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BACKGROUND
Geographical Location
The Republic of Panama, with an area of approximately 78,200 sq km, located between Costa Rica and Colombia,
forms the narrowest and lowest portion of the Isthmus that links North and South America. Geographic coordinates:
9 00 N, 80 00 W.
Climate: tropical; hot, humid, cloudy; prolonged rainy season (May to January), short dry season (January
to May).
Population
The population of Panama is approximately 2,778,526 (July 1999 est.), about 52 percent of which is urban.
Religions: Roman Catholic 85%, Protestant 15%.
Political Structure
The Isthmus of Panama was discovered in 1501 by Rodrigo de Bastidas and Vasco Nuñez de Balboa, who had
a leading part in the establishment of Santa Maria La Antigua del Darien in 1510, the first permanent settlement
on the mainland of the Americas. In 1513, Balbao led an expedition, in Panama, that discovered the Pacific Ocean.
Panama City was founded by Pedro Arias Davila on 15th August 1519, almost a hundred years before Jamestown, the
first permanent English settlement in North America was founded. Panama was a Spanish colony until 1821 when it
became part of the Gran Colombia of Simon Bolivar. In 1903, Panama broke its alliance with Colombia and became
an independent republic.
The executive branch of the Government is at present composed of a President and two vice-presidents, elected
for a five year term in 1994 by direct election.
Infrastructure and Economy
The Colon Free Zone is located on the Caribbean side of the Isthmus of Panama near the Atlantic entrance to
the Panama Canal. This Free Trade Zone is the second largest in the world after Hong Kong.
Operations and transactions taking place in the Free Trade Zone are subject to a special tax treatment whereby
imports from other parts of the world and re-exports to third world countries are exempted from any import or export
taxes imposed by Panama. Income earned from re-exports is taxed at specially reduced rates.
Language
Spanish is the official and spoken language. English is also spoken widely in urban areas.
Currency
United States Dollar.
Exchange Control
None.
Type of Law
Based on Spanish Civil Law with many Common Law influences, particularly regarding Company Law which is based
on the Delaware Model.
Principal Corporate Legislation
Corporation Law No. 32 of the 1927 Commercial Code.
KEY FEATURES TABLE
| General |
| Political Stability |
Good |
| British Based Legal System |
No |
| Type of Company |
Offshore |
| Disclosure of Beneficial Owner |
No |
| Migration of Domicile Permitted |
Yes |
| Tax on Offshore Profits |
Nil |
| Non-English Language Names Allowed |
Yes |
| Corporate Requirements |
| Minimum Number of Shareholders |
Two |
| Minimum Number of Directors |
Three |
| Bearer Shares Allowed |
No |
| Corporate Directors Permitted |
No |
| Secretary Required |
Yes |
| Standard Authorised Share Capital |
$10,000 |
| Local Requirements |
| Registered Office/Agent |
Agent only |
| Company Secretary |
No |
| Local Directors |
No |
| Local Meetings |
No |
| Government Register of Directors |
Yes |
| Government Register of Shareholders |
No |
| Annual Requirements |
| Annual Return |
No |
| Audited Accounts |
No |
| Recurring Government Costs |
| Annual Tax/Licence Fee |
$150.00 |
| Annual Return Filing Fee |
Nil |
COMPANY FORMATION
Type of Company for International Trade and Investment
Generally, corporations are incorporated under the Corporation Statute Law 32 of the 1927 Commercial Code.
Limited Liability Companies and Limited Partnerships are used also.
Procedure to Incorporate
By presentation of the proposed corporation's signed Articles of Incorporation before a Notary Public who creates
a Public Deed for registration at the Public Registry.
Restrictions on Trading
Cannot undertake banking or insurance business. Also cannot undertake Collective Investment Schemes.
Language of Legislation and Corporate Documents
Spanish and Certified English translations.
Name approval required
Yes.
Shelf Companies Available Yes.
Time Scale to Incorporate
24 hours, subject to name approval.
Name Restrictions
A name that is similar to or identical to an existing company. Names of well known companies incorporated elsewhere
or a name that implies Government patronage.
Language of Name
Names may be expressed in any language using the Latin alphabet.
Names Requiring Consent or a Licence
"Bank", "Insurance", "Assurance", "Trust".
Suffixes to Denote Limited Liability
All Panamanian corporations must end with the suffix "Corporation", "Sociedad Anonima"
or the abbreviation "Corp.", "Inc." or "S.A.".
Disclosure of Beneficial Ownership to Authorities
No requirement.
SHARE CAPITAL, TAXATION, LICENCE FEES AND COMPLIANCE MATTERS
Authorised Share Capital
Usually U.S.$10,000 divided into 100 common voting shares of U.S.$100 each or 500 common voting shares of no
par value.
Classes of Shares Permitted
- Non-voting shares.
- Preferred shares.
- Bearer shares.
- Registered shares.
Bearer Shares Permitted
Yes. Permitted. have to be paid for in full.
Taxation
No Corporation Tax is levied on non-Panamanian sourced income.
Double Taxation Agreements
None.
Licence Fees
Annual Franchise Tax of U.S.$150 is payable.
Financial Statement Requirements
No requirement if income is of non-Panamanian sources.
STRUCTURE OF MANAGEMENT
DIRECTORS
Minimum number of Directors
Three. Need not necessarily be the Officers.
COMPANY SECRETARY
Company Secretary Required
Yes
SHAREHOLDERS
Minimum number of Shareholders
One
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