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The question I often
hear is, "I would like to form an offshore incorporated company, but which
jurisdction is best" ?. Well, there are a few things to consider about
which jurisdiction to use when forming any entity. For example, what
your goals are, and what you are trying to accomplish. Is there some
special reason that you need to be in one particular jurisdiction?
If it really does not matter, and you simply want the the best location,
coupled with the lowest expenses, then Panama is the place for you to consider.
Also, keep in mind that an IBC structure from say Belize or the Bahamas
is more restrictive than a Panama Company. While a Bahamas IBC company
cannot engange in business with Bahamians, or own real estate in the Bahamas,
A Panama Company has none of these problems. In addition, the IBC
structure may only have a "tax-exempt" status that is valid for a certain
period of time (usually 15 or 20 years). The Panama Company is Tax-Exempt
in perpetuity, providing that the company income or profits are derived outside
of Panama (Interest from a Panamanian Bank account is tax-free for a Panama
Company, and would be the only exception for income that could be earned inside
of Panama with-out a tax liability).
How to Establish a Panamanian Corporation
The corporation law
of the Republic of Panama provides that any two natural persons acting as
the organizers and the subscribers may appear before a Notary Public to organize
and constitute a corporation (In Panama Public Notaries govern most entities
under the direction of a government institution). It is the usual practice
for natural or juridical persons outside of Panama to accomplish the formation
of a Panama corporation through a local Panamanian law office, a trust company,
or a professional management services firm. For the purpose of drafting necessary
documents, the following simple information and particulars are supplied by
the client to the incorporation agent:
Company Name - A preferred name, with two or
three alternatives in the event that the desired name may conflict with a
name already in use, expressed in any language, The name must also include
a corporate ending such as (Anonymous Society), Corporation, or Corp, Incorporated,
or Inc., Limited, or Ltd. to clearly denote that it is an incorporated company.
Articles of Incorporation – One must specify
the purpose of the company and certainly that can be as broad or specific,
as you would wish. It is certainly possible to indicate a number of
activities, if that is desired.
The capital of a Panama corporation is expressed
as Authorized Capital, and there is no minimum capital that must be paid
in. I suggest that the indicated capital be no more than US$ 10,000.00
as the initial registration tax or fee is a function of the authorized capital.
The minimum, initial capital registration fee is US$250.00 (based upon $ 10,000
authorized share capital). The annual minimum tax thereafter, assuming
there are no profits derived from any business activity in Panama, is $ 250.00.
You will need the services of a notary and accountant to make this declaration
for you, but this is not a problem.
Shares may be issued in Bearer form or in Nominative
form. Preferred, Class A, Class B, voting, non-voting, and other shares
structures are also permitted. Keep in mind that the “Articles of Incorporation”
are public record.
Directors - A minimum (with no maximum) of three
directors is required. These may be of any nationality, residence or occupation.
Nominee directors are permitted and many offshore formation firms will try
and convince you to use their nominees for this purpose. The decision
to use nominee director is yours to make and really comes down to trust.
Do you trust the
person whose name appears on your documents as having control over your company?
In reality, you can certainly choose anyone that you wish, but I advise
you that there are some other strategies you can employ if you wish to remain
anonymous. Juridical persons (other corporations or entities) can also act
as a director.
Officers - A President, a Treasurer, and
a Secretary are required. These may be natural or juridical persons,
and there are no requirements as to nationality, residence or occupation.
While one person may hold more than one office, it is customary that the
President should not also be the Secretary. One of the officers is usually
named Vice-president. There may be as many Vice-presidents as required. Managers
or other positions may also be named if desired. Normally the directors and
the officers are one and the same, but they certainly do not have to be.
Domicile - The company can be domiciled
anywhere in the world, but I advise that you stay with Panama or another
tax haven as the domicile of the Panamanian Company. The Panamanian
Company must have a Registered Agent domiciled in Panama. It is required
that the agent is a practicing lawyer or law firm. Domicile of registry
is not necessary domicile of Business. A very important point to understand
when planning tax strategies.
Duration - The Corporation may have a
limited or unlimited life, however, it is customary for the duration to be
perpetual.
Time To Establish The Company A competent
attorney in Panama can get the incorporation process done in about 1 week
to ten days. If the paperwork is being accomplished by mail, and your
check needs to clear, then of course the process can take a month.
But anyone in a rush can incorporate in person in about 1 week.
As a word of advice,
stay away from “shelf corporations” that some of these offshore firms will
try and sell you. You do not know if the offshore formation company or attorney
has actually made any material changes when you buy a shelf company and
you also do not know if the company was engaged in something that will come
back to bite you later on. The incorporation process is convenient
and quick, so why not get a new corporation from the start?
Corporate Minutes, Seals, Etc. - Corporate Seals
or Minutes Books are not required, especially if the corporation does not
operate in Panama. With your certified copy of the “Articles of incorporation”,
you should not have an problem opening a bank account or conducting other
business.
Expenses Our experience is that some firms
have charged up to $7,000 for one single corporation. We usually
work with our clients on a flat fee basis. We prefer the flat fee basis,
because we can offer a complete service - without any hidden charges or
fees. Regardless of what type of arrangement desired, the entire cost
should not exceed $ 3000.00 (with federal express fees, legal fees, etc.
included in this amount)
Renewal and registration costs should
run no more than $800 total. There are a number of offshore formation firms
and lawyers that charge outrageous amounts of money to set up and maintain
both Foundation and Corporation structures. Some of these prices are way out
of line, but most people do not know any better and end up paying quite a
bit.
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