Articles of Incorporation

In Panama, two or more natural persons may create a corporation by executing a charter of incorporation. The incorporators need not be citizens or residents of Panama.  According to Article 2 of the General Corporation Law, the charter must contain the following information:

• The name of the corporation must include a word, phrase or abbreviation indicating that it is a corporation, and distinguishing it from other types of business organizations. The usual abbreviations are: " S.A. ", "Inc." and "Corp.".
• The General Purpose or Purposes of the Corporation  
• Panamanian law expressly allows a corporation to engage in any business activity. Thus, the listing of corporate purposes does not disqualify the corporation from pursuing other activities not expressly mentioned out in the charter. 
• The Amount of the Authorized Capital

The amount of the authorized capital, as well as the par value of the shares into which the capital is to be divided, may be established by the incorporators since the law does not establish any minimums or maximums. The authorized capital and the par value of the shares may be expressed in the currency of the Republic of Panama or in any other currency. The Panamanian legal tender, the "Balboa", has always been at par with the United States dollar.   

• The law permits corporations to issue shares with no par value. If all the corporate shares are to have no par value, the charter must indicate the number of shares the corporation may issue. It is not required that the amount of authorized capital be stated. The value assigned to non par value shares may be determined in the charter itself or, if the charter so provides, by resolution of the board of directors or the stockholders. The charter may provide for the issue of both par value and non par value shares. 
• If different classes of shares are to be issued, the charter of incorporation must state the number of shares of each class and all specifications, priorities, privileges, voting rights, restrictions or qualifications of each class of shares. Alternatively, the charter may provide that the specifications, priorities, privileges, voting rights, restrictions or qualifications of each class of shares be determined by resolution of the majority of the stockholders or the majority of the directors. 
• The articles of incorporation must state if the shares are to be issued in registered or bearer form. With registered shares, the name of the owner appears on the stock certificate and on the stock register of the corporation, which is not the case for bearer shares, however. The articles of incorporation may also provide that both types of shares, once issued in one form, may be converted into the other form. It should be noted that bearer shares may only be issued if they are fully paid and non-assessable. 
• Panamanian law, different to some countries do not require that in the act of incorporation a certain percentage of the authorized capital be subscribed for and/or paid-in. Rather, it is sufficient to state in the articles that the incorporators subscribe a minimum of one share each. Once the corporation has been recorded, the incorporators are then free to assign their subscription rights to other parties
• The Domicile of the Corporation . It is sufficient to state that the corporation will be domiciled in the city of Panama or in any other particular city in the world. 
• Panamanian law requires all corporations to have a resident agent domiciled in the Republic of Panama . The agent's name and address must appear in the charter of incorporation, and he must be an attorney admitted to practice in Panama . 
• Panamanian law requires that the charter of incorporation include the full names and addresses of the first directors of the corporation. A minimum of three directors is required, who may be non-residents of the Republic of Panama . The law further allows for the appointment of a variable number of directors, with a minimum of three (3). 
• Unless the articles of incorporation provide otherwise, neither the directors nor the officers have to be stockholders. Furthermore, the officers do not need to be directors, and the shareholders, directors and officers may be of any nationality. The only exception is in the case of corporations that intend to engage in certain business activities within the Republic of Panama that are expressly reserved by law to Panamanian citizens. 
• The meetings of shareholders and of the board of directors may be held outside Panama where this is expressly provided for in the articles of incorporation or by-laws. 

The directors may be represented and vote at the meetings of the board of directors by substitute. Substitutes need not be directors and may be appointed by private or public document, with or without the power of substitution. Stockholders may do the same at stockholders meetings. 

• The board of directors is elected by the stockholders, but vacancies on the board of directors may, if established on the charter of incorporation, be filled by the vote of the majority of the directors in office. 

The corporation must have a president, a treasurer and a secretary. Furthermore, it may have such other officers as the board of directors or charter of incorporation may determine, such as vice presidents, assistant treasurers, and assistant secretaries. It is common for the first officers to be appointed in the charter of incorporation, and any person may hold more than one office. 

• Usually the articles of incorporation state that the existence of the corporation is perpetual, but that it may be dissolved and liquidated at any time by the vote of the owners of the outstanding shares with voting rights. 

The articles of incorporation may include various other provisions, for example restrictions on the transfer of shares, preferring rights in the event of the issuance of new shares, and the powers of the officers to bind the corporation.

• Articles of incorporation executed in a foreign country must be legalized by a local Panamanian consul and must then registered with a notary public in Panama before they are registered with the Public Registry Office. 

The articles of incorporation must, in all cases, be registered with the Public Registry of Panama in order for the corporation to be deemed to exist with regard to third parties. 

The articles of incorporation may be executed in any language, but must be translated into Spanish by a certified public translator of Panama . The public deed may contain both the original version and its Spanish translation. 

The clients interested do not need to travel to Panama to carry out the process of incorporation. Two persons domiciled in Panama may execute articles of incorporation before a Panamanian notary public in accordance with instructions received from parties abroad. As mentioned above, each incorporator must subscribe at least one share of the authorized capital. Once the articles of incorporation have been recorded in the Public Registry, the incorporators may then resign their rights, and transmit them to the real parties in interest, thereby turning over control of the corporation.