Panama, Republic in Central America, located on the narrow strip of land that connects North and South America.
Its position between two continents and separating two oceans has played a defining role in Panama’s history.
Panama, meaning “abundance of fishes”, occupies an area of 77,082 square kilometers.
Its capital, Panama City, is on the Pacific coast at the entrance of the Panama Canal.
The country has a population of approximately 2.6 million people of which half live in Panama City.
The official language of Panama is Spanish.
Documents in a foreign language, which are filed at the Companies Registry, must be accompanied by a Spanish translation.
Spanish and English are used equally in business circles.
Panama is a center of international business and finance with hundreds of international firms operating from Panama City.
Panama’s key geographic position has been conducive to its specialization as a service country.
The Panama Canal and the Colon Free Zone are at the forefront of this development.
Financial and fiscal benefits alone are not the only reasons for both the continuing flow of international banking corporations to Panama and the continued worldwide attractiveness of Panama corporations.
The Republic of Panama is at the center of the American continent and as a Democratic Republic, offers a valuable combination of political and monetary stability.
Key Features of Panamanian Limited Liability Companies (Panama LLC)
Panama has a new legal instrument governing the existence of Limited Liability Companies (Panama LLC), in accordance with the Law 4 of January 9, 2009, which came into effect on January 15, 2009.
Limited Liability Companies are a complement to the range of instruments already available in the Republic of Panama, such as Companies or Corporations, Private Interest Foundations, Trusts, and Banking Operations.
Limited Liability Companies (LTD or LLC) are a hybrid between a Partnership Company and a Shareholding Company (Companies or Corporations).
Panamanian Offshore Limited Liability Companies hold the following features (Panama LLC):
- Wide Purpose. The new Law of Panamanian Limited Liability Companies enables these companies to engage in any kind of business, whether civil or commercial, anywhere in the world.
- For their incorporation, at least two (2) persons, Panamanian or foreign, legal or individual, must be involved.
- Share capital does not need to be released and paid by the shareholders at the time of formation of the company.
- Share capital may be represented by any type of currency.
- Shareholders’ liability is limited to the amount of their contributions.
- The identity of shareholders must be registered and publicly displayed, so the incorporation of new partners involves the amendment of the Articles of Incorporation.
- The businesses of the company are managed by one or more managers, who may be the individual or legal entity of any nationality, may be partners or not.
- The managers of the company will be responsible for the administration and management of the company and its representation.
- The income from the activities of Panamanian Offshore Limited Liability Companies and profits paid to their shareholders are exempt from tax in Panama.
Uses of Panamanian LLC Companies
Panama LLC – Limited Liability Companies, also known by the acronym LTD or LLC or by its acronym in Spanish SRL (Sociedad de Responsabilidad Limitada) are associations of persons or companies to carry out a common purpose.
This is the difference from Companies or Corporations.
Also, Panama LLC – Limited Liability Companies of Panama have the attractive element of eliminating the risk generated by the individual activity of people, using an intermediary company, which response only to the extent of their participation.
In tax matters, these companies usually allows, in countries where they are used, to eliminate the tax burden on their profits, leaving only the tax burden which corresponds to its shareholders separately, according to their participation in the company, thus eliminating a potential double taxation.
It is important to mention, that Limited Liability Companies of Panama, until they have local operations, are exempt from taxes on the operations they render, enhance or consume exclusively abroad.
As indicated by the Law of Limited Liability Companies, their purpose may be wide, to enable the company to engage in any lawful activity, without limitations.
Panama LLC Companies Structure
Limited liability companies require that the Articles of Incorporation indicates the following information:
- The name and address of the grantors,
- The domicile of the Company,
- The duration of the company, which may be perpetual or not,
- The display of objects, that can be special or general,
- The amount of authorized share capital that may be represented in any currency, shares, or quotas and the value of each one.
- The designation of the person or persons who are going to exercise the role of managers and legal representatives, which may or may not be Partners.
- The appointment of one or more officers or representatives, both general and their functions.
- The appointment of a resident agent who shall be a lawyer or law firm.
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