Modernization of the PANAMANIAN COMPANY
Dateline: February 1998
On July 9, 1997, it was published in the Official Gazette of Panama No. 23327 the Decree-Law No. 5 of July 2, 1997, «Whereby some articles are amended or added to the Commercial Code aiming at modernizing certain juridical institutions, Law of 1984 on Trust is amended and other provisions are decreed.)>>
Most significant for its dynamic character, the aforesaid Decree-Law guarantees, includes and rejoins different aspects of importance to the Panamanian legal system with effects also in the corporate law. It makes of Panama a more competitive jurisdiction by introducing modern elements presently common in other jurisdictions.
The amendments preserve and reinforce the legal certainty of Panama's juridical entities. mainly the law on stock companies, so well known in the local and international business communities.
Among the most important changes included in the Decree. We can mention the following:
CONTINUATION-MIGRATION-TRANSFER OF JURISDICTION
The amendments regulate for the first time in Panama the transfer of seat (also called ' or «change of jurisdiction>).) of companies into or out of Panama; Hence. A company validly incorporated under a foreign law may choose to become subject to the laws of the Republic of Panama and to continue its existence under this jurisdiction as a Panamanian corporation, notwithstanding the provisions under the laws of its original incorporation, by submitting to the Public Registry, for its registration, the relevant documents.
On the other side, a company incorporated under Panamanian law may continue under the laws of another country provided only that the laws of said country so allow and that the company is up to date in its fiscal obligations in the Republic of Panama.
CORPORATE RECORDS
The stock registry and the minutes of a company may be kept not only in book form. but also by electronic or other means, provided they can be printed.
REGISTRATION OF BALANCE SHEET AND FINANCIAL STATEMENTS
Panamanian companies may register at the Public Registry, at their discretion, their financial statements, provided they have been approved by the Directors or Shareholders of the company, and duly certified by a chartered accountant.
CORPORATE DOCUMENTS THROUGH ELECTRONIC MEANS-VALIDITY OF RESOLUTIONS AND PAYMENT OF A RESERVATION FEE
Agreements, minutes, acts or contracts of directors, shareholders, members, managers or liquidators of companies performed by telephone or telefax or electronic communication means will be considered as having been performed in person if the parties or their representatives or attorneys-in-fact have been directly in contact and shall be valid even if they may have signed the documents on different days and in different places (circular resolutions).
CORPORATE DIRECTORS
Not only are natural persons allowed to act as subscribers or organizers of a corporation, but also legal entities. Likewise, directors, officers, or liquidators of a corporation may be natural persons or companies.
CORPORATE DIRECTORSHIP
Following into certain extend the example of the Panamanian foundation, now corporations can also have legal bodies as 'corporate director.' The amount of directors for stock companies has regrettably remained three.
GENERAL POWERS OF ATTORNEY NEED NOT BE REGISTERED AT COMMERCIAL REGISTRY
General powers of attorney. granted by Public Deed or by private document with a legally certain date will be effective in respect of third parties as of the date of its execution and may be optionally registered. The revocation of previously registered power of attorney must be registered.
RESERVATION OF NAMES IN THE PUBLIC REGISTRY
The name intended to be used for the incorporation of a Panamanian company may be reserved at the Public Registry for a period not exceeding thirty (30) calendar days, upon verification of its availability.
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