Panama has a long history of offshore work primarily in the areas of offshore companies and ship registration. The bulk of company law is found in Law 32 of 26 February 1927, which was adopted from the state of Delaware, USA, and Law 24 of 1 February 1966.
Companies can be formed for all lawful objects and the proposed name should end with one of the following suffixes: Sociedad Anonima (S.A.), Incorporated (Inc.) or Corporation (Corp.). Interestingly, the word ‘Limited’ is not sufficient.
There is no minimum capital, the standard authorised capital we use is US$10,000 divided into 100 shares of US$100. It is possible to have bearer shares. The minimum number of members is two, there are no restrictions on the nationality of members. Whilst the two initial incorporators of a Panamanian company will appear on the public record, Panamanian law makes no provision as to disclosure of details of shareholders once incorporation has taken place.
The company requires at least three directors, who need not be shareholders. The names and addresses of the directors will appear in the Articles of Incorporation, and subsequent changes must be recorded. It is also necessary to appoint a President, Secretary and Treasurer. These persons are appointed by the directors, but need not be directors or shareholders. One person may hold all three offices.
Each company must have a registered agent who is resident in Panama and who must either be a lawyer or a law firm who must confirm acceptance of the post. There are no annual returns and no obligation to file annual accounts. Meetings of shareholders and directors can be held anywhere in the world as governed by the Articles of Incorporation.
Panamanian taxation is strictly territorial, and income tax is levied only on income derived from sources within Panama. Consequently, if the company carries on all its activities outside Panama, no Panamanian tax will be payable other than the annual franchise tax and filing fee in the sum of US$250.
Panama has strict secrecy laws, however treaties have been established with a number of countries on mutual assistance in criminal matters. Such treaties exclude exchange of information on tax affairs.