Historically, the most utilised form of legal entity in the
Republic of Panama has been the sociedad
anónima (corporation). However, the limited
liability company (LLC) is becoming an increasingly popular
type of legal entity. It offers individuals interested in
conducting business in Panama a different organisational
structure, while still providing similar benefits to those
offered by corporations.
Despite numerous similarities, there are some key
differences between a corporation and LLC. On the one hand,
unlike corporations, the law that regulates LLCs requires the
name of the members and their capital commitments to be made
public. The information must be disclosed at the time its
corporate charter, and any relevant transfer of membership
quotas, are filed with the public registry.
For both legal structures, there is no minimum or maximum
capital contribution requirements. This is very appealing for
foreign startups, but LLCs need to have at least two members.
Likewise, as with corporations, the revenue generated by an LLC
overseas is not taxable in Panama.
Regarding the governance of LLCs, the members are entitled
to designate one or more individuals to act as managers, to
represent them and the entity. These managers need not be
members of the LLC. As with Panamanian corporations, LLCs may
designate one or more officers or attorneys-in-fact to exercise
specific roles in the day-to-day operations, as established in
the articles of incorporation.
Another advantage of using an LLC is that they offer the
possibility of establishing the corporate domicile in a foreign
country (conforming to that jurisdiction's requirements). It is
also possible to transform the structure of an LLC into a
corporation, thereby offering the possibility for individuals
to modify the respective structures based upon their specific,
or changed, needs.
All of these advantages, coupled with the overall improving
Panamanian economy, make LLCs an interesting corporate
structure when investing in Panama.