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Coddan CPM Ltd. – Company Registration Agent in the UK
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Home Incorporate in Offshore Panama Incorporate in Panama

Offshore Panama Company Formation. Incorporate Offshore Corporation In Panama

Welcome to Coddan online Panama Company formation agent. We recommend reviewing this site in its entirety, so that you are knowledgeable of Panama jurisdiction and the powers granted to Panamanian companies. We will guide you through the process of registering your company and establishing your registered identity. Complete and submit our application form. Adequate completion and submission of this form, along with the provision of payment, will enable Coddan to incorporate your proposed company in Panama within three business days. We will express mail your corporate documents to the mailing address you specify in your incorporation order. If you want to become familiar with the description and the contents of Panama company formation packages, offered by Coddan and to find above, what kind of service is included in this or that Panama companies incorporation package, to get an idea about the price of annual renewal of the service, and about the general legal requirements to the companies incorporation within Panama, please, select the package you need from the list, situated below the banner. The information in the banner will be renewed according to the package you've chosen. For over seventy-five (75) years the Panamanian Corporation ("Sociedades Anonimas") have been recognized, world wide, as an offshore vehicle, with the proper advice, can be successfully used in a variety of International Business, Asset Protection, Estate Planning Structures, among others.

Particular features of Panamanian Corporations:

  • Incorporation in 24-48 hours.
  • Panamanian Companies can be incorporated without regards to the nationality of its directors and shareholders.
  • Incomes generated by a Panamanian Corporation outside of the Panamanian territory are tax exempted.
  • The authorized capital does not have to be paid in full or partially.
  • There is no need to file any financial reports or tax returns with any government entity in the Republic of Panama, provided that the company does not operate within the territory of Panama.
  • Legal entities of any jurisdiction may act as directors, officers and shareholders of a Panamanian Corporation.
  • There is no need to hold annual meetings of Directors or Shareholders.
  • Directors and Shareholders may attend to the meetings personally, by proxy, by phone or by any other electronic means.
  • Three (3) directors are required, either natural persons or legal entities.
  • The dignitaries (President, Secretary and Treasurer) do not have to be directors and one person can occupy several or all charges. Natural persons or legal entities can also be appointed as dignitaries.
  • Shares may be issued to the bearer or in nominative form. In any event, the name of the shareholder is not require to be registered in the Panamanian Public Registry, thus, ensuring total anonymity.
  • A corporation can effectuate transactions and have assets in any part of the world without the obligation of maintaining assets in the Republic of Panama.
  • Panamanian Corporations are empowered by law to conduct any lawful act.
  • Absence of exchange control.

Part of my day-to-day practice involves the incorporation of Panamanian companies for clients. Clients use corporations for a number of purposes, for example:

  • Holding company for real estate in Panama or elsewhere;
  • Holding assets internationally on a favourable tax basis whereby assets can be transferred between persons in a private transaction through the delivery of shares rather than an exchange of the underlying assets themselves;
  • Business start-up in Panama, such as a consulting service internationally or a hotel in the tourism industry;
  • Conduct business in any jurisdiction in which a local or domestic corporation may conduct business;
  • Investment and banking; and
  • Borrow or lend money.

Incorporation of the company usually takes 3 working days. However, during the holiday season the registry is usually not as responsive to client requests and therefore your patience is requested. Depending on where the client is located, documents can be dispatched overnight or delivered in 48-72 hours. After the corporation has been established, you will need to consider the costs of maintaining the corporation in good standing. This means that you will need to pay the Annual Renewal Fees of the corporation for the Government Franchise Tax (US$250.00) and the Registered Agent fees. If the company has nominee directors, then there will also be fees payable for this service. Annual renewal fees for companies are payable in two periods annually. Companies incorporated between January and June must pay before the end of June. Companies incorporated between July and December must pay in December. Reminders will be sent out monthly, so that you do not forget. Should you require further services, such as mail forwarding, please let us know at the time of incorporation. After the company has been established, we can assist with the preparation of company resolutions, as well as shareholder agreements, etc. which may be required for the corporation.

Please note

The prices payable for the items that you order are clearly set out in the web site. There will be no contract of any kind between you and us unless and until we receive payment from you. We act as your agent in the incorporation of offshore companies. We are not able to guarantee that any such filing will be acceptable to Companies Registrar , nor are there any contractual obligation upon us to do so. If Companies Registrar rejects incorporation or other filing, we will credit your account with a full refund and the contract between us will be made void. Companies Registrar does not offer a cancellation facility for the incorporation of companies or the filing of documents. We will be unable to cancel any such submission on your behalf and will not refund any payment you have made. All prices shown at Coddan Web Site are in Great British pounds. Credit cards are the preferred method of payment; we accept VISA, MasterCard and Delta. We can accept payment in UK Pounds Sterling, US Dollars, Euros, Australian Dollars and Canadian Dollars.

Live Help

Live Help is a real time "chat" feature which enables you to interact with a customer service representative without a phone call. Get answers to your questions while using our website. Clicking the "Live Help" button will start an on-line session with one of our representatives. Live Help is currently available during normal business hours. Outside of the above opening hours our business center will be closed. When you click on the button you will see an e-mail form that will allow you to send us a mail with your questions. Live Help is absolutely free! There are no hidden fees. We offer the service as a courtesy to our website visitors. Dear visitors, while having a chat session with a customer, we are frequently requested to give a piece of advice on tax planning or business structuring. We would like to inform you that it is against our principles to provide online advice pertaining to these issues. The points that may be covered during a session include service description, package or service price, navigation at our website, ways of making an order, methods of payment etc. Yet, if you wish us to provide you with advice on tax or business structuring, you should be aware that this service is chargeable. If you have any questions please E-Mail or call us: 033 0808-0089 or +44 (0) 207.935.5171, fax: +44 207.504.3531.

Fatf/oecd Blacklists

In June 2000, Panama was identified by the FATF as a non-cooperative tax haven in the global fight against money laundering. The result of this was that Panama was one of fifteen tax jurisdictions placed on an FATF blacklist. Each offending tax haven had a year in which to correct its regulations and legislation.

The FATF released its annual report in June 2001, in which the organisation revised its list of countries and territories deemed non-cooperative. Only four were removed from the list, including Panama (the other three being the Cayman Islands, Liechtenstein and the Bahamas). Panama was praised by the FATF for its substantial efforts to conform to forty recommendations set out in a code of good practice governing money laundering.

Although along with many other offshore jurisdictions Panama issued a 'commitment' letter to the OECD in 2001, following agreement on the EU's Savings Tax Directive in 2003, Panama told the OECD that it considered there was no longer a 'level playing field' and that it did not consider itself by by its commitments.

Panama's Low-tax Specialisations

Panama has territorial taxation, thus only locally sourced income is taxed. There are no 'offshore' regimes as such other than the Colon Free Zone and the export processing zones. There are more than 120,000 companies in Panama, most of which trade or hold assets externally. It is reasonably easy to form corporations, and privacy is assured. There are no tax treaties. Banking and shipping are Panama's two main 'offshore' industries. There are 140 or more banks, specialising obviously in South and Central American business, and Panama is the world's largest shipping registry. Once, it would have been fair to say that drug running and money-laundering were well-rooted in Panama, but with lots of US pushing and shoving, the country seems to have moved in a better direction lately. There is a small but growing stock exchange, and there is 'captives' legislation which is little used.

Moderate Taxation For Local Business

Locally sourced profits are taxed at up to 30%; for individuals this is the top rate of a sliding scale. There is no capital gains tax but gains on real estate count as income. There is a small withholding tax. All foreign-source income is tax-free. There is VAT, and import duties, but these have been reduced substantially in recent years. The Government's extensive investment incentive programmes give substantial tax benefits to incoming investors in many sectors; and the free zones are ideal for locating regional distribution centres. No company with exclusively external assets and commercial operations will pay tax.

Panama Corporation (sociedad Anonima)

The corporation limited by shares is the most frequently used corporate form in Panama, and is the usual choice for an offshore operation.

Benefits: no reporting requirements. It is possible to keep a business under direct control while maintaining complete confidentiality. Names of beneficial owners are not publicly available. It is not required to file any changes to ownership schedule, after the registration is complete. It is not required to maintain a legal address. No citizenship or residency requirements or restrictions with respect to owners, directors and officers as with most other tax havens. Stockholders' and directors' meetings may be held anywhere in the world. Capital shares may be issued in a nominative form, or to "bearer" - the ideal protection of the corporation owner's identity and total privacy. Funds and accumulated offshore profits can be deposited or invested in any country in the world without becoming subject to taxation in Panama. One person might hold all three positions of a President, Corporate Secretary and Treasurer.

Other common advantages of Panama companies are: ultimate financial privacy. Asset Protection. Income Tax Reduction. No inheritance, succession or gift taxes. Protection from inflation. Reduction in legal liabilities. Reduction in operating expenses. Freedom from currency exchange control. Local Government concessions, subsidies and support. Data on owners and directors are not publicly available and remain confidential. Easy access to North American and European capital markets. No international trade tariffs. No annual tax return requirements. No import/export quantity limitations. No costly bureaucracy.

In June 2000, Panama was identified by the FATF as a non-cooperative tax haven in the global fight against money-laundering. The result of this was that Panama was one of fifteen tax jurisdictions placed on an FATF blacklist. Each offending tax haven had a year in which to correct its regulations and legislation. The FATF released an annual report in June 2001, in which the organisation revised its list of countries and territories deemed non-cooperative. Only four were removed from the list, including Panama (the other three being the Cayman Islands, Liechtenstein and the Bahamas). Panama was praised by the FATF for its substantial efforts to conform to forty recommendations set out by the FATF in a code of good practice governing money laundering.

The purpose of this summary is to provide the basic information for incorporating a company in the Republic of Panama, which can conduct personal and/or business affairs. The law governing companies is set out in Law 32 of 1927 and many of its provisions have been copied by other leading offshore financial services centers since it was promulgated over 70 years ago. Despite the popularity of many of these centers, only Hong Kong has more registered companies (some 400,000) than Panama (approximately 350,000) at present.

If you have a need for an offshore corporation, Panama will still offer the most flexibility and security. Your corporation will be complete within three days of receipt of payment and you will not be subject to tax liabilities unless your corporation operates and generates direct income from Panama. That means you can open offices and employ local Panamanians for any business activity that does not generate its income from Panama, and you will still be tax exempt.

Strangely enough, often the most difficult part of what is very straightforward process is choosing a name for the corporation. Once one has been chosen, it is recommended that you also pick a standby alternative as well it must be approved by the Companies Registry and it is possible to have this done in a day. You can reserve a name for up to 30 days if necessary. The name of the corporation can be in any language, but must end with one of the following suffixes: S.A., Inc., Incorporated, Corp. or Corporation.

The corporation will either be resident or non-resident in Panama. If it will be conducting business in the country it will be resident and will be subject to income tax. Taxes in Panama are territorial and, therefore, corporate income earned outside the country will not be taxable. There are no tax treaties with other countries. Usually, it is the non-resident corporation that it is formed because it is not subject to Panamanian taxes- except for an annual government corporate tax of US$250.00 If a non-resident corporation conducts banking business in Panama (savings accounts and fixed deposits, for example) the income derived is exempt from Panamanian taxes, which is a very attractive feature.

Your Panamanian corporation will come complete with a translation in English. It will contain all of the necessary documents including certificate of incorporation, General power of Attorney, Nominee Directors and Registered Agent for one year. Your package will also contain a Minutes Book, Stock Ledger and your Stock Certificates. You will also have for your personal security undated signed letters of resignation from the Nominee Directors. Application forms for corporate bank accounts and optional debit cards will also be included.

Among the interesting features of Panamanian Corporations, we can find the following: Panamanian companies can be incorporated without regards to the nationality of its directors and shareholders. Income generated by a Panamanian Corporation outside of the Panamanian Territory is tax exempted. There is no need to file any financial reports or tax returns to the Panamanian authorities, if the company does not operate in Panama. Companies may act as directors, officers and corporate liquidators. There is no need to hold annual meetings of Directors or Shareholders in Panama. Directors and Shareholders may attend to the meetings personally, by proxy, by phone or by any other electronic means. Shares may be issued to the bearer or registered. In any event, the name of the shareholder is not disclosed to the Public Registry. There are no restrictions for the objects of a Panamanian Corporation, as long as they are not considered illegal by the authorities. The time of incorporation is around three to five working days tax.

Panama offers the most favorable and most flexible incorporation laws available in the world. Panama corporations are used by individuals from all over the globe who are interested in asset protection, tax minimization, privacy, investment diversification, affordability and convenience. Panama corporations can be used for international trade, to settle trusts or foundations, to establish and own bank or brokerage accounts, or hold ownership of real estate or any other type of asset. In some cases, Panama corporations are formed for very private and confidential business transactions such as the movement of funds to another jurisdiction for the protection of the assets.

Panama offers the strictest corporate book and banking secrecy laws available in the world, therefore providing legal protection to your assets and your identity through the confidentiality of corporate business and banking transactions. Most other offshore jurisdictions, such as the British influenced countries, have vowed down to recent legislation that has begun the removal of bank secrecy in those British colonies around the globe. Panama is a totally sovereign nation, not governed or controlled by any other country in the world.

Panama Company Formation

The following details are required to incorporate a Panama company:

The name of the corporation. It must end in any of the following words or abbreviations: Corporation, Corp., Incorporated, Inc., Sociedad Anуnima or S.A. Names in a foreign language are permitted. Availability of names must be cleared for use by the Public Registry. Name(s) available may be reserved, if desired, for a period of 30 days only at a cost of US$30.00 each. The specific objectives of the corporation. Usually broad general objectives are listed; however, mention is also made in the corporate charter of certain specific objectives for which the corporation is organized, if desired. The amount of authorized capital, stating also the number of shares and their respective par values. (If no par value shares are used, then the government values each share at US$20.00 for purpose of computing of registration fee on authorized capital). The type of shares - Nominative and/or bearer, common and/or preferred, and the class of shares - class A or class B, (when applicable) voting or non-voting, as well as any rights and/or restrictions applicable thereto. The law requires a minimum of three (3) directors, which may be natural persons or juridical entities. For natural persons, the full names (initials are not acceptable) and addresses are required. For juridical entities, complete official name(s) and address(es) accompanied by a notarized and apostilled certification (or Panamanian Consul authentication) from the regulatory body or registrar of the corresponding jurisdiction(s), indicating that the entity is validly existing and who is its legal representative are required. If so desired, the services of directors and/or officers are provided for a yearly fee by local attorneys and management companies. The full names of the first officers: president, secretary and treasurer. Vice President(s) and other officers are optional. One person may hold two positions, but the president should not be the secretary as well, for practical reasons. Directors may also act as officers. Directors and officers need not be shareholders, Panamanian, or local residents or entities. Duration of the corporations, which may be in perpetuity. Name and address of the Resident Agent (a local attorney or a law firm). Domicile of the company (Registered address).

Therefore Panama Corporations may have accounts in any country and in any bank. Panamanian corporations may be organized by two or more persons of legal age (who can be Panamanian or foreigners) as well as juridical entities, for any lawful purpose (or purposes) whereby the incorporators subscribe to at least one share each of the capital stock of the corporation under formation. In practice, two persons or juridical entities from the incorporating attorney's office act as incorporators and immediately upon incorporation the two persons endorse (in blank) their subscription rights, thus the total authorized capital remains intact and may be issued to the beneficial owner(s) in full. The authorized capital of a Panama corporation does not have to be fully subscribed or paid up.

Every corporation requires 3 directors and 3 officers (President, Secretary and Treasurer). The directors and officers can be either individuals or corporations and the directors can also be the officers, or vice versa. The corporation must have two subscribers when it is incorporated, but needs to have only one shareholder. A shareholder does not have to be either a director or an officer and the share certificate/s can be issued in his name or in bearer form. Those clients seeking maximum privacy usually request the professional forming the corporation to provide nominees to fill the positions of officers and directors. This will be reflected in the annual fee charges. Although the only documentation on public record will usually be the deed of incorporation (and any amendments), the names and addresses of the directors, officers and Registered Agent are also recorded. Beneficial ownership of a corporation or Annual Returns (common in many offshore jurisdictions, which detail basic information about the corporation) are not, however, required to be filed with the Registry.

Despite of the fact that Panama Registry is opened one - to maintain anonymity of the client allow: the use of Nominee Directors, General Power of Attorney and BEARER SHARES. The law requires all corporations to have a legal address, which must be provided by a local lawyer or law firm as Registered Agent. The incorporating attorney, or his law firm (Coddan), generally acts as the statutory Resident Agent of the corporation, a legal requirement in Panama.

No records have to be kept by the Panamanian Registered Agent and although every corporation must maintain a minute book and stock register, they can be held anywhere in the world. Neither are accounts required by statute and a corporate seal is optional. The flexibility of Panamanian corporations is further illustrated by the fact that annual general meetings of either shareholders or directors are not mandated and when meetings are held, they can be by proxy and take place anywhere. The meetings can be via telephone or other electronic means and the resolutions passed will be valid even if they are ultimately signed on different dates and in different locations by the parties.

There are no exchange controls and Panamanian corporations can conduct business in any country or currency. They have a multitude of uses and are used, for example, to settle trusts and foundations, maintain bank accounts and hold stock market and mutual fund investments. Real estate is often held in the name of a corporation, especially houses, apartments and commercial properties. Sometimes a corporation is formed for a particularly sensitive and very confidential business transaction.

Capital Structure

Under Panamanian Law, the Articles of Incorporation must set forth the amount of the corporate capital and the number and par value of shares into which it is divided. The corporation may issue shares without par value, if the Articles of incorporation so provide, and if it does the said articles must stipulate (a) the total amount of shares that the Corporation can issue, (b) the number of shares with par value, if any, and value of each one, (c) the number of shares without par value, and (d) one or the other of the following statements: (1) that the corporation's capital shall be at least equal to the total amount represented by the shares with par value, plus a stated amount with respect to each share without par value which is issued and the sums that from time to time may be incorporated into the corporate capital by means of a resolution or resolutions of the board of directors; or (2) that the corporate capital shall be at least equal to the total amount represented by the shares with par value, plus the value received by the corporation for the issuance of shares without par value, and the amounts that from time to time may be incorporated into the corporate capital by means of a resolution or resolutions of the board of directors.

In addition, if the shares are to be divided into several classes, the Articles of Incorporation should set forth the designations of each class and a statement of the preferences, privileges, voting powers, restrictions and relative rights concerning the shares of each class. Furthermore, the Articles of Incorporation may impose restrictions for the transfer of shares, but any restriction which in an absolute manner prohibits the transfer of shares is null and void.

Under Panamanian Law, shares may be issued in exchange for money, labour, services or property of any kind, and must be issued pursuant to a resolution of the board of directors. Shares may be nominative or registered, or bearer. If nominative, or registered, such shares may be issued as fully paid and non-assessable, as partially paid, or even without any payment having been made thereon, and are transferable by endorsement and the subsequent registration on the books of the corporation (Stock Register Book). Bearer shares may not be issued unless they have been fully paid and non-assessable, and are transferable by delivery of the corresponding certificate.

The jurisdiction has, perhaps, the most secure confidentiality laws to be found anywhere. Those who have been following developments in jurisdictions such as the Cayman Islands, the British Virgin Islands and the Isle of Man will appreciate just how privacy is being eroded elsewhere. In Panama, however, only serious crimes relating to drug trafficking and money laundering will cause confidentiality to be lifted. Therefore businessmen and others making legitimate use of the jurisdiction will find that Panama can provide both the professionals and the infrastructure to achieve their objectives from a strategically located international financial services center.

Panama Corporation Tax Information

Income tax is payable on the income of a Panama or foreign corporation or other entity derived from business carried on within Panama; a corporation carrying on business both inside and outside Panama will pay tax on the proportion of its income that arises within the country. Capital gains are counted as income after deduction of allowances. The rate of income tax in Panama is 30% on chargeable income; a higher rate of 34% applies to income over PAB 500,000 for companies that are registered with the Official Registry of National Industry or that have government contracts. Companies with gross income below PAB 200,000 pay lower rates on the first PAB 100,000 of their taxable income.

There is a withholding tax of 10% on dividends paid out of taxed income. If less than 40% of taxed income is distributed, then Undistributed Profits Tax of 10% becomes payable on the undistributed balance; this therefore amounts to a maximum of 4% tax. In effect this is an advance withholding tax, and it is creditable against the 10% tax on later distributions of the taxed profit. Branches of foreign corporations pay the 10% "deemed dividend tax" on their full taxed income (making their effective taxation rate equal to 37%); but they are not subject to withholding tax on eventual distributions. The tax year is the calendar year, ending 31st December, although a different year can be agreed with the tax authorities. A tax return is due within three months (can be extended to six). The previous year's tax return must be accompanied by a forecast of the current year's tax, which is then payable in three instalments after six, nine and twelve months after the end of the previous year.

Non-Resident Panama Corporations offer the following tax advantages: no tax reporting requirements. No income tax. No capital gains tax. No interest income tax. No sales tax. No tax to shareholders. No capital stock tax. No property tax. No estate tax. No gift tax. No stamp tax. No succession tax. No inventory tax. With all this advantages is no wonder why over 100 banks and foreign companies have chosen Panama as their strategic base of operations for the Latin American region! International investors, financiers and businessmen find Panama an ideal foreign base country for worldwide operations and transactions. Panama taxes according to the territoriality principle (that is, it does not tax foreign-source income), only the income produced locally is taxable, disregarding the citizenship of the taxpayer. Dividends are not included as income subject to income tax.

Due to its structure, geographical position, political stability and characteristics of its economy, Panama has become one of the most important tax havens of the Western Hemisphere. It has excellent international transportation and communication systems; the United States Dollar has been a currency of legal tender for more than ninety years. Panama has taken several steps to modernize its economy and promote foreign investment. Most Panamanian and foreign investors choose to form corporations. There are no exchange controls, currency restrictions or reporting requirements and imposes no limits on monetary transfers to and from the country.

Panamanian Corporate Management Structure

Shareholders. Generally speaking, the management of the affairs of a corporation is vested in the board of directors, and shareholders are attributed few administrative functions per se. However, under Panamanian Law, the shareholders constitute the supreme power of the corporation, and shareholder action is required in connection with (a) amendments to the Articles of Incorporation; (b) removal of directors; (c) if so provided by the Articles of Incorporation or by-laws adopted by the shareholders, the adoption, amendment and repeal of By-Laws; (d) extraordinary corporate matters such as the sale, lease, exchange or disposal of capital assets, including its clientele and privileges, franchises and rights; (e) if so provided by the Articles of Incorporation, the transfer of assets in trust or to pledge or mortgage them to guarantee the liabilities of the corporation or third parties; (f) agreements for the merger or dissolution of the corporation.

However, other than the above and in absence of provisions to that effect in the Articles of Incorporation or the By-Laws, there are no particular requirements for the holding of a shareholders' meeting. In absence of a provision in the Articles of Incorporation or By-Laws, shareholders' meetings must be held within the Republic of Panama. Written notice of time, place and purpose is required to be given to call a meeting of the shareholders of a corporation. Said notice is given in the name of the President, Vice-President, Secretary or Assistant Secretary, or of any person or persons authorized for this purpose by the Articles of Incorporation or By-Laws. Notice of the meeting must be given in the manner contemplated by the Articles of Incorporation or By-Laws, and in default thereof, notice must be given personally or mailed not less than 10 days nor more than 60 days prior to the date of the meeting to the shareholders' registered address; and in the case of bearer shares, by publication in accordance with the provisions of the Articles of Incorporation or the By-Laws.

Shareholders, or their legal representatives, may waive notice of any meeting in writing, and the attendance of all the shareholders at a meeting thereof will operate as an automatic waiver of notice of the meeting. Under Panamanian Law, resolutions adopted in any meeting in which all shareholders are present, whether personally or by proxy, are valid; and resolutions adopted in a meeting in which there is a quorum, having those shareholders who are absent waived notice, will be valid for all purposes enumerated in the waiver. The quorum requirements for shareholder meetings may be determined by the Articles of Incorporation, and in default thereof, the presence of the majority of the shareholders will constitute a quorum. If a quorum is present, the majority vote of the shares represented will be sufficient to constitute a valid resolution of the shareholders, unless otherwise provided by law or a provision to that effect in the Articles of Incorporation.

Furthermore, unless restricted by the Articles of Incorporation shareholders have the right to be represented by a proxy holder at all shareholders' meetings, who may be appointed by private or public instrument, with or without power to substitute, and who need not be a shareholder of the corporation. Lastly, the Articles of Incorporation may provide for cumulative voting for the elections of members to the board of directors. Under Panamanian Law, the management and administration of a corporation is vested in a board of directors, composed of at least three natural persons of full age, and subject to that which is prescribed by law and provisions to that effect in the Articles of Incorporation. The board of directors has absolute control and management of corporate affairs, including the adoption, amendment and repeal of By-Laws.

A quorum for board of directors' meetings, in absence of a provision to that effect in the Articles of Incorporation, is constituted by the presence of a majority of the members of the board of directors and the resolutions of the majority of directors present at a meeting in which there is the required quorum, are considered as resolutions of the board of directors. In addition, directors may be removed at any time by the votes, given to that effect, of the holders of the majority of the subscribed shares with voting rights in the election of directors.

In absence of a provision to the contrary in the Articles of Incorporation, it is not necessary that the members of the board of directors be shareholders. Additionally, if expressly authorized by the Articles of Incorporation, it is possible for directors to be represented at meetings of the board of directors through proxy holders, who need not be directors, and who must be appointed by public or private instrument, with or without power to substitute.

Under Panamanian Law, corporations must have at least a President, a Secretary and a Treasurer, who are elected by the board of directors, and in addition, may have all the officers, agents and representatives determined by the board of directors, the Articles of Incorporation or the By-Laws, and who are to be elected in the manner established therein, and all of whom may be replaced at any time by resolution adopted by the majority of the members of the Board of Directors at a meeting thereof, or in any other manner set forth in the Articles of Incorporation or the By-Laws. If so provided by the Articles of Incorporation or the By-Laws, the same person may hold two or more offices, although it is recommended that the President and Secretary be two different persons. Furthermore, in absence of a provision to the contrary in the Articles of Incorporation or the By-Laws, it is not necessary that a person be a member of the Board of Directors or Shareholder to be an officer of the corporation.

Corporate Records And Bookkeeping

A Panamanian corporation which does not operate in Panama is not required to file any financial reports or tax returns and may maintain its books of account in any manner it desires in any part of the world. Panamanian corporations operating in Panama are required to file Income Tax Returns. No other financial reports, with the possible exception of certain statistical reports which may be requested by various government offices, and a municipal tax declaration are required. All Panamanian corporations are required by law to have a Minute Book, in which the minutes of all meetings of shareholders and/or directors should be transcribed in chronological order, and a Stock Registry which should contain the data relating to the ownership and issuance of share certificates. If shares are issued in bearer form, an entry to that effect should be inserted upon the original issuance thereof. Panamanian corporations which do business in Panama are required to have, as well, a Journal, a General Ledger and a Book of Inventories and Balances and to keep them pursuant to generally accepted accounting practices in Panama. All corporate and accounting books must be bound and sealed by the proper authority in Panama.