessels with recreation or tourism purposes.

Authorized Visas

• Visa Authorized as Businessman.
• Visa Authorized as Immigrant.
• Visa Authorized as Tourist.

Authorized Visas to Enter The Country

The Consuls of the Republic abroad, are authorized to grant Tourist Visas. The foreigners of some countries, due to the security policies, in order to travel to Panama require counting on the prior approval on the part of the Migration National Service, which authorizes said diplomatic officers to issue the visas. These proceeding is known as authorized visa to Enter the Country.

Likewise, it may be directly processed in our country by the interested party. This visa is granted for thirty days, and may be granted or not in order to carry out the residence proceedings.

The processes to obtain the immigrant visa or temporary visitor visa may be commenced abroad or in Panama once the foreigner is there.  The Visa request shall have to be submitted by means of a suitable Lawyer to practice the profession in Panama, and it shall have to comply with the requirements stated by the Law.  

Requirements: The requirements may be different, in accordance with the type of visa in question, but the common documents for each one of the visas are the following in the list:

• Criminal records certificate of the country of origin or residence.  
• Passport of the interested party.
• Marriage certificates and birth certificates of their children, issued by the authority of the country where they got married, the date thereof shall have to be recent.
• Photographs.
• Health Certificates.
• Economic Solvency Certificate of the foreigner who is requesting the visa.  
• Certified checks or management checks for the amount of B/. 250.00 and B/. 800.00 in favor of the Department of Treasury.
• To furnish evidences of the source and the quantity of the incomes with which it will cover its general expenses and of its dependents.  

The documents shall have to be authenticated by the Panamanian Consul at the country where they are issued or where the apostille is issued.

Multiple Return Visas

The migratory provisions grant the non – resident foreigner the possibility of obtaining a multiple entry and departure visa which may be valid up to  five (5) years as the particular case may be, which allows the foreigner entering and exiting the country in an unlimited number of times and without the need of  obtaining another visa on the part of a Panamanian consular officer abroad in order to be able to come back to the country. Likewise, it may be granted to the non – resident foreigners who, due to their commercial or business activity need to travel constantly to our country.

Right To The Personal Identity Card

The identity card is the personal identity document of the bearer, weather a citizen or a foreigner.  The foreigners older than eighteen (18) years old and with definitive stay in Panama, shall have the grant to obtain it.

Naturalization

The immigrant foreigners, with permanent residence in the country shall be able to become citizens, if they are under any of the following circumstances:

• Residents in Panama for more than five consecutive years,  after having obtained their status of permanent residents.
• Foreign residents in Panama for three consecutive years, married with Panamanian citizens.  
• Foreign citizens (on birth) of Spain or other Latin American country, based on the reciprocity principle. It is worth clarifying that the Panamanian State reserves the right to approve or not a request of Naturalization Papers due to morality, security, healthiness, physical or mental disability.

Working Permits.

The foreigners who request a Temporary Visa for being Executives hired by the company of Free Zone of Colón, in the capacity of Technician hired by the Panamanian State, in the capacity of Press Correspondent or for a Special Temporary Visitant Visa, as well as those with Immigrant Visas who whish to work in the territory of the Republic of Panama shall have to obtain, in addition to it, a Working Permit.

The common requirements in order to obtain a Working Permit are the following:

• Power and request by means of a lawyer.
• Original working contract.
• Certification of Migratory Status issued by the Migration National Service of the Republic of Panama.
• Photocopy of the Migration card.
• Photocopy of the passport.
• Four (4) passport sized photos.
• Certificate of Public Register of the company owning the business.  

Naturalization Papers.

Every foreigner who meets the requirements set forth in our legislation may opt for Naturalization Papers and thus adopt the Panamanian citizenship, with which it acquires the rights, privileges and duties that the National Constitution confers to the Panamanians.

Ship Registration in the Republic of Panama

The Republic of Panama is the country with the largest Merchant fleet in the World. This is due to:

• An open system ship registration;
• A favorable legislation;
• An efficient legal system;
• The existence of the Panama Canal, with its multiple advantages.       

An important aspect in the professional practice of  Infante Pérez & Almillano is its experience in maritime law.

Our Law Firm is able to offer multiple legal services, such as: ship registration, navigation licences, maritime law, ship mortgages, chartering contracts, loading and transportation of goods, among others.

Required Documentation to apply and carry out Ship Registration:

Any person who wishes to register a ship under Panamanian flag, must gather the following documentation:

• Sales Contract and sales acceptance on behalf of the buyer’s part, or;
• Construction Company’s Certificate and delivery acceptance on behalf of the owner. (This applies to new ships).     
• Cancellation Certificate of the previous registration, which is issued by the proper authorities from the Merchant Navy of the country where the ship cancels its registration (it’s not required if the ship is new).
• Power of Attorney on behalf of the owner, granting the ship’s dealership upon the authorities of the Republic of  Panama.
• Tonnage Certificate, issued by the Classifying Society of the ship, under the name of the Republic of  Panama, according to the resolutions of the International Agreement on Ship Tonnage from 1969.
• Photocopy of the service contract, signed by the company that will handle the radio bills.
• Radio application, properly filled in.      

The documents indicated in numbers 1, 2, 3 and 4 must be properly signed by Public Notary, and the Notary’s signature must be properly legalized by the Panamanian Consul where they were issued or annotated in accordance to the Hague Convention from 1961.

The procedure for ship registration under the flag of Panama takes one day to be properly completed.  

Likewise, the following required information should be presented to fill in the respective applications:

• The name the ship will hold in the Panamanian Registry.         
• Current name of the ship.
• Country to which nationality is being renounced.
• Name and address of the owner.
• Name of the authority in charge of the radio bills.
• Place of  construction.
• Year of construction.
• Constructors’ name.
• Number of  decks, masts and funnels.
• Material of the hull.
• Dimensions: length, beam, depth.
• Tonnage.
• Ship service.
• Number of machines or engines.
• Trademark or name of the manufacturers.
• Speed of the ship.
• Horse-power and number of  cylinders of each engine.
• Name of the Classifying Society.
• Type of  call issuer (radio-telegraph, radio-telephone or both).

 

Once the documentation and the requested information are received, we proceed to present the application to the General Management of the Merchant Navy and to make the government duties payments. The General Management of the Merchant Navy will proceed to issue the Provisional Patent, valid for six (6) months and the Radio Permit, valid for three (3) monthes. During this period, original documents must be presented so that the General Management of the Merchant Navy proceed to issue the Final Patent.

Creating Private Interest Foundations and Trusts

Infante & Pérez Almillano considers of extreme importance the correct protection and organization of its clients’ assets on the long term. In order to safeguard this, the firm has created a legal framework that considers the establishment of Private Interest Foundations and Trusts, real asset protective entities, in such favourable places as Panama, Liechtenstein, Belice, Malta, among other.

Basic Aspects of the Panamanian Private Interest Foundation

The initiative of creating a law about Private Interest Foundations, comes from the popularity acquired in Europe, and more precisely in Switzerland, by the family foundations of Liechtenstein Principate.

Private Interest Foundations are defined as the allowance or donation of assets for some determined objectives or goals in the document called the Foundational Act.
The accomplishment of the objectives of the Foundation is entrusted to the Board of Directors, that constitute an Advisory Board, whose names must be included in the Foundational Act.

The beginning assets of the Foundation can be increased from time to time, by the originator(s) of the Foundation, who will be called the FOUNDER(S), or by any other person. Persons or institutions that receive the benefit of the foundation are called the BENEFICIARIES. The fund or asset transmitted to the Foundation is separated from the Founder’s personal assets, that means, it becomes autonomous, thus the Foundation having independent corporate body.

Unlike a corporate entity, the Foundation doesn’t have partners, participants or shareholders. However, the Law recognizes the beneficiaries, or the persons who benefit from the purposes of the Foundation, among which the Founder can be included.

The main difference between this kind of Foundations and the Charity Foundations or those having Scientific aims, is that the latter must be authorized by the Ministry of Government and Justice of Panama, while Private Interest Foundations start existing, or acquire legal personality when they are registered in the Public Registry.

It is important to point out, that even though this kind of foundation doesn’t have as its aim to dedicate itself to non-lucrative activities, those have important and practical uses for all the community. Being a permanent instrument, they offer the possibility to set and continue for a long period of time, even after the founder’s death, the determined ideas and objectives that such person would have in mind about his wealth or his assets, its final purpose, as well as family’s wealth planning.

Law Nº 25 from June 12, 1995, by means of which Private Interest Foundations are regulated, establishes with detail how they are formed and work. These law dispositions have been regulated by the Executive Order Nº 417 from August 8, 1995, by means of which in the General Management of the Public Registry the section of Private Interest Foundations is created, and the inscription of the incorporation, modification, and termination of these foundations is ruled.

Main Advantages of Private Interest Foundations

• Complete secrecy.
• Fast incorporation procedure. 
• Reasonable prices of incorporation and maintenance. 
• There is no legal requirement of maximun assets allowed.
• They can perform any transaction, of a civil nature as well as commercial nature (in a non usual way), in any country of the world and in any currency.
• The Foundational Act can be signed by the client or by the authorized representative or the fiduciary.
• The Foundations can set domicile again, or continue existing as Private Interest Foundations of Panama, following a simple procedure.
• The assets that constitute the wealth of the Foundation cannot be confiscated or seized by the Founder’s or the beneficiarie’s obligations, except when the transfer of such assets to the Foundations was made with fraud to the creditors.
• The valid compulsory legal dispositions in inheritance matters at the founder’s or beneficiaries’ address, will not be enforceable to the Foundation, neither will affect its validity, nor will prevent the accomplishment of its objectives.

 
Main Characteristics of Private Interest Foundations

• They can be incorporated by any person, natural or corporate body, by themselves or by means of authorized third parties.
• Their aim is non-lucrative, but they can perform acts of commerce in a non u sual way. For example, become holders of shares of a financial group (holding).
• They can be made to start operating right from their beginning, including even after the founder’s death.
• The Foundational Act and its modifications, can be written in any language of the Latin alphabet.  When it’s a langugage other than Spanish, the Foundational Act and its modifications must be registered by a Notary, together with its translation, by a Public Translator authorized by the Republic of Panama.
• The Foundational Act must contain, as stated in article 5 of the Law, the following:
  • Name of the foundation, which must not be the same to another one already in existence in Panama.
  • Initial assets, expressed in legal currency, not lower than the equivalent amount of TEN THOUSAND AMERICAN DOLLARS (US$ 10,000.00).
  • Appointment, including complete name and address, of the members of the  Foundation Board, which will not be less than three (3).
  • Address of the Foundation.
  • Name and address of the Resident Agent, who must be a Lawyer or a lawyers’ firm.
  • Aims of the Foundation.
  • Beneficiaries of the Foundation, or the way to appoint them.
  • Provision of the right to modify the Foundational Act.
  • Duration.
• Purpose and way of asset liquidation, in case of dissolution.
• Every Foundation and its modifications, pays Right of Registry and Annual Unique Fee, same as the Corporations. Likewise, it is subject to the limitations about money laundering produced by drug-trafficking and other dispositions established in Decree 468 from 1994.
• The registration of the Foundational Act in the Public Registry grants the Foundation legal status. Besides, it is a means of publicity before third parties.
• For all legal aspects, the assets of  the Foundation will constitute a separate wealth from the Founder’s personal assets, and such assets will not be able to be confiscated, seized, or object of actions or precautionary measures except by committed obligations, or by damage caused in case of  execution of  the aims or objectives of the Foundation, or by legitimate rights of  its beneficiaries. The Foundation does not respond to the Founder’s or beneficiaries’ personal obligations.
• Foundations are irrevocable except:
  • When the Foundational Act has not been registered in the Public Registry.
  • When the contrary was specifically expressed in the Foundational Act.
  • Because of any of the revocation reasons of the donations.
  • When the Foundation was created to start working after the Founder’s death, in an excluding and unlimited way.
• The laws in inheritance matters, valid in the address of the Founder or the Beneficiaries, will not be objectionable to the Foundation.
• Assets of any nature can be included in the Foundation, present or future, which origin would come from any legal lawful business.
• Both the Administration, as well as the accomplishment of the aims and objectives of the Foundation, will be in charge of the Board of the Foundation.
• Besides, the members of the Board of the Foundation could be subject to the previous authorization of a protector, committee or any supervising  body designed by the Founder or most of the founders.
• The Foundation Board is bound to be accountable of  its affairs to the beneficiaries and, otherwise, to the supervising body, at least once a year.
• In the Foundational Act, the Founder will be able to set for himself or for third parties, the right to releive from their duties the members of the Foundation Board as well as to appoint or add new members.
• If it’s not indicated in the Foundational Act, the members of the Foundation Board could be releived from their duties, through the courts, by means of a summary trial, because of the reasons expressed in article 22 Law Nº 25 from June 12, 1995.
• Any controversy, that does not have a special procedure appointed by Law, will be solved through a summary trial. Notwithstanding the above mentioned, in the Foundational Act or inthe Foundation regulation, an arbitration clause can be agreed on.

Most Common Purposes of Private Interest Foundations.

• To protect defenceless people, such as minors, handicapped or disabled people unable to handle their own assets or exposed to the danger of losing their wealth.
• To give continuity and maintenance to family businesses.
• To be administrator of profits’distribution plans for workers and pension plans.
• To become the share holder and other assets of private companies.  In this case, the Private Interest Foundation works as a holding entity.
• To collect royalties and other kinds of credits.
• As means of investment in long term deposits, shares, bonds or other assets.
• To be the owner of personal  (such as works of art) or real estate properties.
• To be bank account holders, since it is a safe and discrete means for encoded accounts.
• To be asset protectors.
• To be a planning vehicle for the distribution of the family wealth.

Creation of Trust

Starting Requirements.

Inter Vivos Trusts:

Inter Vivos Trusts can be created with a written consent, by means of a private document or through a public instrument.The instrument of the trust must contain the following:

• Appointment of the SETTLOR or FOUNDER, THE TRUSTEE, and THE BENEFICIARY in a clear and correct way.  When future beneficiaries or different kinds of beneficiaries are involved, full requirements for their identification must be stated as well.

Note: The settlor can be at the same time the beneficiary of the trust.

• Appointment, clear enough for the purposes of identification of  the trustees and/or substitute beneficiaries, if there were so.
• Description of the assets or the wealth, or part of it, in relation to which the trust is created.
• Specific statement of the will of creating a trust.
• Rights and duties of the TRUSTEE.
• Any prohibitions or limitations imposed to the TRUSTEE in the execution of the Trust.
• The rules of asset growth, distribution and disposal, Trust asset’s revenues and profits.
• Place and date when the Trust was created.
• Appointment of the Trust Resident Agent in the Republic of Panama, who must be a lawyer or a firm of lawyers, and who must authenticate the creation of the Trust.
• Address of the Trust in the Republic of Panama.
• Specific statement that the Trust is created according to the laws of the Republic of Panama.

This office recommends its clients to add certain sentences that refer to the following aspects:

• Payment (fees) of the trustee, if agreed on beforehand.
• Trustee responsibility in handling the Trust assets.
• How to render accounts and to whom.
• Which law will rule the affairs of the Trust or to indicate which one should be in case of not being the one of the Republic of Panama.
• Relevant court or authorities which will decide upon the conflicts that would emerge from the Trust, if these happen outside the Republic of Panama.
• Causes of the Trust ending.
• Acceptance of the Trustee with a written consent.

Mortis Causa Trusts:
These Trusts that have effective date after the FOUNDER’S death must be created by means of a Will. They can also be created by means of  a private document, without the formalities of a Will, as long as the Trustee is an authorized person to carry out the Trust business inside the Republic of Panama.

The Mortis Causa Trusts will contain the same clauses as the Inter Vivos Trusts.

Trusts on Real Estate Located in the Republic of Panama:
They must be created by means of a Public Deed, by Notary Public, and registered in the Public Registry.

Creation of Corporations

has a corporation department, with expert staff in such area. Thus, we can offer our clients the great advantages that the offshore corporations offer, not only in the Republic of Panama, but also in other places such as: British Virgin Islands, Curacao, Bahamas, Cayman, Belice, among others, with our main objective:  to use and combine these corporative entities in the most favourable way for the client.

Corporations in Panama

A.  General Characteristics

Panamanian laws recognize corporations as having their own legal status different from that of their partners for all their acts and contracts.

Corporations in Panama have certain characteristics that make them different from other kinds of corporations.

Among the most important ones, we can mention the following:

• The principle of limited responsibility. The corporation responds in the compliance of its obligations with all its assets, “ Shareholders are only reliable to creditors up to the amount they owe at the expense of their shares...”
• Ability to transfer share titles. This is one of the main characteristics of panamanian corporations.  Stocks can be freely negotiated by simply handing in when dealing with documents issued to the bearer, or through endorsemnt, in case they are issued as order documents.

Nevertheless, some restrictions can be established in the corporate agreement, to allow the free trade of the shares, setting a preferential right to the stockholders to proportionally acquire, the stocks that another stockholder wants to sell.
Our law considers as void, however, “any restriction that absolutely forbids  the transfer of shares”.

• The essential characteristics mentioned above refer to share capital corporations that operate under a determined corporate name and that their creation is determined upon the observance of certain formalities.  We will deal with these aspects in detail later on.

B. Establishment of The Corporation

The Corporate Agreement
The procedure for the creation of a corporation in Panama is very simple: two or more persons, older than eighteen (18) years of age, of any nationality, even if they don’t have an address in Panama, can create  a corporation for any valid purpose, writing down the “Corporate Agreement” in the presence of a Notary of Panama. The Corporate Agreement must be registered later on in the Registry.

C. Corporate Agreement Components

The Corporate Agreement must contain at least the following:

The Subscribers
Identification of each one of the subscribers to the Corporate Agreement. When these people are not in Panama, two persons previously appointed for this matter, can grant the Corporate Agreement in the presence of a Notary, transferring later on, by means of a private document, any rights they could have acquired when creating the corporation. 

Name and Trade Name
This name must not be the same as in any other previous corporation, so that it could not lead to mistakes.

The name  must include one word, phrase or abbreviation, such as S.A.,  CORP., INC., etc., that indicates that it is a corporation.

Both the name or the abbreviation that indicate that it is a corporation can be established in any language.

Some special laws forbid the use of certain words in the trade name, without previous authorization of the corresponding entity.   So, the words “Bank”, “Insurance company”, “Reinsurance company”, “Insurance Administrator”, “Broker”, “Trust”, or others that indicate the practice of these activities cannot be used without the previous authorization of the governmental entity that controls the respective activity.

The Corporation Address
The corporation is entitled to establish and issue one or more kinds of shares, with appointment of the preferences, privileges, ability to vote, restrictions, requirements and any other rights determined in the corporate agreement.
Thus, the shares can be issued to the bearer or endorsed.

Objectives and purposes for its creation
The main objective of the corporation can be defined in the most broad terms and it may cover any and every valid activity.
Usually, there is one activity stated in the Corporate Agreement as the main one, and then there is a wide list of valid activities, to conclude that, in one word, it can do any business that is not considered void or forbidden by the Law.
It is not required to confine the purpose of the corporation to one or several specific objectives.

The Corporation’s Capital
The corporation must have a “Corporate authorized capital”.
The amount of the corporate capital may be in Dollars or in any other currency.

The corporate capital can consist of:

• An amount of money, divided into a certain number of shares with a nominal value assigned to each share (for example 10,000.00 Dollars divided into 1,000 shares of a nominal value of 10 Dollars each).
• Certain amount of shares without nominal value (for example: “ the corporate capital will be composed by a thousand shares without nominal value”) or;
• A combination of both.

It is not mandatory to issue or subscribe or pay all or part of the authorized corporate capital in a fixed moment, nor make a deposit in any bank, official or private, except the fact that the subscribers of the corporate agreement must subscribe one share each, at the moment of creation of the corporation.

The Shares
La sociedad está facultada para establecer y emitir una o más clases de acciones, con designación de las preferencias, privilegios, facultades de voto, restricciones, requisitos y cualesquiera otros derechos determinados en el pacto social.

The endorsed shares can be issued without being completely payed. Any cession or transfer of endorsed shares must be registered in the Corporation Registry Book of shares.  Transfer is not valid unless registered in the Registry Book.

 The shares issued to the bearer must be completely payed to be issued. The cession or transfer of such shares is made only with the trade of the title or certificate that represents them.

The title or share certificate must include:

• Information about the registration of the corporation in the Public Registry.
• The authorized corporate capital.
• The number of shares that the certificate represents.
• The kind of shares, as well as the special conditions, appointments, privileges, preferences, prizes, advantages and restrictions or requirements that some of these kinds of shares might have over the others.
• If the shares represented by the certificate are completely payed and free, as well as the amount of money paid for them.
• If they were endorsed shares, the name of the holder must be stated.

The Resident Agent

The law establishes that every corporation must have an appointed Resident Agent in the Republic of Panama, who must be a lawyer or a law firm.

The Resident Agent does not have the faculty of engaging  in obligations on behalf of the corporation, nor can he tax in any way its assets, unless he is specifically granted this faculty. He is, however, able to present the documents to be recorded by a Notary and to register the resolutions of the corporation in the Registry.

The Resident Agent is also authorized to pay on behalf of the corporation the Unique Tax (Corporation Annual Tax).

The Directors
The business of a corporation is administered by the Board of Directors, which must be composed by at least three Directors, who can be of any The Directors
The business of a corporation is administered by the Board of Directors, which must be composed by at least three Directors, who can be of any nationality and who are not required to have an address in the Republic of Panama.

It is not necessary to be a shareholder to fill the position of Director.
The first directors are appointed by the subscribers to the corporate Agreement at the moment the corporation is created. From that moment on, directors are appointed and releived from their duties as indicated in the corporate Agreement or as determined by the shareholders. They must remain in their positions until a replacement is appointed.
As agreed with the Board of Directors, the corporation can sell, lease, exchange or in any other way transfer all or part of its assets according to the terms and conditions that the Board of Directors considers convenient, as long as it is authorized for this purpose by Resolution of most of the shareholders with the right to vote in the matter, adopted in a meeting requested for this purpose.

Notwithstanding the above mentioned, the consent of the shareholders is not necessary to transfer the assets in a Trust or to encumber them with pledge or mortgage, as a guarantee of the corporation debts.

The Dignitaries
The corporation must have at least three dignitaries: a President, a Secretary, and a Treasurer, but it can have as many as it requires.

The same person can fill one or more positions, if it is determined in the corporate Agreement.

It is not necessary that a person be a shareholder or  member of the Board of Directors to be a dignitary, except if the corporate Agreement demands so.
The dignitaries’ attributions and faculties are usually established in the corporate Agreement.

The Shareholders
The Board of Shareholders is the corporation’s highest authority, but it cannot, in any case, relieve the shareholders from the rights they might have acquired.

As well as in the case of the directors, the shareholders can be of any nationality and it is not required that they have an address in Panama.

The meetings of the Board of Shareholders can take place in the Republic of Panama or in any other country of the world, if it is so appointed in the corporate Agreement and can be called by the President, Vice-president, Secretary or Assistant Secretary, or by any other person authorized by the Corporate Agreement.

The Shareholders can be represented in the meetings by a representative, who doesn’t need to be a shareholder, and who could be appointed by public or private document, with or without substitution clause.

It can be established in the Corporate Agreement that the sahreholders have a preferential right to buy, in proportion to the shares they own, the shares of the corporation that another shareholder wants to sell.

The approval of the shareholders is necessary for the following matters:

• To change the articles of the Corporate Agreement.
• To sell, lease, or transfer all or part of the corporation assets and to encumber them as  a guarantee of the obligations of third parties.
• To merge with other corporations.
• To perform the dissolution of the corporation.

Shareholders are only responsible to the corporation’s creditors up to the amount they owe on account of their shares. It cannot be established any lawsuit against any shareholder upon the corporation debts until the sentence has been passed against it, whose total amount was not collected after the execution against the corporate assets.

Corporation Dissolution

If the Board of Directors of the corporation finds that the corporation dissolution is convenient, it will propose a dissolution agreement, and within the ten following days will call for a Shareholder Meeting to decide about it.

If in the Shareholder Meeting, the holders with most of the shares with the right to vote adopt a resolution approving the corporation dissolution agreement, a copy of such agreement will be issued, accompanied by a list of the names and addresses of the directors and members of the corporation, certified by the President or the Vicepresident and the Secretary or Assitant Secretary, such copy will be recorded with a Notary, and will be presented to be registered in the Public Registry.

A copy of this resolution must by published once in a local newspaper, where the corporation has an established office in the Republic of Panama.

Once these formalities have been carried out, the corporation is considered dissolved, but nevertheless, it will continue during three years from that date, for the specific objectives of starting the special procedures considered necessary, defend its interests as defendant, settle its affairs, transfer and dispose of its assets and divide its corporate capital.

Fiscal Considerations
In the Republic of Panama, Income Tax is only encumbered over the gross revenue obtained from the operations that took place in the Republic of Panama. The revenues obtained abroad, are not from Panamanian source, and so, are not subject to encumbrance under our Law.

Even if the Panamanian corporation has an office, employees, and licence to operate businesses in the Republic of Panama it will not generate income taxes in Panama as long as the transactions from which this revenue came from, were held outside the Republic of Panama.

The shared income dividends that come from sources outside the Republic of Panama are not subject to encumbrance. Panamanian law states that the Panamanian corporation that has as its only source of revenue dividends or participations received from other corporations, from Panama or abroad, is not required to pay income tax in the Republic of Panama. Dividend income originating from a Panamanian source, received by a corporation or individual, resident or non-resident, is subject to a ten percent (10%) tax rate.

A Panamanian corporation that has only had incomes originating outside the Republic of Panama, will be able to distribute all or part of its assets, in the moment of dissolution, merger or sale, without being subject to any taxes over capital gains.

Corporations that only have revenues from foreign sources are not obliged to prepare or publish financal statements, nor are they required to register any tax or any other declaration.